So the job numbers came out last week, but the presidential debate and the fall out from the “Trump Tapes” scandal has dominated the news. Let’s talk about the economy, because it’s the only possible game changer left that could seriously impact the elections.
Highlights from the September Jobs Report
- Net nonfarm payroll rose by 156,000.
- the U-3 unemployment was little changed at 5.0 percent.
- the U-6 unemployment dropped 0.4 point from September to 9.3 percent, but there was no change of the seasonally adjusted U-6 of 9.7 percent.
- labor force participation rate, at 62.9 percent, changed little.
- employment-population ratio, at 59.8 percent, changed little.
Job numbers for July were revised downward to 252,000, and job numbers from August were revised upward to 167,000 net jobs created. The 156,000 jobs created in September is a decrease of about 11,000 jobs from August. Compared to the 2013-2015 average for September, the current number is 50,000 fewer than the 206,000 average. Together, this reveals a continuing softening in the employment market. Of particular interest is the increase in the official U-3 Unemployment number from 4.9% in August to 5.0% in September, a 0.3% increase since May 2016.
Highlights from the 2nd Quarter Economic Report
- 2nd Quarter GDP grew at an annual rate of 1.4 percent, a +0.3 percent revision.
- 1st Quarter GDP grew at 0.8 percent (revised).
This third estimate of the 2nd Quarter GDP number is 0.6% higher than the 1st Quarter GDP number, showing marginal growth, but, compared to the 2.6% from 2nd Quarter 2016, 1.4% still indicates a significant slow down. Later this month, we’ll have initial numbers from the 3rd Quarter, and a slow down could significantly impact the election, especially given the significant stimulative policies already in place. The bubble that the US economy is in seems ready to burst.
The Federal Reserve Committee met at the end of September and “decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent“. This came as a surprise to no one, especially given the impending election. An increase in the federal fund rate would have been have sent a signal that the economy is improving, thus impacting the election positively for Hillary, while doing nothing is fairly ambiguous. With the election upcoming, we’ve no choice but to wait and see if the bubble economy bursts before or after the election.
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