The US economy created a mere 22,000 jobs in August, badly missing economists’ estimates of around 75,000. The jobs figures for June and July were revised down by a total of 21,000 jobs.
Blame it on Trump’s tariffs sowing the seeds of uncertainty among hiring managers or AI playing the role of bulldozer through offices. The reality is the job market has cooled, and that has implications for investors.
Here are a few quick hot takes:
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Expect the report to add more pressure on the Federal Reserve to cut interest rates when it delivers its decision on Sept. 17 — and to signal more cuts are on the way.
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Tough stances on tariffs and immigration are beginning to show up in the economic data. So, this jobs report may be a sign of more mixed economic reports into year-end.
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We are getting an early taste of how AI is reshaping the labor market.
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Quote of the day: “Net, net, the make-or-break jobs report turned into break this month as the economy is on the razor edge and the data may yet be revised to show the economy is in recession with the loss of jobs. The labor market is done, busted, and the only medicine to help is a rate cut from the Federal Reserve later this month,” FWDBONDS chief economist Chris Rupkey said.
“It’s unlikely we will fall into recession in the next coming several months. I mean, I think we’re in a little bit of a bizarro world with respect to the signals from the labor market, because we’ve had a slowdown in the labor supply,” Vanguard chief economist Joe Davis told me on Yahoo Finance’s Opening Bid.
US Labor Secretary Lori Chavez-DeRemer downplayed the weak jobs report, putting full blame on the Federal Reserve, as one would expect.
“If he [Fed chair Jerome Powell] doesn’t cut those rates, the American people will continue to suffer,” Chavez-DeRemer said on Opening Bid.
Goldman Sachs is sounding an early alarm bell on the near-term direction of hot AI stocks.
The investment bank said in a new note today that AI investment as a percentage of capital expenditures could be nearing a climax. That sets the stage for overly upbeat AI investors to be let down if earnings don’t come in strongly in future quarters.
Investors will need to see evidence of AI impacting corporate profits before warming up further to these stocks.
The call comes in the wake of big sell-offs in Salesforce (CRM), Figma (FIG), and C3.AI (AI) this week as earnings and outlooks didn’t live up to the hype. Nvidia (NVDA) stock also had a rough go of it since reporting earnings a week ago — shares down 6% over the past five trading sessions.
