By Jobs Report Today By Hardika Singh
Investors will take stock of the labor market this morning. Economists expect 161,000 jobs were added in August and the unemployment rate fell to 4.2%.
Markets have tumbled this week, hurt by worries about the health of the economy. Investors say a positive jobs report could help the market regain its footing.
The report stands to play a larger-than-normal role in determining the size of a widely expected interest-rate cut by the Federal Reserve later this month. For the last two years, the inflation reports-not the jobs reports-have been the big focus. But this week, that changes. The jobs report will likely decide the magnitude of the rate cut.
Read on for this news and more.
Top News Jobs Report Will Sway Fed’s Decision on Size of Rate Cut
A decent August jobs report might lead Fed officials to kick off a likely sequence of rate cuts with a quarter-point reduction. A larger cut looms if hiring is soft or the unemployment rate jumps-as in July. Friday also happens to be the last day Fed officials can communicate publicly before a self-imposed premeeting quiet period begins. New York Fed President John Williams and Fed governor Christopher Waller are set to speak Friday morning after the jobs report is published, providing a final opportunity to set expectations for the coming meeting.
Goolsbee Says Economic Data Justifies Multiple Rate Cuts
The longer-run trend of labor-market and inflation data justify the Fede easing interest-rate policy soon, and then steadily over the next year, Chicago Fed President Austan Goolsbee said in an interview with MarketWatch. “The long arc shows inflation is coming down very significantly, and the unemployment rate is rising faster” than Fed officials had expected in June, Goolsbee said. Given the more favorable inflation data and the less favorable unemployment data, “it is pretty clear that the path is not just rate cuts soon,” Goolsbee said, but multiple cuts over the next 12 months. – MarketWatch
U.S. Economy The Crushing Financial Burden of Aging at Home
Americans want to grow old in their own homes. But pursuing that dream has gotten harder , and is putting huge financial and emotional strains on families.
Soaring costs of in-home care, medical advances that extend lives but require ongoing help, and the growing ranks of older baby boomers are creating new pressures. Spouses, adult children and siblings are putting their lives on hold to care for relatives, wrestling with sleep deprivation and constant worry. Families are draining savings to hire help, pay for medical care, and modify homes.
Glynn’s Take: Attacks on RBA Independence Carry a Big Risk By James Glynn
With pitchforks in hand, barbarians were once again at the gates of the Reserve Bank of Australia this week, demanding it join its global peers and cut interest rates immediately, lest it send the commodity-rich economy into a deep dive that destroys jobs and businesses.
The metaphorical mobs outside the walls of the central bank were being egged on by comments from Canberra, with Treasurer Jim Chalmers warning on Monday that high interest rates are “smashing the economy.”
RBA Gov. Michele Bullock poured fuel on the fire on Thursday by standing strong in her position that inflation remains a problem, and interest rates are unlikely to fall near term. Read more.
Financial Regulation Flooding Is Getting Worse-and Fewer Homeowners Have Insurance
Growing swaths of the U.S. that have never before been flooded are now in danger of being swamped as climate change fuels more intense rainfalls. Yet the government’s official flood maps haven’t been updated to reflect that rainfall risk, lulling some homeowners into a false sense of security .
Bank of America Shared Nonpublic Information With Investors in India, Whistleblower Says
Bank of America is investigating allegations that bankers in Asia shared nonpublic information with investors before the bank sold hundreds of millions of dollars worth of stock.
Forward Guidance Friday (all times ET)
8:30 a.m.: Jobs report
8:45 a.m.: FRB New York President John Williams speaks at Council on Foreign Relations event
11 a.m.: Fed Governor Christopher Waller speech on the economic outlook
Monday
10 a.m.: Employment Trends Index
10 a.m.: Monthly Wholesale Trade
3 p.m.: Consumer credit
Research Fed May Be Tempted to Cut More Heavily if Jobs Growth Slows
A weaker jobs market increases the likelihood of a sharper rate cut by the Fed this month, LPL Financial chief economist Jeffrey Roach says in a note to clients. Hiring slowed again last month, according to a report by ADP released Thursday. If official Labor Department data due Friday show a similar weakening in the jobs market, chances rise for a cut of 50 basis points at the coming Fed policy meeting on Sept. 18, Roach says. – Joshua Kirby
Basis Points The service side of the U.S. economy grew again in August, but momentum faded in response to higher interest rates, slower sales and less customer traffic, a new survey found. An index of service businesses rose a hair to 51.5% last month from 51.4% in July, the Institute for Supply Management said. Numbers over 50% are viewed as positive for the economy. Still, the index has been stuck in a narrow range since the spring in a sign the economy has softened. – MarketWatch The number of Americans who applied for unemployment benefits last week fell slightly to 227,000 and touched an eight-week low, reinforcing the view that companies are reluctant to lay off workers even as they clamp down on new hiring. New claims declined by 5,000 in the seven days that ended Aug. 31 from 232,000 in the prior week, the government said Thursday. It’s the lowest level since early July. – MarketWatch The eurozone economy grew less rapidly in the three months through June than previously estimated, making it more difficult for the European Central Bank to secure a soft landing as it seeks to tame inflation. The long slide in German factory output continued in July , increasing the risk that the eurozone’s largest economy is falling into a second straight quarter of contraction. Executive Insights
Here is our weekly roundup of stories from across WSJ Pro that we think you’ll find useful.
Artificial intelligence and its staggering costs have frayed the nerves of investors, but CEOs still believe they can make the technology pay off.
AI has brought a host of new obligations to the role of chief privacy officer, among them decisions on ethics and cybersecurity.
Before he joined Sorrento Therapeutics, the drugmaker’s restructuring chief hosted a party for the Houston bankruptcy judges who later oversaw the company’s liquidation.
Falling costs of renewable energy have made desalination a more affordable way to help alleviate the stress that droughts and data centers are putting on water supplies.
About Us
WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].
This article is a text version of a Wall Street Journal newsletter published earlier today.
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09-06-24 0720ET
