Jobs report for August 2022 signals further Fed interest rate hikes ahead

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Total nonfarm payroll employment remained high in August, rising by 315,000, while the unemployment rate hit 3.7%, the Bureau of Labor Statistics (BLS) reported on September 2.

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Investors and economists are now wondering how this new data will affect the Federal Reserve’s decision at its next meeting on September 20-21 and whether it will slow its pace of interest rate hikes. In turn, all eyes are on the upcoming Consumer Price Index (CPI) data, which will be released on September 13 and will provide a clearer picture of the financial situation of Americans.

“I think it improves the case for a 50bps [basis points] up from a 75 basis point rise at the September meeting,” Tim Holland, CIO Orion Advisor Solutions, told GOBankingRates. “Having said that, we get the August CPI and PPI on the week of the 12th and the Fed meets on the 20th and 21st – those two data points I think matter the most this month.”

Some analysts have less decisive views, such as Matthew Kopko, vice president of public policy at DailyPay, who said: “This latest jobs report does not help us solve the mystery of how the economy is changing. . People generally expect the Fed to raise rates again unless the economy turns sour. Uncertainty is quite high at this point and businesses and consumers are acting cautiously accordingly.

According to some experts, today’s report helped the dovish stance on interest rate hikes because unemployment rose and wages were low. David Russell – vice president, market intelligence at TradeStation Group – believes that 100 basis points isn’t really in the cards for the September meeting, and now 50 basis points seems a bit more likely.

“Still, the keystone of the Fed’s September meeting will likely be the consumer price index on the 13th,” Russell told GOBankingRates. “This could be good news for Americans’ wallets as interest rates may stop rising. It will take time to work through the system, especially with the Fed managing its balance sheet. We may not see borrowing costs come down in the near term, but their relentless and painful rise may be coming to an end.

It’s time to reduce credit card debt, says an expert

Ted Rossman, senior industry analyst at, told GOBankingRates that the Fed will continue to raise rates – and that even after learning that 315,000 robust jobs were added in August, the CME tool FedWatch indicates that investors are pricing a 58% chance of a 75 basis point hike later this month, up from 75% yesterday.

“While this is all interesting, I think the advice to consumers remains the same. Interest rates have already risen sharply this year, and further increases are very likely,” Rossman said.

He added that the average credit card rate – 17.96% – is the highest since 1996.

“It’s very expensive debt, so get that 0% balance transfer card or a low rate personal loan as a form of debt consolidation,” he recommended. “Or seek non-profit credit counseling, take a scramble, or cut spending. Every dollar of credit card debt you pay off represents a guaranteed, risk-free, non-taxable return regardless of your interest rate, often 15%, 20% or more,” he said.

High interest rates are hurting demand in the real estate market

On mortgages, Rossman noted that the average 30-year fixed mortgage rate is 5.78%, down from 3.27% at the start of the year, which is significantly affecting housing affordability and holding back Requirement.

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“While credit card rates will almost certainly continue to rise, the way forward for mortgage rates is less certain,” he said, adding that unlike credit cards, these don’t keep up. the actions of the Fed directly. Of course, while rates are an important part of the home buying decision, other factors are also very important, including your overall financial situation, job stability, how long you plan to stay in the House.

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About the Author

Yael Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She has also worked as a VP/Senior Content Writer for major New York-based financial firms, including New York Life and MSCI. Yael is now independent and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare”, with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in journalism from New York University and one in Russian studies from Toulouse-Jean Jaurès University, France.

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