Jobs Report Disaster — Fed Forced to Cut Rates More Quickly

The jobs report was released and the results, they were bad. Now the Federal Reserve is going to have to cut interest rates more quickly in order to rescue the labor markets. So for the month of August, the labor market added an estimated 22,000 jobs. So this came in far below expectation. The expectation was 75,000 net jobs to be created. And you have to remember that this is just a preliminary number because it's expected to be revised downward heavily. So take a look at the chart which shows how many net jobs are created each month. The labor market continues to steadily weaken. Okay now here's something I want to point out to you which I actually predicted it came true. So take a look at the month of June. In the month of June, they revised the figure down again. Now they're saying that the labor market lost 13,000 jobs in June. Okay so if you remember initially the U.S. government reported that for the month of June, the U.S. labor market added 147,000 jobs. So 147,000 net jobs created. So the government said you know at that time the labor market was very healthy. The labor market is very robust. The Federal Reserve said that they're not cutting interest rates because the labor market is so solid. Yeah but now okay now they revised it. Positive 147,000 jobs added to now negative 13,000. Anyways they did a slight modification to July which is not yet the final number. But I'm estimating large revisions downward for both months for July and August. So we'll see you know what the final figures are. But even so the final figures that they are going to cite, they're not going to be the real numbers. But again the initial estimate is that 22,000 jobs created in August, that's considered to be highly inaccurate. But you should know that that's the government's official reported figure for whatever narrative that they're trying to sell to the public. Now turning to unemployment, the unemployment rate has risen from 4.2 percent in July to 4.3 percent in August. And if you remember this is the most important data point for the Federal Reserve. So I showed you the video clip of exactly that statement coming out of the mouth of Jay Powell who's the chair of the Federal Reserve. So if the unemployment rate is ticking up then that's a good reason for the Federal Reserve to cut interest rates, which I'm going to show you the odds of that happening in a minute. Now here's another concerning data point that I want to point out to you. Wages are growing at a rate of 3.7 percent. So currently the rate of inflation is around 5 percent. This means that wages are not keeping up with inflation. This means that most Americans continue to see pay cuts in 2025. So essentially if you're not getting a 5 percent raise then you're taking a pay cut. That's the reality. That's the truth. So I just want you to keep this in mind when it comes time to negotiate your compensation. Because anything over 5 percent would technically be a raise. And that's if the rate of inflation stays the same for, I mean we're talking about next year. However, I expect that the rate of inflation to sharply accelerate next year in 2026, which is actually what I predict in 2024. So before I move on, please remember this 3.7 percent wage growth number. Now some people may erroneously say, Brian, the rate of inflation is 2.7 percent according to the CPI inflation reports. So if wages are growing at a rate of 3.7 percent, then wages are growing faster than the rate of inflation. And to that I say you are completely incorrect. That's not how it works. Okay, so what you have to understand is that CPI inflation does not measure price inflation. In other words, it does not measure the change in price. So CPI inflation measures the change in the cost of living, which is a completely different thing. So listen, if an apple costs one dollar last year, and an apple costs a dollar ten cents today, then you would say that inflation is going up at a rate of 10 percent a year, right? I agree, but that's not how CPI inflation is calculated. Okay, so listen, this is like the example. There's a company called 100% Ground Beef, and when they sold their canned beef product, and the beef was not 100% ground beef, people got upset. And I don't understand why, because the company never claimed that their product was 100% ground beef. That was just the name of the company on the can. So it's the same thing with the CPI inflation report. The inflation report does not measure price inflation. For that, you have to look at the money supply. And here's how the money supply has been growing, and this is coming from the Federal Reserve. It's at an all-time new record high. And here's a one-year chart. The reason why I said inflation is growing at a rate of around five percent is because we don't have the August figure on this yet. July inflation was at 4.8 percent growth year over year. But again, I do expect the rate of inflation to accelerate more rapidly in 2026. So listen, this is why the price of gold is shooting up, why silver is shooting up, why the stock market is not going down. They're just printing more and more money to prop up the system. But if your pay raises are not beating inflation, then in real terms, you are accepting a pay cut. Now, I want you to take a look at this additional labor market data. Job openings fell in July to the lowest level in 10 