Date: September 3, 2021

Jobs Report Lays Another Egg

The August Nonfarm Payrolls Report was released at 8:30am today. Boy, was it another stinker relative to what was expected. 235,000 new jobs were created, embarrassingly below the 750,000 that was expected. However, the unemployment rate did tick lower by .2%. No matter what spin the Biden administration puts out, the economy continues to have its dislocations and struggles. That’s indisputable.

“But Paul, 235,000 new jobs is good, right?”

In a vacuum, it is. However at this stage of the recovery and with untold trillions of stimulus in the system, the economy should be creating more than a million new jobs a month. I listened to a panel of “experts” explain away the monster miss as just being due to the Delta variant. Of course, they all knew about Delta before they forecast more 700,000 new jobs. And when we saw jobs surge a few months ago, the “experts” all credited stimulus. Sorry folks, you can’t have it both ways. Something ain’t right.

Former President Trump used to tout the stock market as his own report card. I always warned that when anyone does this, you are prone to lots of A’s and F’s. It’s a bad way to operate. President Biden likes to beat his chest that he is building the economy from “the bottom up and middle out”. While that sounds great and is a good slogan for a bumper sticker, the truth is that during his presidency, the wealthy have become wealthier as asset prices have continued to soar, far outpacing wage growth. Thanks go to the Fed for continuing to buy $120 billion a month in assets as well as Congress for spending trillions more. This is not how the economy and financial system are supposed to function.

More important that the actual economic news, my readers know to watch the market reaction. After a quick selloff, interest rates reversed and headed higher by 1% on the 10-Year. However, gold also jumped. Stocks did very little. That initially tells me that the market believes the Fed will forge ahead with tapering sooner than later and wage growth will continue to put pressure on the inflation numbers.

As the final weekend of traditional summer approaches, it should be a relatively quiet market day. If you’re traveling this weekend, please stay safe!

Rosh Hashanah, Jewish New Year, begins Monday at sundown so I am not sure if I will publish early next week.


Paul Schatz, President, Heritage Capital