Jobs Report Today: U.S. Adds 142000 Payrolls in August ...
The Numbers
Here's a look at the Bureau of Labor Statistics's August employment report:
Payrolls: Increased by 140,000 vs. an estimated increase of 160,000
Revisions: Employment in June and July was revised down by 86,000 jobs total
Unemployment rate: 4.2%, down from 4.3% in July
Market reaction: Stocks fell, with the Dow Jones Industrial Average down more than 300 points.
Fed impact: In a speech after the report, Gov. Christopher Waller said 'the time has come' for cuts; Barron's writes that today's data should tilt the Fed toward a smaller cut.
Key Events
Latest Updates
The U.S. labor market has continued to “soften but not deteriorate,” Federal Reserve Gov. Christopher Waller said Friday, in remarks following the release of August jobs data.
The Bureau of Labor Statistics reported growth of 142,000 nonfarm payrolls in August, up from a downwardly revised 89,000 jobs added in July. The unemployment rate ticked down slightly, to 4.2%.
“Today’s jobs report continues the longer-term pattern of a softening of the labor market that is consistent with moderate growth in economic activity,” he said in prepared remarks at the University of Notre Dame in Notre Dame, Indiana, on Friday morning.
When looking at the longer-term trend and the totality of the data, Waller isn’t panicking about an imminent recession.
“The collective set of economic data indicates to me that the labor market and the economy are performing in a solid manner and the prospects for continued growth and job creation are good, with inflation near 2%,” Waller said on Friday. “I continue to believe that this can occur without substantial harm to the labor market.”
Keeping the economy on track for a so-called “soft landing” will require the Fed lowering interest rates in the near future, Waller added. He noted that the balance of risks has shifted to the employment half of the Fed’s dual mandate, after a focus on reducing inflation for most of the past few years.
Waller attributed the past year’s rise in the unemployment rate—which troughed at 3.4% in April 2023—to an influx of workers into the labor force, as opposed to layoffs or other job losses.
“The recent rise in the unemployment rate appears to be more of a supply-side-driven phenomenon, not demand-driven,” Waller said.
Federal Reserve Gov. Christopher Waller said Friday the U.S. economy isn’t falling into a recession, acknowledging recent market worries that a more severe downturn could be imminent.
Rather, he is bullish on a soft landing for the U.S. economy—a scenario in which inflation returns to manageable levels without a meaningful economic downturn, according to his remarks at the University of Notre Dame in Notre Dame, Indiana, on Friday morning. Achieving that will require easing off of restrictive monetary policy starting later this month.
Waller said that while the labor market had decidedly softened since last year, it was much more of a healthy normalization than a concerning collapse.
As for inflation, he sees continued progress toward the Fed’s 2% annual goal in the remainder of 2024 and noted that recent monthly readings would be on target if they continued for a year.
“While the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one soon,” Waller said Friday, according to his prepared remarks. “But I also believe that maintaining the economy’s forward momentum means that…the time has come to begin reducing the target range for the federal-funds rate.”
Waller said that he is now more focused on the employment-maximizing side of the central bank’s dual mandate, alongside ensuring price stability. That lens argues for a rate cut when the Fed’s policymaking committee next meets on Sept. 17-18.
“While I don’t see the recent data pointing to a recession, I do see some downside risk to employment that I will be watching closely,” Waller said. “But at this point, I believe there is substantial evidence that the economy retains the strength and momentum to keep growing, supported by an appropriate loosening of monetary policy.”
Federal Reserve Gov. Christopher Waller. (Al Drago/Bloomberg)
It’s time to lower interest rates, Federal Reserve Gov. Christopher Waller said Friday. It’s another Fed official as good as confirming that rates will begin to come down when the central bank concludes its Sept. 17-18 policy meeting.
In a speech titled “The Time Has Come” at the University of Notre Dame in Notre Dame, Indiana on Friday morning, Waller said that the recent inflation, jobs, and other economic data support a decrease in interest rates, but don’t point to a recession in the near future.
“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Waller said, according to his prepared remarks. He has served on the Fed’s board of governors since December 2020 and is a voting member of the Federal Open Market Committee, the Fed’s policymaking body. The committee has held the federal-funds rate target steady at a range of 5.25% to 5.50% since July 2023, and hasn’t lowered the benchmark interest rate since 2020.
Waller said he doesn’t expect a September rate reduction to be the FOMC’s last, but he isn’t making any firm predictions about what future cuts look like—that will depend on the incoming economic data between now and subsequent FOMC meetings.
“I am open-minded about the size and pace of cuts, which will be based on what the data tell us about the evolution of the economy, and not on any preconceived notion of how and when the Committee should act,” Waller said. “If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings. If the data suggests the need for larger cuts, then I will support that as well.”
Interest-rate futures market pricing on Friday morning implied roughly 60% odds of a quarter-point decrease in the federal-funds rate at this month’s FOMC meeting, with the balance of the odds favoring a half-point reduction. Futures markets are betting the Fed will lower interest rates by a total of one percentage point by the end of 2024. The FOMC next meets in early November, then in mid-December.
