There is cautious optimism by some who feel that the American economy has sustained a lot of bumps and bruises: from the Great Recession to the pandemic, enduring inflation, (peaking at 3.4 percent at the end of August) causing pricing increases across the board, plus the US led war on Iran and its attendant gasoline prices.. That does give some solace, but one unexpected bump or crisis can create havoc for American families.
In July we reported this May discussion from The Hiring Lab, and it still rings true: “This kind of equilibrium can’t hold indefinitely. A market frozen between low hiring and low firing is only stable as long as nothing pushes on it. Should demand soften, the lack of hiring leaves no cushion to reabsorb workers who lose their jobs, and what now reads as a quiet labor market could tip into a rising unemployment rate quickly.”
The greatest cause for concern are wages which have not kept up with inflation and at an increase of just 0.3 percent, calculated on a year-over-year basis, the math is easy; and taking into the high cost of housing, food, gasoline and diesel to get goods to the supermarket, the result is a Damcoleus sword hanging over many American heads. And, making it all more perilous is that consumers are the drivers of the American economy with prices rising 0.4 percent from July 2026 to August 2026.
“KPMG chief economist Diane Swonk has argued that payroll growth is losing altitude without the labor market having stalled, leaving less margin for error if demand weakens further,” according to crowdfundinsider.com.
On the market side the 10 year yield increase of 5.34 percent on Treasuries is driving up the cost of a mortgage from that once comfortable 30 year at 6 percent to 7.28, meaning that many people are going to stay put and avoid even mortgaging an existing home. To note, this is up from 7.03 percent last week and the highest since November 2023, the mortgage financing giant Freddie Mac said Thursday.”
We have seen a rise in manufacturing and construction, but again this is mostly attributable to constructing AI centers and with the public clamoring for restraints, and even halts, this bubble could burst.
The good news is that the Federal Reserve is unlikely, when they meet this month, to raise interest rates; and, especially after their recent quarter point increase, they can afford to take their time for further action, while they study the data.
While the unemployment rate of 4.2 shows relative stability over the last several months it’s not enough to sustain fears; but, one caveat was that while it shows relative stability over the long term it could become meaningless with the above headwinds.
The heavy hitters are still health care at 17,000 gains, reflecting the surge of baby boomers retiring, and living longer than their parents, but those gains were modest, compared to previous months, “We’re seeing healthcare hiring slow,” Kory Kantenga, chief economist at LinkedIn who told CNN in an interview. “If we keep going in the direction that we’re going today, it’s certainly a more fragile labor market.”
Construction at 11,000, again modestly surging due to date center construction and manufacturing increasing to 9,000, another slight increase from a once moribund area.
“Both the labor force participation rate, at 61.8 percent, and the employment-population ratio, at 59.2 percent, changed little in September. These measures showed little net change since January,” according to the report, while some economists saw this as an omen that the crystal ball might need adjusting.
“Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force decreased by 236,000 to 1.5 million in September. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little over the month at 414,000,” all of which portends a stable, if precarious outlook.
Amidst the tumult of noise, “Taylor Rogers, a spokeswoman for the White House, touted the new jobs report as a sign of the strong economy. In a statement, she focused on a few positives, including the uptick in labor participation and the addition of manufacturing and construction jobs.
“The economy added 9,000 manufacturing jobs and 12,300 factory construction jobs over the month — proof that President Trump’s reindustrialization agenda is working,” she added, reported The New York Times.
In a follow-up they also reported, “Asked if he found the jobs figures disappointing, Kevin Hassett, the director of the White House National Economic Council, told Fox Business, “No, not even a little bit.”
With President Trump’s falling approval rate and general dissatisfaction among his supporters, there seems to be a conundrum from the administration, with the November midterms just around the corner, especially since this is the last report before then.
Hassett said there was good news in the data, particularly in the uptick in construction jobs, which he attributed to President Trump’s agenda. He said that the building of factories in particular had helped to boost growth, and the resulting boom “puts downward pressure on inflation.”
For Blacks there was a nearly double digit increase in unemployment 7 percent in September, “up a full percentage point from August and nearly double the 3.6 percent rate for white workers,” and despite some lows early in the mid aughts, “has edged up gradually since, hitting about 6 percent last spring. It then began to rise more quickly, hitting 8.2 percent last November.”
“The public sector – primarily state and local governments – shed jobs last month as did white-collar industries such as information (tech), professional and business services, and financial activities,” added CNN and also that,”Notably, temporary help services (which had a net loss of 10,900 jobs) drove the decline in the professional services sector.”
“This may signal weakening demand for hiring in the coming months,” ZipRecruiter economist Nicole Bachaud wrote Friday. “Instead of changing headcount for their permanent workforce, employers often turn to temp services to scale up and down more quickly, to be able to respond to changing economic conditions.”
In the long run, what we see, and what we don’t see seem to be key economic indicators.
