On the September Jobs Report

A big miss versus a consensus that was a low bar to begin with. Much of it can be explained away by upward revisions to prior months, and to seasonal adjustment problems in the education sector. But with employment down 5 million from the pre-pandemic peak, there is still a large output gap that would command bigger payroll gains if the re-opening of the grassroots economy hadn’t stalled out due to the Delta scare and the culture-war over vaccinations. We think two disappointing jobs reports in a row won’t be enough to deter the Fed from announcing tapering at the November FOMC. It may be sufficient to cause the initial pace of tapering to be slower than would have otherwise been the case.