The fate of the US economy hinges on this batch of jobs data

Welcome back from the long weekend. Get this — the S&P 500 has notched 38 all-time high closes this year.

However, today is the first day of trading for what’s historically been the worst month of the year for stocks.

This week, though, all eyes are on the labor market.

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Labor Day kicks off labor week

It’s fitting that Labor Day kicked off a week that includes three critical labor market reports on Wednesday, Thursday, and Friday, respectively:

• Job Openings and Labor Turnover Survey (JOLTS)
• ADP’s monthly private employment
• August non-farm payrolls

The August jobs data holds particular gravity.

Remember it was the same report a month ago that led to a sharp stock sell-off and led some economists to call on the Fed to make an emergency interest-rate cut.

The panic subsided and stocks eventually finished August higher.

That said, the government did announce near the end of the month that it had overstated job growth by 818,000 in the 12 months up to March.

The updated numbers will either cement or dissolve concerns that the labor market is deteriorating more than expected.

Those forecasts, in turn, will materialize in the central bank’s next move.

To be sure, Jerome Powell has already signaled that a rate cut is coming this month. What remains uncertain is the pace of those cuts.

Weaker-than-expected jobs data could open the door to a jumbo, 50-basis-point move lower, whereas as-expected reports could lead to the typical quarter-point cut.

Economists surveyed by Bloomberg expect that the US added 163,000 jobs in August, and the annual unemployment rate dipped from 4.3% to 4.2%.

The unemployment rate has not decreased in six months.

Meanwhile, anecdotal evidence suggests everyday Americans are not so confident in their employment outlook.?

A new Bankrate survey found that almost three in four respondents were concerned about job security.

Plus, nearly half of workers planned to look for a new role over the next year.

Morgan Stanley, for its part, sees the labor market as moderating but not in a “slump.” The firm expects the Fed to cut rates by 25 basis points.

“We see a solid [non-farm payrolls] print,” analysts wrote in a note Friday, “confirming our view that the economy is slowing but heading to a recession, and we don’t forecast a sharp increase in the unemployment rate on the horizon.”

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