Jobs And Rates – Down And Up

The Bureau of Labor Statistics will release its delayed jobs report on December 16, nearly a week after the Federal Open Market Committee meets to discuss rates. The latest ADP data suggest that payrolls are continuing to contract. Private companies have shed an average of 13,500 employees per week over the past four weeks.

The last update showed a running average of 2,500 weekly job losses. American companies are rapidly downsizing amid this wave of stagflation. If the Fed were looking at the BLS September release, nonfarm payrolls were around 119,000 with unemployment in the 4% range.

In other data, the September CPI headline inflation rate was 3%, a 0.3% monthly rise. Core PCE is running a bit under 3% on a 12-month basis. Inflation is allegedly easing, but above the 2% target.

The preferred GDP gauge was not released for Q3, but the Atlanta Fed believes it is around the 4% annualized range, and the Bureau of Economic Analysis placed it at 3.8%.

The current federal funds rate is at 3.75%-4.00%. Washington is ready to throw Powell into the fire if he does not cut rates. But QE has failed, and Powell has been steadfast.  The Fed does not control the fiscal side of the budget and cannot prevent government from perpetual borrowing. If the Fed does nothing, then the money supply is increasing because it’s the debt side and merely currency that gains interest. The models show heightened volatility coming out of 2025, but no long downtrend in interest rates that Trump would like to see.