Goldilocks Jobs Report for the Fed


The economy bounced back and created a better than expected 248,000 jobs in September and upward revisions for the previous two months amounted to an additional 69,000 jobs than previously reported. Coming into the fourth quarter, 2014 monthly job creation has averaged 227,000, up 17 percent from last year’s pace. According to Bill McBride at Calculated Risk, we should be partying like we’re Prince, because this year is on pace to be the best year for both total and private sector job growth since 1999. The unemployment rate dropped to 5.9 percent, the lowest level since July 2008, due to a combination of 232,000 people landing jobs and 97,000 would-be workers dropping out of the labor force (more on those drop-outs in a bit.) Adding to the good news, the broad unemployment rate, which includes the official rate, plus marginally attached workers (those who are neither working nor looking for work, but want a job and have looked for work recently); and people who are employed part-time but want full time work, fell to 11.8 percent, the lowest level since 2008.

But nearly seven years since the start of the recession, there are signs that the labor market is not fully healed. There are still 3 million Americans who have been out of work more than six months, which is down from a recession high of 6.7 million, but is still almost 50 percent higher than its highest pre-recession level on record; the participation rate, which tallies the number of people working or actively seeking a job, fell to 62.7 percent, the lowest level since February 1978; and average hourly earnings have increased by just two percent, matching the pace of inflation.

The not-too-hot, not-too-cold jobs report jibes perfectly with the Federal Reserve’s monetary policy. Yes, growth is accelerating, which is why the central bank will complete the wind-down of its bond buying at the end of this month. But the noticeable “slack in the labor market” as evidenced above, justifies the Fed’s decision to keep a lid on interest rates…and of course, stock investors liked that a great deal, making the week a losing one, but not an horrible one.

Speaking of the Fed, economists are atwitter over a new monthly data release, called the labor market conditions index, which will dig into labor market trends beyond the standard monthly unemployment rate measure. The central bank will release the updated data on the first business day following the monthly employment report and the first release will occur on Monday. Warning: according to the Fed, the LMCI is a staff research product and not an official statistical release and could be subject to “delay, revision or methodological changes without advance notice.”

It will be a relatively quiet week on the economic calendar, but let me be the first to wish you a Happy Financial Planning week! The Financial Planning Association created the week in order to raise awareness about the importance of the financial planning process. To celebrate, check out this week’s Jill on Money” radio show, with special guest Kevin Keller, the CEO of the Certified Financial Planner Board of Standards!

MARKETS: It coulda’ been worse...a better than expected jobs report rescued what was shaping up to be a very bad week.

  • DJIA: 17,009 down 0.6% on week, up 2.6% YTD
  • S&P 500: 1968, down 0.8% on week, up 6.5% YTD
  • NASDAQ: 4475, down 0.8% on week, up 7.2% YTD
  • Russell 2000: 1104, down 1.3% on week, down 5% YTD
  • 10-Year Treasury yield: 2.45% (from 2.53% a week ago)
  • November Crude Oil: $89.74, down 4.1% on the week (down 16% from mid-June high)
  • December Gold: $1192.20, down 3.9% on the week (lowest since Aug. 3 2010)
  • AAA Nat'l average price for gallon of regular Gas: $3.31 (from $3.37 a year ago)


Mon 10/06:

Tues 10/7:

10:00 Job Openings and Labor Turnover Survey (JOLTS)

10:00 Consumer Credit

Weds 10/8:


2:00 FOMC Minutes

Thurs 10/9:

8:30 Weekly Jobless Claims

Fri 10/10:

8:30 Personal Income and Spending