The August jobs report is out. 187K jobs were added in August vs. 170K expected. The unemployment rate jumped up to 3.8% in August, up from 3.5% in July . The labor force participation rate was 62.8% in August, up from 62.6% in July but still down from February 2020 level of 63.3%. Average hourly earnings rose 0.2% MoM and 4.3% YoY, still way above the 2% inflation rate the Fed targets.
With the PCE report yesterday and Jobs report today, we can see that inflation pressure is still a bit high but things are trending toward the soft landing direction with slower income growth, slower consumer spending growth and higher unemployment rates. Hopefully, things don’t swing too far to the other direction this time. But I have a feeling that we are not done paying for the damages cause by the ZIRP/QE policy yet and we will need to suffer some consequences in the coming years.