While the S&P 500 closed at a record high on Thursday, September 11, the labor market continues to show signs of softening. Watch as Portfolio Consulting Director Aya Yoshioka dives into what’s going on with economic growth, inflation, and the labor market this week.

TRANSCRIPT:

Hi. My name is Aya Yoshioka, a Portfolio Consulting Director and Senior Investment Strategist here at Wealth Enhancement. Welcome to another edition of our 7 Market Movers series where we cover all sorts of topics impacting markets, everything from economic growth to interest rates, geopolitics, market sentiment, inflation, and more. This week, I'm going to touch on three of our market movers. First, economic growth, second, inflation, and lastly, interest rates. So, we'll begin with economic growth. And for this aspect, I'm going to focus on the data surrounding the labor market, which we got a lot of information on over the last week. Last Friday, we saw a disappointing August jobs report as the US only added 22,000 jobs relative to the expectation of adding 75,000. And with this report, we saw the unemployment rate increase from 4.2% to 4.3%. But it's been a slow rise from those absolute lows where we saw unemployment rates, at 3.8%. On Tuesday, we actually got some revisions from the Bureau of Labor Statistics, on the overall employment data. The quarterly census of employment and wages, the QCEW report, is an annual update to the monthly employment data that the BLS provides. This allows them to improve the overall accuracy of the data, and it is sort of backwards looking. But it does use administrative records from unemployment insurance filings that cover 95% plus of US jobs versus the monthly jobs data, which is more survey based in nature. So the most recent, revisions report covered the period from April of 2024 through March of 2025. But it showed that jobs were actually 911,000 fewer than initially estimated or reported. So, typically revisions are relatively small. They only constitute about 0.2% of nonfarm employment adjustment numbers, over the last 10 years. However, this time, it was three times as large at 0.6%, and it's the largest sort of revision that we've seen in quite some time. And to just cap it all off on Thursday, we received the initial jobless claims. This is a weekly, data series, and that came in a little bit softer than expected as well. Initial jobless claims for unemployment were at 263,000 versus the estimate of 235,000, which all of this put together continues to paint the picture that we are continuing to see, softness in the labor market. It's continuing to sort of weaken, but it's been more of that melting ice cube type of environment where it's been a lot slower versus the, you know, sudden announced layoffs that continue from company to company. So on our second market mover, I'd like to talk about all the inflation data that we received this week. So on Wednesday, we saw the producer price index or PPI data, which actually posted an unexpected decline from a month over month basis of 0.1%. And it's the first decline that we've seen in four months. So when we dig into the data, goods prices excluding food and energy rose 0.3%, but services costs actually fell 0.2%. And this is all followed by Thursday's CPI data, the consumer price index, which showed a slight uptick in the annual headline number, which increased from 2.7% to 2.9%. And when we dig into that report, we saw that airfare, clothing, and, vehicle prices actually, increased while medical care and recreation costs, saw a slight decline. This brings us to our last market mover, topic, which is interest rates. And markets are now fully pricing in the Fed to cut interest rates when they meet next week. On next Wednesday, we'll get the announcement. And, you know, markets are expecting a 25 basis point interest rate cut. So we'll get interest rates down to that 4% level. But treasuries have really priced this in. The two-year is already trading at 3.5%, while the ten-year is now at 4.02%. So hopefully, this is going to be the start of some additional interest rate cuts. The market's already pricing in further cuts in October and in December as well. But there are some people who are arguing that perhaps this will be a one and done and maybe they'll just do 50. I think we'll have to wait and see till next week. And despite all of this unwelcome, inflation and labor market data, the US equity market continues to climb higher. The S&P 500 closed at an all-time high again here on September eleventh, near 6,590, and it's now up 12% on a year-to-date basis, and up over 30% from the lows in April. So that's all I have for you today. Thank you again for listening. And if you have any questions or would like to discuss markets or your portfolio with any of us, please reach out to a financial advisor here at Wealth Enhancement. Thanks again, and we'll talk to you next week.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor's specific circumstances. Investing involves risk, including possible loss of principal.

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