Why the Latest Jobs Report Is Such a Big Deal

The monthly jobs report comes out Friday morning and since it has the potential to affect both the presidential race and the Federal Reserve's long-anticipated interest rate cut, it's being very closely watched. Economists will be watching to see if the unexpected spike in the unemployment rate in July was a blip caused by factors including Hurricane Beryl, or a harbinger of a recession, the Washington Post reports. This may be the most closely watched look at the jobs market since early in the pandemic, the Post notes.

• If the report shows unemployment rose again in August, it will bolster the case for the Fed to deliver a rate cut of a half-percentage point, or 50 basis points, instead of the standard quarter-point when it meets later this month, the AP reports. If the rate fell from 4.3%, the Fed is likely to deliver a quarter-point cut, with more to follow.

• Analysts say that while the economy appears fairly robust, warning signs include a slowdown in wage growth and the shrinking of the length of the average workweek. "It's not a spectacularly good labor market. But if this was a steady state, that'd be fine," Guy Berger, director of economic research at Burning Glass Institute analytics nonprofit, tells the Post. "The problem is that there's a fair amount of evidence that it's not a steady state. Things are still cooling."
• The AP reports that with the presidential race now in its last two months, a poor jobs report "would fuel former President Trump's claims that the Biden-Harris administration has overseen a worsening economy," while good news would be a boost for Kamala Harris' campaign.
• Some analysts say the Fed should deliver a larger cut even if the report is positive, the Wall Street Journal reports. "There's an awfully strong argument to go ahead and do 50," says Diane Swonk, chief economist at KPMG. "The labor market is not in recession, but the ice is thinning. You don't want to have it slip away inadvertently. Even if we get a good number on Friday, labor-market slack is growing."

(More jobs report stories.)