An astounding 1.37 million Americans went back to work in August as unemployment rates fell to 8.4 percent. This is the lowest national unemployment has been in since March 2020, and the data showed the U.S. jobs market beat predictions by Dow Jones economists that there would be just over 1.3 million new jobs and unemployment would remain at nearly 10 percent.
“We are still moving in the right direction…but it still looks like it will take a while,” said head of Citizens Bank global markets division Tony Bedikian. He added, “We continue to be optimistic that the economy has turned a corner.”
So far, the population of furloughed employees has continued to decline as well. In August, 24.2 million people reported not working due to their employer shutting their doors for the pandemic (compared to 31.3 million in July). Temporarily laid-off employee numbers also fell from a high of 18.1 million in April to 6.2 million in August. However, the report noted 3.4 million new job losses as temporarily eliminated jobs became permanent eliminations.
Federal Reserve Chairman Jerome Powell said that despite rising jobs numbers, it could be “years” before the Fed raises interest rates above “low” levels. “The economy is now recovering,” Powell declared. “But it’s going to be a long time, we think…that the economy is going to need low interest rates, which support economic activity.” He added, “It will be measured in years.”
Although the stock market continued its sell-off, most analysts say they are not concerned about long-term losses at this time. “Stocks are still well-supported by a combination of Fed liquidity, attractive equity risk premiums, and an ongoing recovery as economies reopen from the lockdowns,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. Investors should expect “sector rotation,” however, as investors take profits out of the tech sector and sink them into areas that appear to have more upward growth potential, such as energy and materials sectors. Haefele said his team views “the latest selloff as a bout of profit-taking after a strong run” rather than a lasting threat to portfolio performance. However, with the presidential election looming, the only surprising thing that could happen would be if nothing happens.
Vice president Mike Pence said of the jobs report numbers, “This is real evidence that the American comeback is underway.” Do you agree?
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