President Joe Biden took a victory lap heading into the Labor Day long weekend. Well, it was more of his two-second half-jog that the president usually does when he is about to speak at the podium. This time, Biden celebrated the August jobs report and touted how Bidenomics continues to exceed any expectations. He must have assessed different Bureau of Labor Statistics (BLS) data because, aside from the headline print, there was not much to applaud this time around.
The August Jobs Report
Let’s take a look at the brass tacks of the August jobs report. The US economy created 187,000 new jobs in August, up from 157,000 in July and higher than the market forecast of 170,000. The unemployment rate, however, also climbed to 3.8%, up from 3.5%, and matched the consensus estimate. The labor force participation rate edged up to 62.8%, average hourly earnings dipped to 4.3% year-over-year, average weekly hours inched higher to 34.4, and the U-6 jobless figure (people who want to work but have given up looking for work or working part-time because they cannot find full-time employment) shot up to 7.1%.
In addition, here is a breakdown of job gains and losses by industry last month:
- Health care: +71,000
- Leisure and hospitality: +40,000
- Social assistance: +26,000
- Construction: +22,000
- Manufacturing: +16,000
- Government: +8,000
- Transportation and warehousing: -34,000
- Information: -17,000
This is where the non-farm payrolls report becomes a lot more interesting. The BLS confirmed that the July employment figures were revised down by 30,000 to 157,000. The June jobs report was adjusted lower by 104,000 to 105,000, which made it the worst print since December 2020. So far, every month’s report this year has seen downward revisions after the fact, totaling 355,000. Of course, modifications are not out of the ordinary, but the pace and size have raised some eyebrows, especially considering that the country has not witnessed six consecutive months of downward employment changes outside of recessions since the housing collapse in 2007.
That’s not all, folks. In the last two months, the national marketplace has lost 670,000 full-time workers while adding more than one million part-time workers. At the same time, the number of individuals working two or more jobs remained above eight million. The total number of people out of work for less than five weeks or unemployed for longer than 27 weeks rose to 2.2 million and 1.3 million, respectively. The current administration is happy that more people are entering the workforce. But this has largely been out of necessity due to an outlandish cost of living that has forced scores of individuals to depend on credit cards and consumer loans and exhaust their savings to keep their heads above water.
What About the Federal Reserve?
With all this talk of data, market observers may have forgotten a critical player in these monthly employment snapshots: the Federal Reserve. A chorus of market analysts has said the August jobs report to resides in the Goldilocks zone, meaning that it was not so hot as to allow the central bank to keep raising interest rates and not so cold that the central bank can halt the rate hikes. But how can the Eccles Building make the right call when so many of the labor numbers are distorted and revised? Whatever the case, the Federal Open Market Committee (FOMC) will inevitably deduce at the September policy meeting that the red-hot labor arena is continuing to be doused by higher rates.
Suffice it to say, the headline print is all that politicians and financial markets pay attention to at 8:30 a.m. A deeper dive into the numbers presents a much different story than what the public is told: Full-time employment is trending downward, the economy is creating fewer jobs than initially projected, more people are working two or more jobs to stay afloat, layoffs are surging, and job openings are declining. Here’s the deal: It is Bidenomics 101, Jack!
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