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The US added only 29,000 new jobs in September, underperforming expectations. Meanwhile, inflation clocked in at 3.4% over the last 12 months. And the Fed responded by hiking interest rates by another quarter point, the first rate hike since 2023 Mortgage interest rates hit a new high. And bond yields are going bananas. We're going to talk about all of that and more in today's First Friday episode. Welcome to the Afford Anything Podcast, the show that knows you can afford anything, not everything. The show covers five pillars. Financial psychology, increasing your income, investing, real estate, and entrepreneurship, acronym double-I fire. I'm your host, Paula Pant, I have a master's in economic reporting from Columbia. Every Friday, the first Friday of every month, we host a macro economic look at the markets, the economy, what's been happening in the economy over the last month. Welcome to the October 2026 first Friday macro markets, markets and macro economics episode.

We'll start with the jobs report. It really did badly. The US added 29,000 new jobs in its latest report, while the unemployment rate ticked up to 4.2 percent. That is a huge decline over what we've done in previous months, and it really underperformed expectations. In August, initially, the BLS had reported a job growth of 162,000 jobs. That number got revised down to 133,000. The good news is we're still growing. The bad news is not by as much as we thought we were. Two days prior to the BLS report, we get a little sneak peek by getting data from this other thing called the ADP report. ADP is a private payroll processing company. They report private sector employment. The ADP report showed that US private sector employment increased by 90,000 jobs in September. So just so you know the difference in methodologies, ADP is a private company. They're a really big private company. And so they're just looking at their own payroll data. But they're big enough that their payroll data is a very large data set. Based on their own data, they saw an increase of 90,000 jobs in September. The BLS, which has totally different methodology, they only saw an increase of 29,000. So we're getting a big discrepancy from these two data sources. The BLS samples roughly 119,000 businesses and government agencies, covering 622,000 individual work sites. So that constitutes around 26% of all non-farm employment. And they count total jobs. That's how they come up with their jobs data. Their numbers get revised three times after one month, after two months and then annually.

Sometimes those numbers do get revised upwards. That's less common, but it does happen. But a disappointing report this morning from the BLS, turning our attention back to ADP and going into a sector breakdown, ADP saw that most of the jobs that were created, and this will be no surprise if you've listened to these first Friday episodes regularly, most of the jobs that were created were in education and health care. Those constituted about 55,000 new jobs. This is according to the ADP report. Leisure and hospitality was another 22,000 jobs. Manufacturing, 17,000 jobs. Construction, 15,000. Big loss in financial activities. That group lost 16,000 jobs. Overall, especially considering the huge disparity between the August report and the September report, and given the successive downward revisions that we've seen throughout the summer, we're seeing evidence of cooling labor demand. Like we're seeing that job growth has not been as strong as we previously thought. In September, we missed expectations by a huge margin. We further revised down July's numbers. So July figures were cut by an additional 31,000. Again, unemployment, as I mentioned, ticked up. It was at 4.1 percent, now it's at 4.2 percent. So overall, we're seeing a slightly cooling labor market. That means that there is a argument that the Fed might hold rates steady at its October meeting. We'll talk more about that in just a moment, because the big new... Oh, I don't want to spoil it, but the big news is what the Fed did in September. You know what? We'll talk about that next.

On September 16th, the Fed raised interest rates by a quarter point. The Fed raised its benchmark interest rate to a target range of between 3.75% to 4%.

That is the first rate increase that the Fed has done since 2023 And it was a unanimous vote, which is crazy because Fed Chair Kevin Warsh has kept talking about how the Fed keeps having these good family fights. He's used that phrase multiple times. And in the last many, many Fed meetings, they have not been voting unanimously. There's always been some dissent. So to see a unanimous vote, indicating the whole Fed is in alignment, like I guess those quote unquote good family fights that Warsh keeps talking about are actually constructive.