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The month of September is more critical for the US economy because of the labor market recovery and the dwindling of the Federal Reserve as the rate-hike plans remain in suspension. Last month, US hiring slowed sharply after an increase in COVID-19 infections stunted job gains. However, more than 1.05 million jobs were added in July and expected to add 728,000 more jobs but nonfarm payrolls just added 235,000 workers in August. The report came just days before the $300 per week in supplemental unemployment benefits were set to expire in the 25 states that had not already ended the payments. Economists are expecting to see the impact that the Child Tax Credit has on workers reentering the labor force. It pays American families up to $3,600 per child annually.

The chief investment officer of global fixed income at BlackRock, Rick Rieder oversees around $2.4 trillion in assets. He said, “The data will be fascinating to examine, in terms of how these things potentially transition (UI benefits ending, summer weather cools, hospitalizations potentially abate, children, return to school, etc.) and how quickly the momentum toward full employment accelerates again”. The weak job growth could cause the Federal Reserve to delay either tapering its $120 billion per month in asset purchases or rate hikes. The Fed slashed interest rates to near zero and pledged to buy an unlimited amount of assets to buffer the economy amid the sharpest slowdown of the post-World War II era. The Chairman of the US Federal Reserve Jerome Powell delivered a speech last week at his Jackson Hole symposium.

Powell said, “While inflation has met the substantial further progress test needed for the central bank to end its asset purchases, job growth hasn’t been as robust”. Powell promised the Fed would carefully assess the incoming data and that a reduction in asset purchases would not be a direct signal regarding the timing of interest rate liftoff. He said, “The economy must exhibit characteristics of maximum employment and inflation must moderately exceed 2% for some time”. Some economists are worried that the US is in the midst of a sharp, but a temporary slowdown. A team of Morgan Stanley economists led by Ellen Zentner said, “August is the month we think broad activity slowed the most”. The team pointed out a payback period from stimulus checks and ongoing supply-chain disruptions.