The August jobs report was in the goldilocks zone. It was neither too hot or too cold.
Last month, the U.S. economy added 315,000 new jobs, topping the market estimate of 300,000. The unemployment rate rose to 3.7%, up from 3.5% in July.
In addition, the Bureau of Labor Statistics (BLS) revised its June and July numbers by a combined 107,000 jobs.
This sent financial markets rallying on the news, but then the gains were evaporated on monetary policy and energy woes in Europe. In addition, the spread between the two- and ten-year yields — a key recession indicator for investors — remained at around -20 basis points.
That said, it was not all sunshine and lollipops.
Meanwhile, average hourly earnings edged up 0.3% in August, down from 0.5% in July. Workers are earning an average of $32.36. On an annualized basis, average hourly earnings held steady at 5.2%.
Average weekly hours dipped to 34.5 last month, down from 34.6 in the previous month. This is a notable metric because it usually ticks lower before a recession as employers do not want to shed staffing levels just yet but also want to rein in operating expenses.
The labor force participation rate climbed to 62.4%, up from 62.1%. Are more Americans fearful of current economic conditions?
But there was an important data point that should capture some attention: total multiple jobholders.
BLS data showed that the number of Americans working two or more jobs totaled 7.572 million, up from 6.783 million at the same time a year ago. Seasonally adjusted, the number exceeded 7.7 million.
This represented nearly 5% of total employed.
With the Federal Reserve essentially abandoning its crusade to fight inflation through a higher fed funds rate, which would slow the economy and kill demand — in theory — many Americans would be fortunate to possess one job!
Bank of America chief economist Michael Gapen wrote in a research note following the report:
“In our view, the August employment report contains enough good news for the Fed that will lead them to slow the pace of rate hikes beginning in September. We continue to expect the Fed to raise its policy rate by 50bp in September. Looking further ahead, we maintain our view that the Fed will hike by another 50bp in November and 25bp in December, bringing the target range for the federal funds rate by year end to 3.5-3.75%. Risks to our outlook for Federal Reserve policy are skewed in the direction of more rate hikes on account of underlying momentum in the US economy. That said, based on the full set of data in hand since the Fed last met in July, we think risks are in the direction of more cumulative hikes over time as opposed to another large 75bp hike in September.”
For now, it is a sad state of affairs when more than 7.5 million people need to hold two or more jobs to keep the lights on and put food on the table.
A Cost-of-Living Crisis
Of course, this figure is not exactly surprising. The U.S. annual inflation rate stands at 8.5%, although the figure is a lot higher if real estate prices, for example, were factored into the consumer price index (CPI).
The country is suffering through a cost-of-living crisis.
Many Americans are living paycheck to paycheck. Households are shifting their spending behaviors to endure skyrocketing prices. Consumers are saving less and borrowing more to keep their heads above water. The cherry on top is that interest rates are increasing, making borrowing a lot more expensive.
At the same time, the U.S. economy is living through abnormal times. Some say it is “bizarro world.”
The United States is entrenched in a technical recession, while there are more than 11 million job openings. Manufacturing and non-manufacturing purchasing managers’ index (PMI) readings are falling, but business and consumer sentiment is inching higher.
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