WARNING: U.S. Jobs Report Update | Here's What You Need To Know

On this video, let's have a conversation about the latest jobs report for June of 2023 and talk about how that weighs into this whole equation in terms of the Fed increasing the federal funds rate. Now, about a week ago, the Bureau of Labor Statistics released the June 2023 Labor Report. Now, this latest jobs report had really three things in it that I want to point out to you guys on this video. So, the very first thing is non-farm payrolls, what they call non-farm jobs. Now, according to the latest jobs report, the non-farm jobs increased by 209,000 new non-farm jobs last month. Now, that was below what they were anticipating. They were anticipating the creation of more than 240,000 new non-farm jobs. Now, the second thing I want to talk about is the fact that the unemployment rate ticked down a little bit from 3.7% to 3.6% just by 0.1 percentage point. But at the same time, there's a broader measure of America's unemployment, and that actually went up by a little bit, and I'll talk about that. Now, the third thing I want to talk about is the wage rates, the increase in wages that American workers are being paid. Now, some of you are probably saying, I haven't seen any increase, but there has been an overall increase as measured by the Bureau of Labor Statistics of 4.4%, and that's slightly higher than what they anticipated. So, I want to talk real briefly about that as well. So, first off, let's get into non-farm jobs. Now, just to be clear, guys, when I say non-farm jobs, those are jobs that do not include agriculture or farm workers. It doesn't include active military folks. It also doesn't include private household employees or employees of non-profit organizations, right? So, when we say there were 209,000 new non-farm jobs created, we mean jobs in the private sector and jobs at government agencies on every level, right? City, state, federal, county, all of those levels are included when I say government jobs. So, non-farm jobs is pretty broad, right? It just has certain categories that it doesn't include. So, again, this 209,000 was less than what they expected at 240,000. Now, this is significant, and the reason this is significant is because this 209,000 new non-farm jobs is significantly below where we were the previous month. The previous month, they adjusted the numbers a little bit, and the previous month, we were at 306,000 new non-farm jobs. So, now, we're almost 100,000 less new non-farm jobs than just the previous month. So, the amount of new jobs being created is going down. And that 209,000 new non-farm jobs is the lowest amount of new non-farm jobs created in a month since December of 2020. So, that's over two and a half years ago that we've seen new non-farm jobs so low. And according to the report, the amount of new non-farm jobs would have been even lower had we not had a boost in government jobs. There were 60,000 new government jobs created, which were primarily from your city and your county and your state governments, not necessarily the federal government. But that big increase in government jobs really helped boost that number to 209,000. It would have been even lower had it not been for so many government jobs created. There were also strong job increases in healthcare, social assistance, and construction. So, overall, new jobs were happening at a much lower rate than in the past two and a half years. In fact, let me give you this statistic because I think it's really important. The six-month average for new non-farm job creation in the past six months is about 278,000. Well, last year, in the same six-month time frame, that average was 399,000. So as you can see, overall, not just last month, but overall in the last six months, we've had a decrease in the amount of new jobs being created, even though the job market is staying fairly strong at this point. Now, the second significant thing that came out of this latest jobs report was that the unemployment rate was down. It was 3.7%, still very, very low previously, and now it's 3.6%. It ticked down by a tiny little bit. Now, why is that? Well, here's part of the reason. The prime age participation rate. When I say prime age, we're talking about workers between the ages of 25 and 54. Those folks in that age range who are actually participating in the job market right now has increased, has risen to 83.5%. That means 83.5% of everybody in that range, 25 to 54 years old, is participating in the labor market. Now, that is the highest participation rate for ages 25 through 54 in the last 21 years. So that means more and more people are actually participating in the labor market. Now, with lots of people participating in the labor market and 209,000 new non-farm jobs, you have more people vying for a smaller and smaller pool of actual jobs. So that actually made the unemployment rate go down just slightly. Now, as you may or may not know, guys, the unemployment rate is measured by the share of workers who are actually in the labor force who do not currently have a job but are actively looking for work. So if you're in the labor force and it's been two or three or four months and you're not even