The August report was not ideal, so the is now more likely to only cut key interest rates 0.25% on September 17. Specifically, the Department of Labor announced that the rose 0.4% in August, which was higher than economists’ expectations of 0.3%. The , excluding food and energy, rose 0.3% in and 3.1% in the past 12 months. Food prices rose 0.5% and energy prices rose 0.7% in August. Gasoline prices rose 1.9% in August, but are expected to decline in the fall as seasonal demand ebbs.
The news that likely got the Fed’s attention on Thursday was that weekly unemployment claims surged by 27,000 to 263,000, which is the highest rate since October 2021. Economists were expecting weekly to decline slightly to 235,000. The four-week average of weekly jobless claims rose to 240,500, which is the highest level since June. Due to labor market concerns, the Fed is expected to cut key interest rates by 0.25% on September 17.
Speaking of labor market concerns, the Labor Department announced on Tuesday that it overstated 911,000 payroll jobs in the past year through March 2025. This is the largest payroll revision in the past 26 years! This whopping revision represents 0.6% of all payroll jobs and is literally triple the 0.2% average annual revision in the past 10 years. Interestingly, Bloomberg reported that a third of leadership jobs at the Labor Department are vacant, hinting that there may be a morale problem that the new commissioner needs to correct.
Meanwhile, the French government officially collapsed as members of Parliament ousted Prime Minister Francois Bayrou in a no-confidence vote. Bayrous was demanding $52 billion in annual spending cuts to get the budget deficit down to 4.6% of GDP. Furthermore, Bayrous was demanding that Parliament (1) cancel two public holidays, (2) freeze pension and welfare payments at 2025 levels, and (3) impose a new tax on high-income residents.
The European Union’s sustainability and climate goals are being rejected by the U.S.
SEC Chairman Paul Atkins is calling out Europe for its adherence to International Financial Reporting Standards (IFRS) that mandate companies to report on sustainability and climate issues. Specifically, Atkins said that IFRS is chasing “political fads” with sustainability issues and called it a “real issue, a real problem.” Atkins also said that “Those sorts of (sustainability) principles coming into IFRS could undermine the integrity of IFRS and particularly its compatibility with (U.S. accounting standards).”
Speaking of climate goals, , is joining Mercedes CEO Ola Källenius by calling for the EU to drop its 2035 EV mandate, where 100% of vehicles must be electric. Post argued that the EV decision should ultimately come down to buyers, not the European Union (EU) and said, “Finally, the customer decides.” In March, the EU reaffirmed its 2035 EV mandate. Still, as industry calls grow for changing the electric-only mandate, it will be interesting to see if the EU will destroy the European auto industry, which cannot effectively compete with Chinese EVs that recently dominated the Munich auto show.