Forward Guidance The Fed Is Cornered By Stagflation After Jobs Collapse | Weekly Roundup
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Sep 5, 2025 This week, market watchers are grappling with disappointing job growth numbers, raising concerns about the economy's direction. The potential for a Federal Reserve interest rate cut is debated amidst rising stagflation worries. As tariffs' future hangs in the balance, the conversation turns to liquidity challenges in the economy. The allure of gold as an investment rises, signaling a need for protective strategies in uncertain times. Insights into the tech sector's relationship with AI add yet another layer to the discussion.
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Labor Market Showing Growing Slack
- Multiple lagging labor indicators show clear cooling with job openings, ADP, and layoffs all weakening.
- The JOLTS JAWS gap now signals more unemployed people than jobs, indicating rising labor slack.
Immigration Shift Clouds Job Data
- Immigration and post-COVID population changes complicate interpretation of falling job prints.
- With lower labor supply, monthly job additions needed to stabilize employment are much smaller than pre-COVID norms.
NFP Weakness Concentrated In Few Sectors
- August NFP surprised strongly to the downside at +22k and June was revised down to negative.
- Most private job growth is concentrated in education and health services while other sectors are negative.