looking for a job, well, guess what? You're not counted in the unemployment rate. The unemployment rate is only for those that are actively seeking work. So people that have not looked for work in the past four weeks, they're not included in the unemployment rate. Now, with that understanding, guys, there's a broader measure of unemployment that's also looked at as well. And that looks at discouraged workers and people who hold part-time jobs for economic reasons. Now, this broader unemployment measure actually increased in terms of unemployment up to 6.9%, which is the highest this broader measure has been since August of 2022. So the highest it's been in over a year. So while the actual unemployment rate that we always see measured is down from 3.7% to 3.6%, this broader measure that also considers those that are not looking for work has actually increased over the past year to its highest level in almost a year. So I say all that to say that even though we've seen the unemployment rate go down just a smidgen, we also see another broader measure that shows that unemployment is up. Now, the other significant piece to the jobs report that I want to point out to you guys is the wage rates. The actual amount that workers are being paid has gone up by 4.4% year over year, which is higher than what the Fed had anticipated. And it's higher than what they want to see based on trying to reach a 2% inflation, which is their target inflation rate. Now, the wage rate increase is important because what happens, guys, is if people are making more money faster at a higher rate that is consistent with a 2% inflation rate, then it's going to play a key role in sort of keeping inflation higher than they want it to be. This is because basically, guys, when people make more money, people tend to spend more money. And when people spend more money, that means prices of goods and services are going to increase faster to keep up with the increased spending, which ultimately keeps inflation, the rate that prices are increasing, higher. And it does nothing to bring inflation down when people are actually spending more money. So while it looks good and it feels good for everybody's pay rate to go up and increase, we're making more money, wages are going up at a high and fast pace, yes, we can afford things. Actually, it's having the effect on inflation that we don't want to see. Again, higher growth of wages keeps prices of goods and services higher and higher because it adds to the demand for goods and services when people have more money to spend. Now, because wage rates are still higher than what the Fed wants to see, that means the Fed will likely raise interest rates again sooner rather than later. As we all know, last month, the Fed said no federal funds increase rate this month. They gave us a break. But guess what, guys? Now, looking at this latest jobs report, it appears that the Fed will probably increase rates again based on the information I shared with you guys in this video. So just like the Fed warned us last month, get ready for another increase in the federal funds rate coming up in just a couple of weeks when they have their meeting. Yes, the labor market is still relatively strong, but there are some holes in it and it's starting to show, even though don't get fooled by the fact that the unemployment rate went down from 3.7 to 3.6. There's some other areas that are starting to show that the labor market is starting to actually slip a little bit. Just be aware, that means the Fed won't let up. They already promised us increased rate hikes. Guess what? They're coming, especially based on the numbers in this latest jobs report. I think it's important that we understand what's happening in the labor market because all of us have jobs or most of us have jobs. And in my opinion, guys, we need to be paying attention to what's happening with the labor market, what's happening with unemployment, and what's happening with jobs. Because hey, jobs is our livelihood, right? Especially here in America. It's how we make a living. Most of us are not entrepreneurs. Most of us don't own our own business. So what is happening with the jobs and jobs in America is crucial to how a lot of us can pay our bills. And so I always hope that when I do these video guys about the US economy, that it helps you get a better understanding, a more detailed understanding of what's actually happening right now. And it helps you be prepared for what may be on the horizon in terms of labor, in terms of the job market. If you got anything at all out of this video, do me a favor, guys, please, and smash that like button. And hey, if this is your first time on this channel, please do me a favor and consider subscribing to the channel if you're not already a subscriber. Hey, stay tuned to this channel, guys, because on this channel, we talk US economy and we talk money management, being empowered with your money, and also reaching financial freedom Whether that be retiring early or whether it just mean getting a good handle on your own personal finances. That's what we focus on on this channel. Hey guys, take care of yourself and take care of other people. Until the next video, peace.