Yahoo Finance

We want to bring in Joe Bruce Willis. He's RSM's chief economist. We also have Mark Pinto here with us on set, head of America's equities at Janus Henderson investors. Thank you so much to you both for joining us here. Mark, let me start with you when you take a look at this print, materially weaker than what the street had been expecting for this report. And I think going in, one of the real risks, or one of the real concerns here from the street is that we were going to see a dramatic drop. So, what's your first take on this print?

Well, it's um, it's definitely a weaker number than people expected. Um and and the fact that the unemployment rate went up two tenths of a percent is probably not that surprising. I've read estimates that we need 200,000 jobs, new jobs per month, just to keep the unemployment rate stable. So a print in the 100 and I think 114,000 uh is not surprising. And, and you know, we see reports that the uh workforce is increasing. So it's going to take more jobs per month to keep that rate steady. Uh but definitely a weaker number. Definitely going to raise concerns now that the Fed is, you know, behind the eight ball, probably increases the probability of two rate cuts this year. Um so

Is the Fed behind the eight ball? Do you think?

Well, I mean, if this number is if this number is as as written and doesn't have any extra um, you know, hurricane impact, you know, definitely a weak number. Um and it's going to raise that concern. Uh I I think it still remains to be seen uh if if the Fed's behind. You know, GDP is still admittedly slowing, but still pretty strong. We're seeing pockets of strength in the economy. We're definitely still seeing signs of inflation, but clearly the trend is moving in the other direction.

And and you just mentioned that we need 200,000 jobs per month just to keep the unemployment rates stabilized. I just did some quick math with the revisions factored in. Right now, we're averaging about 169-170,000 jobs over the last three months. Well this report included once you kind of take that into account, and Joe, I'll I'll kick this one in your direction. You know, does this squarely put the September cut on the table for the Fed?

I think this uh this this just about guarantees you're going to get a 25 basis point cut. To be honest with you, I think what this does is it puts a September, November, and December cut on the table. I think we can begin talking about the possibility, if not probability of 75 basis points of cuts this year. Look, the unemployment rate went up to 4.253%. That's going to be scored as a 4.3 because 420,000 additional people entered the labor force. So we want to put this in context. The unemployment rate's not going up necessarily because we've seen a lot of layoffs. It's going up because people are moving back into the labor force to take advantage of that 3.6% increase in overall wages. That's what you want to see as an economy normalizes. So my sense is, we're still on track to have an unemployment rate around 4.3% at the end of the year. That's in line, at least with my baseline forecast. And the the the general weakness we saw, what we want to pay attention to here is that, you know, hiring and professional business services is just slowed to a crawl. You can see that. We got a little bit of a disappointment in terms of how many people were hired by the state governments. And uh leisure and hospitality did not perform normally the way you would expect in August. So there's a lot on the table, but I think the primary takeaway is labor market's normalizing. It's below the, what we think is 150,000 is the break even. If you get numbers below that, you're going to continue to see that number, that unemployment rate increase. And the Fed simply is just going to have to move to uh cut rates, make that that rate less restrictive. And as you, Seana and Brad, as you know, we've been we were one of the ones calling for a July rate cut. They didn't do that, but we'll get it in September.