Job growth continued its decline through August, reflecting an economy and job market that is fragile. New data from the Bureau of Labor Statistics revealed that only 22,000 jobs were added in August against an expected 75,000 estimated by economists. Most troubling was that June's reported gain of 147,000 jobs was revised down to a loss of 13,000; this marked the first job loss since December 2020.
Highlights:
- Unemployment ticked upward to 4.3% from July's 4.2%.
- Private sector employment gained 38,000 jobs while federal government employment decreased by 15,000.
- Hourly wages rose by 0.3% or 10 cents.
- Labor force participation rates remained steady.
The most troubling part of the report, in my opinion, was that while government jobs shrank, there was growth in government-adjacent jobs.
In August, health care added 31,000 jobs, below the average monthly gain of 42,000 over the prior 12 months. Employment continued to trend up over the month in ambulatory health care services (+13,000), nursing and residential care facilities (+9,000), and hospitals (+9,000).
Employment in social assistance continued to trend up in August (+16,000), reflecting continued job growth in individual and family services (+16,000).
Health care and social service jobs are funded mainly by insurance and tax extractions from the population. Adding jobs in this sector does not create economic growth. Instead, both indicate an economy that is constrained by the increasing need for those services.
Keeping in mind that forecasts are just that, the near horizon doesn't look all that bright.
Consumer sentiment dropped nearly 6% in August, after trending up in June and July, according to a closely watched index from the University of Michigan. And workers are feeling more pessimistic about the job market, and more people are expecting their income to decline, according to a survey by the Conference Board.
Consumer sentiment can change, but a pessimistic view of your future employment shapes many decisions. There are also layoffs starting to rumble through the economy.
Layoffs have picked up, by some measures. U.S. employers cut about 86,000 jobs last month, a 39 percent increase from July, and the highest August level since 2020, according to a report released Thursday by Challenger, Gray & Christmas, a global outplacement firm. Retail, pharmaceuticals, finance, technology, nonprofits and media reported the biggest losses. Plus, new filings for unemployment benefits rose last week to the highest level since June, according to the Labor Department. Unemployment rates for African Americans, recent college graduates and people with disabilities — all of whom tend to be more vulnerable to labor market weakness — have climbed in recent months.
As Harry Truman said, "Give me a one-handed Economist. All my economists say 'on ONE hand...', then 'but on the other...” While the jobs report and outlook are not rosy, others caution against going full-metal Chicken Little.
Some economists say this does not necessarily indicate that the economy is headed toward recession, as the overall unemployment rate has remained relatively stable.
“Disappointing payroll figures may not signal outright labor market deterioration but rather reflect an economy that requires fewer new jobs to maintain stable employment levels,” Seema Shah, chief global strategist for Principal Asset Management, said in an analyst’s note this week. “Investors and policymakers should be wary of interpreting payrolls softness as an imminent recessionary signal.”
While these numbers are sure to cause President Trump some heartburn, particularly June's major downward revision, the man on the hot seat is Federal Reserve Chairman Jerome Powell; see Federal Reserve Expected to Leave Rates Unchanged, Trump Budget Director Questions Powell's Honesty – RedState. He's already on Trump's bad side, and one of his allies, Lisa Cook, is in deep legal trouble; see DOJ Opens a Criminal Investigation on Rogue Fed Official's Real Estate Fraud – RedState. It was already becoming difficult for him to continue holding interest rates abnormally high; this jobs report will probably make it impossible.
RedState is your leading source for news and views on administration, politics, culture, and conservatism. If you appreciate our reporting and commentary, please consider becoming a member and supporting our efforts. Use promo code FIGHT to get 60% off your membership.
Join the conversation as a VIP Member