Now that Labor Day has come and gone, summer is starting to come to a close and the third quarter is just around the corner. August, already known for its hotter temperatures, saw the labor market heat up with a significant beat in consensus jobs numbers, alongside positive revisions to previous months. The labor market, at least temporarily, has avoided the fears of an increased unemployment rate as we move toward the fall.
The US economy added 162,000 jobs in August while the expectation was only 53,000 roles. The unemployment rate remained the same at 4.1 percent[1]. There were also upward revisions for both June and July bolstering the jobs numbers. This was welcome news in contrast to earlier this year when we saw downward revisions. In addition, labor force participation ticked up for the first time this year[2] suggesting the steady unemployment rate isn’t a product of people dropping out of the workforce.
While the employment picture looks to be improving, price stability is on shakier ground. Despite the inflation rate holding steady in the latest inflation number that came out today as I write this, crude oil prices are spiking again which trickle costs throughout the economy directly with transportation costs, and indirectly with increased prices in goods. Core inflation (prices excluding food and energy) rose over the previous month[3]. There is a good chance of an increase in the Fed’s target rate at their meeting next week in an effort to cool the inflation rate. The Fed Watch tool is showing over an 80% probability as I write this on September 11th.[4] With the ten-year Treasury nearing 5% for the first time in a while, it is hard to know the extent to which a rate increase will trickle down to increased borrowing costs for the government and for consumers.
There is a lot going on this fall with the ongoing geopolitical uncertainty, increasing energy costs, and of course the mid-term elections. Things may look chaotic for a while, but it’s our job to look at the big picture with a long-term outlook in mind.
[1] https://www.nbcnews.com/business/economy/august-jobs-report-trump-inflation-rcna595974
[2] https://fred.stlouisfed.org/series/civpart
[3] https://www.wsj.com/economy/cpi-inflation-report-august-2026-e2b1e5e7?mod=hp_lead_pos1
[4] https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
