Wage growth disappoints

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**Kristin Schwab** (0:31)
Well, that jobs number was a surprise. Now what? From American Public Media, this is Marketplace.
In New York, I'm Kristin Schwab in for Kyris Doll. It's Friday, September 4th, and it's good to be here with you.
The Fed has really just two jobs, Maximum Employment and Stable Prices. And according to the August jobs report we got today, the Maximum Employment part is going pretty well, like better than expected. Here to talk about what that means for the Fed and the economy, we have Catherine Rampell at MS Now and The Bulwark, and Courtney Brown from Axios. Hey, you two.

**Catherine Rampell** (1:15)
Hey, Kristin.

**Courtney Brown** (1:16)
Hey, Kristin.

**Kristin Schwab** (1:19)
So the numbers are 162,000 jobs added, a steady unemployment rate of 4.1 percent. Courtney, what do you think of those numbers?

**Courtney Brown** (1:29)
Really great. I do have like a little bit of whiplash though, because today's jobs report was almost the mirror image of July, when you consider the revisions underneath the hood. I felt like the July report headline number, not great, and then the revisions made the past look a little bit worse as well. And then today we get the jobs report, headline number super strong, and then you look at the revisions and made the past look a little bit better. I mean, the number of jobs in July, we thought that the economy shed jobs. It turns out with the revisions, the economy actually gained some jobs. So the summer slowdown that we thought, the summer slowdown was not as bad as we thought, and it looks like the labor market is set up for a decent fall, maybe, fingers crossed, that jobs growth continues the way that it looked to boom in August.

**Kristin Schwab** (2:25)
Well, Catherine, what do you think the Fed thought of this? I mean, the 12 voting members have been pretty split lately. Do you think this, I don't know, cements their feelings, changes their minds?

**Catherine Rampell** (2:36)
The markets seem to think so. If you look at the market reaction to today's jobs report, markets seem to think that this has encouraged the Fed to raise rates at their coming meeting, that if the Fed was essentially worried about the stagflation quandary, the idea that they would have to face stagnation and inflation simultaneously, and those imply different courses of action for interest rates, maybe the stagnation problem is kind of off the table or it's at least less worrisome. As you just heard Courtney say, then jobs numbers were quite good. The inflation numbers, still not terrific. And so that's not great, but at least it can kind of maybe focus the minds of the members of their FOMC so that they can raise interest rates. Now, there are going to be a lot of complications with that, even if they think that's the right course of action for the economy, of course, not least because the guy in the White House has been pretty clear in tweeting all day that he does not want that to happen.
Right.

**Kristin Schwab** (3:38)
Catherine, well, we do get CPI and PPI next week. Do you think that could change anything?

**Catherine Rampell** (3:47)
If the numbers come in better than expected, if inflation does seem to be easing, and to be fair, we've gotten some better than expected numbers in the past month or so on the inflation front. Yeah, maybe that would change the course of action. But if you listen to what Kevin Warsh, the Fed Chair, said in Jackson Hole, was it last week? I think it was last week.
It certainly sounded like it would take quite a bit of relief on the inflation front to change the Fed's mind about what they needed to do, or at least how seriously they needed to take high price growth.

**Kristin Schwab** (4:27)
Courtney, I want to switch over to the bond market. Long-term bonds hit record highs again this week. Are you concerned?

**Courtney Brown** (4:37)
Yes and no. I feel like I've been living in this world where I have some people, including many people in the Trump administration. I spent some time with Treasury Secretary Scott Besson in Asheville at the G20 Finance Minister track this week.