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Revisions or no revisions, the labor market is cracking under pressure.
Today, the Bureau of Labor Statistics reported that nonfarm payrolls only rose by 22,000 in August, far below projections of 75,000 and a steep backtrack from the revised 79,000 increase in July. Meanwhile, the unemployment rate officially climbed to 4.3%, its highest level since 2021.
That wasn’t the only perturbing labor market data that we got this week: The JOLTS survey showed that the number of new job openings dropped by 176,000 in July, its worst reading since the pandemic in 2020. Plus, ADP reported that US private employers added just 54,000 jobs in August, far below estimates of 75,000.
As if all that isn’t bad enough, just look at those poor Gen Z-ers: The unemployment rate for 16-24 year olds has risen to 10.5% as AI begins snatching entry-level jobs. But the kids aren’t the only ones feeling the sting of artificial intelligence.
“We believe companies are investing in technology instead of human capital,” explained CEO of Laffer Tengler Investments Nancy Tengler in a note today. “We heard this from the companies during earnings, we see it in the business investment capex, which was up dramatically in the quarter and driven almost 50% by technology spending.”
The carnage isn’t expected to stop anytime soon, but the upside is that the Federal Reserve now has good reason to cut interest rates later this month. Traders now put the chance of a September rate cut at 90%.
“Tariffs and AI are weighing on job growth this year,” explained Chief Economist for Comerica Bank Bill Adams in a note today. “Economic growth will likely remain modest through year-end, then regain traction in 2026 as fiscal and monetary policy turn more accommodative.”
WTF is going on with BLS?
If all this macroeconomic bad news is bumming you out, at least we have our fearless leaders to guide us through these turbulent times.
Before today’s rough jobs report dropped, Commerce Secretary Howard Lutnick said that the numbers would be more accurate than ever, given President Trump’s firing of BLS head Erika McEntarfer last month.
Yet when the latest numbers still showed the labor market is getting worse, the White House quickly changed its tune, with White House Advisor Kevin Hassett claiming that these "disappointing" numbers were off—and revisions were coming soon.
Really makes you wonder: Who’s going to shoulder the blame next?—LB