Thomas "Danny" Boston remains optimistic about economic recovery in his analysis of the unemployment report issued by the United States Department of Labor on August 1, 2014.

Boston writes: The labor market continued a sizzling pace of economic recovery in July. The economy created 209,000 new jobs, while the unemployment rate edged up incrementally from 6.1% to 6.2%. The latter increase occurred because 329,000 workers entered the labor market over the last month. When so many workers enter or re-enter the labor market, it is a positive sign that jobs are increasingly available.

The job gains were spread across all key industries including construction (22,000) and manufacturing (28,000). Private non-goods producing sectors also experienced significant employment gains including retail trade (26,700), business and professional services (47,000) and health care and social assistance (25,400).

One concerning outcome of the labor market picture is the unemployment among Blacks, which increased from 10.7% to 11.4%. However, the increase was caused primarily by over 200,000 Blacks entering or re-entering the labor market in July. Unemployment among whites and Hispanics remained constant at 5.3% and 7.8% respectively.

Now that the economy has experienced several consecutive months of strong recovery, economic policymakers will shift their attention to inflation. Specifically, the growing concern will be whether or not the rapid pace of growth will reignite inflationary indicators. There are strong signs this may be the case.

The economy produced 304,000 jobs in April, 222,000 in May and 288,000 in June. In fact, the last six months have been the most robust period of job growth in over 15 years. Over the last several weeks, initial claims for unemployment compensation dropped below 300,000 for the first time since the recession began in 2007. At the same time, the employment cost Index spiked up significantly in recent months as wages and salaries increased by .6% between the first and second quarters. Finally, Gross Domestic Product (GDP) increased by 4% last quarter.

These indicators are signs that point to a growing concern the Federal Reserve will have over the possibility of inflationary growth. The confirmation of the concern is reflected in the stock market, which declined by 1.9% in just one day. Investors are worried the Federal Reserve will increase interest rates to contain the rapid rate of growth. Rising interest rates will in turn slow down home buying, auto sales and other interest sensitive consumer purchases. If that occurs, it will cut into corporate profit.

Unfortunately, inflationary fears are gaining momentum.

Thomas “Danny” Boston, a professor of economics in The Sam Nunn School of International Affairs, Boston received his MA and PhD in economics from Cornell University. His primary research interests are quantitative program performance evaluation, minority and small business entrepreneurship, and public policy and the economics of minorities.