months. Job openings decreased to 7.18 million from 7.36 million in June. So for the first time since April of 2021, there are now more people looking for jobs than there are jobs available. So following the pandemic, employees had more leverage against employers, if you remember that. Listen, I just showed you the job openings. Now from January to August, job cuts are up 13 percent year over year. Month over month, job cuts are up by 39 percent. Okay, in the West, job cuts are flat year over year. So that's just the average in the region. I mean, if you take a look at California in specific, job cuts are up 24 percent year over year in California. In the Midwest, job cuts are up by 8.3 percent year over year. In the South, job cuts are up 32 percent year over year. In the East, and the East is getting hit the hardest, job cuts are up 224 percent year over year, and the surge is coming from the cuts to federal employees. So here's the change in federal employees for each month. In August, the government cut a net 15,000 jobs. And here are the top four reasons why companies are cutting jobs in 2025. So when they actually do the cuts, they give a reason as to why. So the number one reason was DOGE. This includes contractors and the loss of government-funded initiatives. The second reason was market and economic conditions. So this just means a slowing economy. There was also, in third place, closings, bankruptcies, and restructurings. And the fourth was technological updates that includes automation and AI implementation. So the bottom line is that the labor market is getting worse. In order to rescue the labor markets, the Federal Reserve is expected to cut interest rates at their next meeting, which is going to take place on September 17th, which is less than two weeks from now. Before the jobs report was released, there was a 99.3 percent chance that they would cut interest rates in September, and a less than 1 percent chance that they would not cut rates at all. So this is according to the CME FedWatch tool. Now after the jobs reports, which showed further weakness in the labor market, there's now a 100 percent chance of a rate cut in September. It's just a matter of how much are they going to cut by. Are they going to cut by 0.25 percent, or are they going to cut interest rates by 0.5 percent? So there's now an 88.1 percent chance that they're going to cut interest rates by 0.25 percent. There's an 11.9 percent chance that they're going to cut interest rates by 0.5 percent. Personally, if I had to make a bet, I would expect them to cut interest rates by 0.25 percent, so quarter points. If they cut by 0.5 percent, honestly I'd be ecstatic about my gold and my silver positions, but I don't think that they want to dump that much gasoline onto the inflation fire just yet. Also, they have to leave some firepower for the upcoming bond crisis in 2026. Now I want to show you the video clip of the Fed governor saying that the labor market is worse than the government is reporting, and that they need to cut interest rates now to get ahead of the weakening labor markets. So basically what he's saying is that there's going to be more rate cuts to come. Like this is not just a one done thing. Well, I've been clear that I think we should be cutting at the next meeting. The labor market has come in much softer when I first said this with you, I think, a while back. People thought I was crazy, but once the labor market data came in on August 1st, it became pretty clear that the labor market was not performing up to what everybody thought from the original estimates. But we were getting all this anecdotal evidence at the time saying no hiring, no firing, firms were laying off, rates were going up for new entrants, AI was potentially causing problems. So all that soft data. ADP had big negative numbers. So all that data didn't seem to match up with what the BLS was putting out. And that's kind of where I felt like the BLS numbers have got to be off in some way. And then we found out in August that they really were. So I think because of that, and you want to get ahead of having the labor market go down, because usually when the labor market turns bad, it turns bad fast in a nonlinear fashion. It doesn't just kind of creep up. So for me, I think we need to start cutting rates at the next meeting. And then we don't have to go in a locked sequence of steps. We can kind of see where things are going because people are still worried about tariff inflation. I'm not, but everybody else is. So I would say over the next three to six months, we could see multiple cuts coming in. Whether it's like every other meeting, every meeting, we'll have to wait and see what the data says. Okay, so that's your labor market update. Essentially, what it boils down to is the labor market's weakening, and they're just going to cut interest rates, go to an easier monetary policy, and there's going to be more inflation. Inflation is going to surge. So I sincerely hope that people are really protecting their assets, because people work so hard for their money, and just to stow it away, to save it, but then the government just comes in with this hidden tax, and it's just like all that fruitful labor goes to crap, because they can do it, or they have the money printers. So please subscribe. I'm going to keep you updated on this whole situation. Thank you so much, and I wish you a very nice day.