00:00 Speaker A
we did get jobless claims today. What does that tell us about the bigger jobs picture and maybe presage what we might hear in the next jobs report?
00:10 Josh
Yeah, so you you saw a little increase in the weekly jobless claims to mid 230,000 level. That is not a level that economists would normally flag is overly concerning. And that number really hasn’t been creeping higher in the past couple weeks as it had been earlier this year. But the key takeaway from actually for me was the continuing claims number, right? The amount of Americans that continue to file for unemployment benefits every single week. That hit another cycle high at its highest level since November of 2021. That is sort of one of those data points that is in the the Fed should be cutting camp. You have a lot of economists flagging that, but essentially what it’s telling you is it’s taking Americans longer and longer to come back into the labor market to be able to find a new job. So it’s one of those small signs of weakness and perhaps some economists coming out this morning that we were tracking some some predictions that might indicate you get a 4.3% unemployment rate in that August non-farm payrolls report. That’s going to come out at the end of next week or maybe the week after. I might have my dates wrong there. A week after. A week after. But it will be coming out soon, right? And sort of the key to that report obviously is if you get the week August non-farm payrolls report, probably supports a cut in September. Some economists would argue that if it’s particularly weak, it might support a 50 basis point cut. That’s not really where the market’s at right now, but that is one of the risks that’s out there.
02:45 Speaker A
Well, but then there’s the the rock and the hard place situation, right, John? Because, you know, we got the jobless claims data today, but we also got a manufacturing uh purchasing manager’s index from S&P Global that was the highest in several years. So, you know, which would indicate maybe some upward pricing pressure. We heard from Walmart today, which indicated that its margins are getting squeezed a little bit because it’s having to offer bargains to get people through the door. But that means it’s swallowing some of the cost of tariffs. So the Fed, you know, is is is stuck between those dual mandates, perhaps.
03:55 John
It’s it’s it’s a tough spot. That S&P Global report you mentioned did actually show that prices paid in manufacturing are rising. You’re seeing an upward trend there. You know, I think what Josh described uh very accurately is a labor market where I I would say we have labor hoarding. Companies aren’t very aggressively firing workers because things could turn up. Uh but they’re not all they’re also not aggressively hiring workers. So you have this like uh stasis in the job market. And you know, I think for me the description of where the economy is is a a mild stagflation. So there’s just been a lot of uncertainty about how tariff policy plays out, how immigration policy plays out, uh on fiscal policy. And so uh we’re seeing some upwards some rebuilding of price pressures on the inflation side and the labor market isn’t going very far. So the Fed is not really in a position to move very aggressively. My analogy for how uh Jay Powell is going to manage his last walk through Jackson Hole is small steps. You know, when you’re going up or down in uh treacherous terrain, you take small steps and make sure you don’t fall over. So he’ll acknowledge this shifting uh environment. He’ll keep the door open to rate cuts as long as there’s no big surprise in the next round of data, but he’s not going to encourage people to think that the Fed is going into a much easier mode.