The August 2026 Employment Situation report looks stronger than recent months, but we believe the headline payroll number should be treated cautiously. The Bureau of Labor Statistics reported that nonfarm payroll employment increased by 162,000 jobs in August , while the unemployment rate remained at 4.1 percent . That is a significant improvement over the recent trend, but we are not convinced the number fully reflects underlying labor-market conditions. One reason is concentration. About 101,000 of the 162,000 reported jobs—roughly 62 percent—came from just two categories: food services and drinking places and local government education . BLS also noted that the education increase largely offset a decline in the prior month, suggesting that timing and seasonal adjustment may be influencing the headline figure. Much of the rest of the economy showed limited hiring. Employment changed little in wholesale trade, retail trade, transportation and warehousing, financial activities, profess...
Federal Reserve Chairman Kevin Warsh’s August 28, 2026 Jackson Hole speech deserves careful attention because it provides the clearest indication yet of how he intends to define Federal Reserve credibility. Warsh declared that the Federal Reserve’s 2 percent inflation target is “firm” and “fixed,” said current inflation remains too high and concluded that the Fed’s “predominant focus right now should be on prices.” He also made clear that he regards short-term interest rates as the Fed’s predominant monetary-policy tool and unconventional interventions as appropriate principally for genuine crises. Warsh and Rate Hikes: CIR On Point On July 29, Creative Investment Research (CIR) issued a warning titled “Federal Reserve May Consider Rate Hike to Establish Chairman Warsh’s Inflation-fighting Credibility.” We argued that Warsh faced an unusual institutional problem: as a newly installed chairman operating amid intense political pressure for lower rates, he might feel compelled to establi...