Jobs Report Reaction, Diesel Prices Hit Record High, Data Center Debate 9/4/26

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**Kelly Evans** (1:03)
Welcome to Power Lunch. I'm Kelly Evans. Brian Sullivan is off today. A strong August jobs report is putting the Fed back in focus. The labor market's resilience is lifting treasury yields, pressuring stocks, and raising the odds that a rate hike could be on the table in just a couple of weeks time. We'll talk through the numbers, what they mean for the economy, the markets, and your money coming up. After a record-setting August, Americans are heading into Labor Day with a new pressure point, gas prices. The national average has climbed to $4.15 a gallon, the highest ever for this holiday weekend, although not inflation-adjusted. But still, an oil holding above $90 a gallon on continued volatility in Iran, RBC's head of global commodity strategy, Helima Croft, is here. And the AI buildout has been one of the market's biggest growth stories, but the conversation is moving well beyond Wall Street. Two key voices join us to debate the data center boom, former US. Senator Heidi Heitkamp and Daniel Castro, president of Think Tank Information Technology and Innovation Foundation. But let's begin with the surprisingly strong jobs report, the economy adding 162,000 jobs in August. That's more than triple what economists expected, and that big payroll surprise is quickly changing expectations for the Fed's meeting later this month. Check out the CME Group's FedWatch tool. Before the jobs report, odds were about even for whether they'd hike a quarter point. But after today's report, the odds of a rate hike, as you can see there, jumped, with markets now seeing a 60% chance of that happening this month. Joining us now to break down the numbers is Tom Porcelli, the Chief Economist at Wells. They put an S in there, so I wouldn't say Porcelli, which I appreciate. Chris Grisanti, Chief Market Strategist at MAI Capital, who will be joining me for the hour. Welcome to both of you. Just kick us off, Tom, what are your thoughts?

**Tom Porcelli** (2:44)
Look, like any payroll report, there's always quirks.
This was no exception. You got a lot of payback in a couple of categories that sort of really flattered this report. So do I think that this is the beginning of 162,000 jobs that are going to be created going forward? No. I think that we're still in this sort of call it 5200,000 zone. And indeed, I think if you just look at like the three-month average, which by the way, and Chris, you and I were talking about this a little bit in the back, I think that's the right way of thinking about the payroll report. The three-month average is about 70,000, right? It just smooths out a really volatile report. That's all that does. So I think beneath the surface, this is a labor backdrop that is fine.
It's not accelerating, it's not decelerating. And I think importantly, this takes, from the Fed's perspective, it takes labor completely off the table. I mean, I think we're already there.

**Kelly Evans** (3:31)
Remind me, were you in the cut camp or the hold camp?

**Daniel Castro** (3:35)
The hold camp, that's right.

**Kelly Evans** (3:36)
Even as everybody has moved into more of this. So are you still in that camp after?

**Daniel Castro** (3:39)
We are, yeah.

**Tom Porcelli** (3:40)
I mean, look, you know me for long enough to know.
I think it's wrong, that's the polite way of saying it. The Fed is going to let monetary policy hinge on a single number. But here we are. I mean, I think it all comes down to CPI next week.

**Kelly Evans** (3:56)
Chris, what do you think? What were your reactions to the jobs number today?

**Chris Grisanti** (4:00)
First of all, the lovely jobs number. Yes, it was. It's kind of solid, I think is the word we both use.