SEPTEMBER 7, 2021 – JOB GROWTH DECELERATES IN RUN UP TO FED’S MONTHLY MEETING
The virus’ delta variant is having a negative effect on the economic recovery. The US economy added 235,000 new jobs in August, far short of the 720,000 expected by economists. For comparison, 1.1 million jobs were created in July and 962,000 in June. However, the unemployment rate fell to 5.2 percent in August from 5.4 percent in July. Wages were up 0.6 percent month over month, and 4.3 percent year over year.
The surge in the delta variant has caused consumer spending and confidence to drop off. As people are less willing to spend money, employers are less likely to add staff.
The timing of the jobs report creates a dilemma for the Fed. They may now be more hesitant to announce the reversal of its easy-money policies during the September meeting. This doesn’t rule out changes later in the year, but the economic data needs to improve to justify any actions.