The jobs data from last week provided ammunition for not changing current monetary policy.

The Federal Reserve has said they achieved their target for inflation (some would argue they have surpassed the goal) but remain concerned about reaching their goal of full employment. The Labor Department’s report for August provided ammunition for those who believe the Fed should continue with easy monetary policy well into the future. Nonfarm payrolls were reported as having increased by 235,000 while expectations were for growth of 750,000. This disappointing data justifies continuing the bond purchase program and keeping short term rates near zero. However, the internals in the report paint a different picture. The unemployment rate dropped to 5.2% from 5.4% in July. The labor force only grew by 190,000 and those reporting as having a job increased by 509,000 in the household survey.

 

PROBANK AUSTIN ADVISOR - SEPTEMBER 7, 2021