The financial markets anticipated a much better August jobs report. There was a lot of hype over the monthly snapshot of the labor arena, with most investors and analysts confident the U.S. economy would successfully maintain its momentum from the previous month. However, it turns out that, at least for now, the post-pandemic economic recovery is all sizzle and no steak. So, what is the Bureau of Labor Statistics (BLS) reporting?
At the tail end of the dog days of summer, the United States produced 235,000 new jobs in August. This is down from the 1.053 million in July and immensely short of the median estimate of 750,000. The unemployment rate slipped to 5.2% last month, down from 5.4% in the previous month. Average hourly earnings jumped 0.6% to $30.73, average weekly hours were unchanged at 34.7, and the labor force participation rate was the same at 61.7%.
So, where were all the jobs? Here is a look at what sectors added and lost positions:
- Professional and business services: 74,000
- Transportation and warehousing: 53,200
- Manufacturing: 37,000
- Information: 17,000
- Financial services: 16,000
- Mining and logging: 6,000
- Wholesale trade: 1,400
- Leisure and hospitality: 0
- Utilities: -1,300
- Construction: -3,000
- Education and health care: -4,600
- Government: -8,000
- Retail: -28,500
Despite leading the July jobs report, hiring in the broad leisure and hospitality and government sectors came to a screeching halt in August. The consensus among economists is that a mix of the Delta variant and a scarcity of willing workers (labor shortage anyone?) contributed to the substantial drop in job creation. Commonwealth Financial Network chief investment officer Brad McMillian wrote in a research note:
“The headline number is obviously disappointing – much lower than expectations – and markets will react. But the interesting question is why the number is so low. Looking at the unemployment and underemployment numbers, which dropped, as well as the labor force participation rate, it looks to have come from workers electing not to enter the workforce. This ties the shortfall to the pandemic, again, rather than to general economic weakness.”
Market watchers are betting that the September jobs report will be significantly higher as schools reopen and parents head back to the workplace. If not, will the federal government intervene with more aid? Will the Federal Reserve hit the pause button on any tapering plans? The data over the next couple of months will be pivotal to public policymaking endeavors.
Trying to Keep the Taliban Economy Moving?
Since the Taliban took over, the Afghan economy has essentially come to a standstill. Financial institutions have been closed, consumers have refrained from spending their cash, and the afghani has traded sideways against the greenback after initially crashing last month. But the terrorist group is looking to stimulate the economy again by returning to some semblance of normalcy.
Enormous lines have been forming outside banks across the country after the Taliban introduced a $200 weekly withdrawal limit. The Afghan National Bank in Kabul, for example, witnessed thousands lining up for several hours attempting to access their money. However, as more cash travels through the marketplace and adds to inflationary pressures, will $200 be even enough to buy the necessities of life?
Although citizens are concerned about what life will be like under Taliban rule, many are worried about the inevitable economic collapse. Workers say they have not been paid in months, while others complain that their earnings have been slashed by as much as 75%. With a devalued currency and rising inflation, economic conditions in the South Asian country do not look promising.
Make Bitcoin Great Again
It was only a matter of time before the peer-to-peer decentralized virtual currency bitcoin would return to the promised land again. After a few months of red ink and stagnant volumes, the premier cryptocurrency is rallying and hitting its best levels since the middle of May. Is it time to bid auf wiedersehen to the dark winter that had been widely anticipated?
Bitcoin finished the trading week above $51,000 per coin, slightly easing below this threshold. Industry observers are attributing the substantial growth to the millions of dollars in options expiring on Sept. 3, as well as the Federal Reserve affirming that the digital currency is ostensibly a catch-up trade compared to other assets. Plus, with expectations that the central bank may not be so hawkish about decelerating its quantitative easing package and will leave interest rates near zero for longer, easy money policies will likely fuel the boom across the entire investment world.
It is not only bitcoin that is having a whale of a time during this bull run. Ethereum flirted with an all-time high of $4,026. Dogecoin reached $0.30 again, one month after plummeting below $0.20. From litecoin to Cardano to Stellar, the cryptocurrency market appears to have attained a new lease on life. Whether this is sort of a renewed rally or not remains to be seen, but it is clear that the bitcoin bulls, including the massive institutions, are not wavering on their convictions about the future of crypto.
Read more from Andrew Moran.