Cogito Ergo Non Serviam
US Created 22,000 Jobs in August, Unemployment up
A lot has been happening in the last few days. The Japanese PM has resigned, Norway is having a general election and the UK has had a cabinet reshuffle. The significant news for the whole world, though, was the Non-Farm Payroll report that came out on Friday. Just 22,000 jobs were created, below the 75,000 expected. Unemployment ticked up to 4.3%. This happened after President Trump fired the head of the Bureau of Labor Statistics because he did not like the numbers in the previous report. The US labor market is on the edge of recession. At the same time, Mr. Trump has boosted inflation with his tariff taxes on Americans. Stagflation is here.
One of the things that Donald Trump does not like about the figures, apart from the fact that they demonstrate his ineptitude, is the revisions they undergo in the two months after being reported. The truth is that counting all the jobs in the US is imprecise and that, as more data come in, the figures are revised to be more accurate. President Two-Dolls does not like that because he thinks it is the Deep State cooking the books. He does not understand this process any more than he understands quantum mechanics.
The Guardian noted, "Friday's job report included revisions to initial reports for June and July. The pace of hiring in June was initially reported as 139,000 jobs added to the economy, but revisions now put the actual figure at -13,000. This is the first time the labor market lost jobs since December 2020, during the massive unemployment seen during the pandemic. July's numbers were revised up by 6,000, from 73,000 to 79,000." The anemic jobs growth would suggest that the Federal Reserve will cut interest rates at the meeting this month
At the same time, the Producer Price Index and the Consumer Price Index come out this week, Wednesday and Thursday respectively. This journal anticipates bad news because the Trump Tariff Taxes will start to show up in the economy. This will boost inflation, and give the Fed a reason to raise interest rates. Central bankers can do a great many things that look like magic to outsiders, but they cannot raise and lower rates at the same time.
There is likely to be resistance to lowering rates among the Fed governors, and this journal maintains that the right move is to raise rates. Inflation harms everyone while unemployment damages a small percentage of the population. Government can act to help those people who are effecitvely making a sacrifice so the whole economy can get rid of inflation. Of course, this government will not. Instead, it will whine about the Fed and make lots of noise in the media about how awful the Fed is being.
When all is said and done, it is the tariffs that have pushed the country into this mess. If the administration is correct that the second half of the year will bring iin as much tariff revenue (taxes on Americans) as the first half, the whole thing will bring in $600 billion, just over 12% of Federal revenue last year. Restated, Mr. Trump raised taxes 12%. If he had done only that to reduce the federal deficit, this journal might support it (although a tax on financial transactions would generate more less regressively). But he is handing out even more than that in tax breaks to his cronies, increasing the deficit which will pressure interest rates higher.
In the end, the bond market will also enter into the picture. The Hill reported earlier this year, "On May 21, a lackluster 20-year U.S. Treasury bond auction delivered what can only be described as a resounding vote of no confidence in Washington's economic stewardship. The numbers were as stark as they were symbolic: a bid-to-cover ratio of 2.46 and a yield of 5.047 percent -- the highest in five years."
In short, the people who lend to America want more interest if they are to continue lending. That will keep the Fed in check if it tries to lower rates.
The decline under Trump continues to accelerate.
© Copyright 2025 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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