Solid Job Growth Despite Tariffs

So far, tariffs and trade conflicts have not negatively impacted the labor market. The economy added a solid 201,000 jobs in August and with revisions to the previous two months (down 50K), employers have added an average 207,000 a month to payrolls this year, quite a feat, considering that we are in the tenth year of the expansion.

The unemployment rate remained at 3.9 percent and the broader rate (U-6), which tallies total unemployed; marginally attached workers and part-timers who want full time jobs, edged down to 7.4 percent, the lowest level since April 2001. Annual wages increased by 2.9 percent, a slight improvement over the past few months and the fastest pace in nine years (since mid-2009). That’s good news, considering that the annual rate of inflation is running at the exact same pace.

The report and the economy’s underlying strength makes it a near certainty that the Federal Reserve will raise interest rates at its next meeting in two weeks, and probably again in December, unless something knocks the economy for a loop. As it has been since the spring, the most pressing concern is trade.

President Trump said Friday that not only is the administration preparing to implement the previously announced $200 billion in tariffs on Chinese goods “very soon,” but “behind that there is another $267 billion ready to go on short notice if I want. That changes the equation.” Boy, does it ever…if enacted, that would bring the total amount of Chinese goods subject to U.S. tariffs to $517 billion, more than the total value of goods imported from China last year.

The looming threat of additional action on China comes as the Trump Administration is considering tariffs of up to 25 percent on imported cars and parts, which would be in addition to the 25 percent tariff on steel and 10 percent on aluminum already in place. However, if both Mexico and Canada signed on to a reformed NAFTA deal, then they would be exempted. (The European Union was already exempted from the action on cars and trucks.) So who would be the big loser if U.S. auto tariffs were enacted? Japan would be the country most negatively impacted and car and truck buyers would see prices rise.

Remember Bitcoin? It seems like only yesterday (ok, last December) that the digital currency was nearing 20,000. Over the past few months, Bitcoin has been bumping between 6,000 and $8,000 and as of last Tuesday night, you could mine yourself some of the future for $7,400. As a reminder of just how volatile this space is, prices slumped by nearly a quarter from Wednesday to Friday, after Business Insider reported that Goldman Sachs may not launch a crypto trading desk, after all. Bitcoin alternatives like Ethereum, Litecoin and Ripple suffered similar results.

Have a money question? Email me here.?