First half U.S. gross domestic product was a hair over 2%. Inflation expectations are nearly back to 2%. Job growth over last year? You guessed it.

Why it matters: It may not last, but right now, it looks like we're moving back toward the slow growth environment that preceded the COVID-19 crisis, something we used to call the "2% world," Matt writes.

Driving the news: A flurry of decent economic data last week seemed to point toward slowing inflation and growth.

• The cherry on top was Friday's jobs report for August, which showed the employment picture developing in a way that is perfectly in line with the best-case scenario for the economy after last year's rate hike surge.
• Employment continued to expand, but the pace of that growth was markedly slower: Annual job growth was just 2% — it averaged more than 4% in 2022. That should continue to help ease inflation.

The big picture: This is another way of saying the Federal Reserve seems very close to pulling off the so-called soft landing of the economy that so many have hoped for.

Between the lines: This would be a great outcome for the stock market, which has gotten a lift lately from the idea that the Fed might not have to hike interest rates anymore. (They crushed the market in 2022.)

• What's more, if the Fed can stop easing without a full-on recession, that should help support corporate profits and give the market another reason to rise.

Yes, but: Not everything is turning up 2%.

• For instance — long-term U.S. government bond yields, also known as interest rates — continue to hover above 4%, higher than the 2%-ish level where they sat for most of the decade before COVID hit.

The bottom line: Bond yields basically reflect expectations about growth and inflation — and growth is already at 2%.

• That suggests the markets think it will take some time for the Fed to slowly guide inflation back to its target. Which, of course, is 2%.

Market-based readings of inflation expectations continue to come back to earth after flaring up during the post-COVID breakout of price pressures, Matt writes.

Why it matters: It's one of the clearest indications that some of the world's most sophisticated investors — these inflation expectations are based on bond market prices — expect a return to the low inflation environment that characterized the pre-COVID before times.

🪧 UAW strike looks "highly likely" when contract ends Sept. 14. (Axios)

✨ Merger Mondays are expected to make a comeback. (Axios)

✂️ Goldman cuts recession odds to 15% from 20%. (Bloomberg)

🏦 Chinese lenders extend billions of dollars to Russian banks after Western sanctions. (FT)

Local government employment — primarily jobs at schools — still hasn't recovered from the pandemic, according to fresh Bureau of Labor Statistics data.

Why it matters: Parents are sending their kids back to school this week, writes Emily, whose kids are boarding the bus tomorrow. But there may not be enough teachers there to greet them. Schools around the country are struggling to hire.

• Local government was a weak spot in an otherwise solid jobs report.

Zoom in: "K-12 schools are yet again starting the school year with many unfilled vacancies," Julia Pollak, ZipRecruiter's chief economist wrote in a note.

• Despite ramping up hiring efforts — and raising wages — "schools are still struggling to recruit teachers," Pollak told Axios' Courtenay Brown in an interview.

What happened: A lot of teachers left the profession during COVID.

• Some older teachers retired. And some younger teachers were furloughed and didn't come back, suggests new research from ADP's Nela Richardson.
• Shortages are worse in places where teacher pay is low and students are poor, notes the Washington Post.
• But low pay is an industry-wide issue, especially in this strong labor market.

Flashback: Before 2020, local government hiring had finally recovered from the hit of the financial crisis after a decade-plus slog.

• Now, the number of local government employees in the U.S. is back to where it was in 2018 when that recovery was still underway.