Disappointing jobs report sends unmistakable signal to the Fed

Expectations heading into this morning showed projections of about 185,000 new jobs having been added in the United States in July. As it turns out, according to the new report from the Bureau of Labor Statistics, the job market didn’t fare quite that well. CNBC reported:

The jump in the unemployment rate was especially notable: In July 2023, the rate was 3.5%, and 12 months later, it’s 4.3%. It’s why the public is about to hear a lot about the “Sahm Rule.”

But as the public digests the latest figures, it’s worth emphasizing that the Federal Reserve, hoping to combat inflation, kept interest rates high, knowing it would cool the job market. The recent slowdown, in other words, isn’t an accident; it’s a deliberate outcome of the Fed’s strategy.

It’s also why the obvious reaction to today’s jobs report will be renewed pressure on the Federal Reserve for a meaningful rate cut in September — at the latest.

As for the politics, let’s circle back to previous coverage to put the data in perspective. Over the course of the first three years of Donald Trump’s presidency — when the Republican said the U.S. economy was the greatest in the history of the planet — the economy created roughly 6.38 million jobs, spanning all of 2017, 2018 and 2019.

According to the latest tally, the U.S. economy has created over 16.2 million jobs since January 2021 — more than double the combined total of Trump’s first three years.

For some additional context, consider job growth by year over the past decade, updated to reflect the latest data revisions:

2013: 2.3 million

2014: 3 million

2015: 2.7 million

2016: 2.3 million

2017: 2.1 million

2018: 2.3 million

2019: 1.98 million

2020: -9.3 million

2021: 7.2 million

2022: 4.5 million

2023: 3 million

Seven months into 2024: 1.4 million

This post updates our related earlier coverage.