Fed Watch

The Smoke Clears After Jackson Hole, Jobs Report Encouraging

Hot labor market cooled moderately as employers slowed the pace of hiring, more people sought to rejoin the labor force, and pace of wage growth moderated. Deceleration came as a relief in contrast to the red-hot data characterizing much of the past two years. While the August jobs data reported this morning delivered some positive news, hawkish remarks from Fed insiders (Mester, Powell, Yellen) implied 75 bps is very much on the table for September’s FOMC. August CPI is scheduled to be released on the 13th. This is the other key economic datapoint Powell will be looking at to inform his actions and words at September’s FOMC meeting.

Job Growth: Neither too hot nor too cold. Some said it was a “goldilocks” report. As more Americans seek out work (labor force participation rate for workers aged 25-54 increased by the most since June 2020 to just under 83%), inflationary pressures could abate. Right now, one of the reasons for tightness in the labor market is that there are more job openings than job seekers. Adding job seekers to the market, which is what the report shows, slackens the conditions a bit and helps the Fed’s efforts to slow down inflation as pressures come down on wages.

Employers added 315k jobs, roughly in-line with estimates, and down from over ha...

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