The unemployment rate unexpectedly increased in August, a sign that the national economy may be slowing down. The increase in jobless workers will likely present a political challenge for the reelection campaign of President Joe Biden.
The U.S. Department of Labor announced Friday that the U.S. economy added 187,000 jobs last month, which was slightly higher than the amount expected by economists.
However, the positive news stopped there, as the unemployment rate jumped from 3.5% to 3.8%, which is the highest rate in a year and a half.
Furthermore, the Labor Department also revised its job growth numbers from previous months. The national economy added 110,000 fewer jobs than originally believed in June and July. Figures for each month of this year have been revised down from their original estimates.
The federal government also found that wages grew by about 4% last month, further adding pressure to nationwide inflation.
The jobs report places the Federal Reserve in a unique position as it considers possible interest rate increases in September and November. Fed Chairman Jerome Powell has previously indicated that the central bank may further increase rates to try to bring down the nation’s high inflation rate.
The increase in the unemployment rate may push the Fed to pause the rate hikes, while the increase in wages may signal a need to increase rates.
August Unemployment Rate Unexpectedly Spikes As Payrolls For Every Month In 2023 Is Revised Sharply Lower https://t.co/Ly8i0iAwYk
— zerohedge (@zerohedge) September 1, 2023
“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” Powell said late last month.
Current economic conditions “could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he said.
The jobs news will also likely pressure the president after the rollout of his economic policy, dubbed ‘Bidenomics.’ Concern regarding both inflation and unemployment will be major elements of the 2024 campaign against the eventual Republican nominee.