The Week in Review: September 6, 2022
A Steady Freddy Jobs Report
Short-term traders hold their breath before every jobs report, which is typically released on the first Friday of each month. Job creation, or the lack of it, is important. But the heavy emphasis on the monthly numbers seems a bit overdone.
When the economy is expanding, employment typically increases. When the economy is contracting, the number of employed usually declines. Today, the huge number of job openings makes it easier to find work in some industries. It appears to be adding to the robust numbers.
In August, the U.S. Bureau of Labor Statistics (BLS) reported that nonfarm payrolls grew by a healthy 315,000, down from July’s 526,000. The unemployment rate ticked up to 3.7% in August from 3.5% in July.
The nonfarm payrolls number and the unemployment rate are taken from separate surveys, which occasionally creates temporary discrepancies. In August, the increase in the jobless rate occurred amid a big inflow of folks looking for work.
Overall, job growth moderated but remains healthy.
From the perspective of workers and investors, it was a good report. Plus, a slight moderation in wage growth added to the narrative that the rate of inflation has probably peaked.
Even if inflation comes in lighter-than-expected when it’s reported next week, it may not be enough to keep the Federal Reserve from hiking the fed funds rate another 75 basis points (bp, 1 bp = 0.01%) at its September meeting.
Fed Chief Jerome Powell lowered the hammer during a late August speech. One or two months of good inflation data may not be enough for the Fed to shelve another 75 bp rate hike.
The Fed wants to reestablish its credibility, convince investors it’s serious about conquering inflation, and it wants to avoid the policy mistakes of the 1970s that eventually forced then-Fed Chair Paul Volcker to ratchet up interest rates to dizzying heights.
For most of the year, the Fed’s aggressive response to inflation has been the primary focus of investors.
If you have any questions or concerns, please don’t hesitate to let me know.
Two for the Road
Wikipedia has banned some users from making edits on its “recession” page as people are feuding over the term’s proper definition. - Marketwatch, August 19, 2022
Russia’s working-age population has been declining since 2010 so recently the Russian government announced it is reviving the Soviet-era honorary title “Mother Heroine” for women who have 10 or more children. Russia’s hero medal and a lump sum of 1 million rubles ($16,000 US) will be received when the 10th child turns one, if all have survived. - CNN, August 18, 2022
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