The U.S. Economy Created 315,000 Jobs in August, as the Unemployment Rate Climbed From 3.5% to 3.7%… The June and August jobs numbers were revised lower by a total of 107,000.
What it means— Revising 100,000 jobs in an economy with 160 million jobs is noise. The rise in the unemployment rate happened for a good reason, more people entered the workforce. We can say that rising prices are compelling more of the people who were sitting out to go look for jobs, but with so many openings, that will help the economy. Another thing that’s good and bad is that average hourly earnings rose slightly less than expected, up 5.2% instead of 5.3%. Slower earnings growth will take one more inflationary pressure off the table.
Overall, there’s nothing here important enough to dissuade the Fed hawks from pushing rates up another 50 basis points or so this month and keeping the rhetoric sharp afterward.
Oil Prices Drop More Than $10 in Two Days… After walking higher toward $100 on the back of OPEC+ statements, traders sent oil below $90 after reports on easing demand.
What it means— OPEC+ can turn on a “virtual pump,” calling for members to produce more or less oil upon agreement. Remember, it’s a cartel, and they don’t have our best interests in mind. We’re paying a lot more for energy than we have for years and are proving now that we’ll hand over the money. That fact is not lost on international producers. Meanwhile, Indian and Chinese refiners are only too happy to “mix” Russian oil and resell it as an unlabeled blend.
G-7 Putting Finishing Touches on Russian Oil Price Ceiling… A European G7 minister said the program could be ready today.
What it means— Businesses in the G7 insure over 90% of oil transports, so government officials in those countries think they can set a top price for Russian oil by setting the insurance price. Have these people ever heard of add-ons? How about lab fees in school or the idiot charges some auto dealers try to tack on? The Russians can add on any fee to the price, and this might spawn a new industry of piggyback insurance outside of the G7. Or, it might not fly, because Russia refuses to sell at a low price.
German Manufacturers Halting Production Due to Energy Costs… German Economy Minister Robert Habeck reported that industrial energy use was falling because companies were making less.
What it means— This is not good. The biggest economy in Europe is starving itself of some level of production for want of energy, which is being held captive by Russia. Now, the Kremlin has shut off gas again to make sure Europe can’t restock for winter. The idea that Western Europe has “enough” implies that it’s all right to shutdown part of your economy.
Student Loan Forgiveness Taking Shape, Possibly Headed to Court… In addition to the eight million borrowers on which it already knows income information, the Biden administration is setting up a website where borrowers can affirm their income to have some or all their student loan balance wiped away.
What it means— Early in the process on student loan forgiveness, the Biden administration released a memo that pointed to a 2003 law giving the executive branch the authority to forgive burdensome education loans. It’s hard to square that with wiping out $300 billion or more in debt that is rightfully owed to the taxpayer by people who make up to 300% of the median take-home pay in the country.
Whether it is servicers who see billions of dollars in fees go out the door or some enterprising attorney general, someone will find a way to sue. As for an inflationary effect, don’t bother looking. Student loan expert Mark Kantrowitz estimated that as of December 2021 a mere 1.2% of borrowers were paying on their loans, which have been in stasis since the spring of 2020.
It’s not like borrowers are waiting around with $10,000 in hand to pay off their loans and now will apply that money to something else. That ship sailed. Instead, the money that would go to those loan payments in January (if the government lifted the freeze) will just stay in normal spending.
Lowell, MA, Man with More Than a Pound of Cocaine in Car Is Saved From Prosecution by Two Minutes… Police approached an unidentified Lowell, MA, man parked in his running car after sundown with another man in a parking lot known for drug deals. Upon seeing the police, the driver pulled out without his lights on. The police stopped him for driving at night without
lights, asked to search the car, got permission, and found the drugs. The sentence for carrying that weight in cocaine is 20 years, but the man had a good attorney. In good weather, Massachusetts law requires drivers to turn on their lights within 30 minutes of sundown, which on that date was 8:09 PM. The man was stopped at 8:37 PM, providing him a two-minute window in which his stop was not lawful.
Data supplied by HS Dent Research
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