Finance

The US added 818,000 fewer jobs this year than originally estimated

Published

8 months ago

August 23, 2024

Business Finance News

The labor market isn’t as strong as predicted, with 818,000 fewer jobs. (iStock )

The U.S. Bureau of Labor Statistics just reported that the U.S. added 818,000 fewer jobs over the last 12 months (through March) than they previously predicted. The -0.5% difference was reported in the preliminary estimate of the annual revision to the BLS employment series. Consumers won’t know the final numbers until February.

The largest discrepancy occurred in the professional and business services sector, with the revision showing 358,000 fewer jobs than originally reported. The retail industry had the second-largest revision at 129,000 fewer jobs. Manufacturing came in third with 115,000 fewer jobs.

The labor market isn’t in a dire place, but the unemployment rate still hovers near 4.3%, which is higher than the beginning of 2023, Jerome Powell, the Chair of the Federal Reserve, explained in recent comments.

The unemployment rate isn’t due to increased layoffs, but rather the large increase in the supply of workers. It’s also due to “slowdown from the previously frantic pace of hiring,” Powell said. Generally speaking, the job market is getting stronger.

“Overall, the economy continues to grow at a solid pace,” Powell explained. “But the inflation and labor market data show an evolving situation. The upside risks to inflation have diminished. And the downside risks to employment have increased.”

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INFLATION IS WHY MANY AMERICANS PLAN TO DELAY RETIREMENT: SURVEY

The Fed is still poised to cut rates in September

Consumers have been waiting for the Federal Reserve to cut rates since the possibility of multiple rate cuts was announced at the beginning of the year. September finally appears to be the meeting where rates will be cut.

The Fed has held off cutting rates due to consistently high inflation. When inflation drops closer to 2%, the Fed is more likely to slash rates. A large majority of Federal Reserve officials claimed the central bank is likely to cut interest rates slightly in September, according to minutes from the policy meeting in July.

“Our restrictive monetary policy helped restore balance between aggregate supply and demand, easing inflationary pressures and ensuring that inflation expectations remained well anchored,” Powell said.

With inflation on the right trajectory, after a dip in progress earlier in the year, Americans can expect rate cuts soon. These cuts affect borrowing costs for mortgages, vehicles and student loans, among other lending options.

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HIGHER RATES TO LINGER, FED MAY MAKE CUTS IN SEPTEMBER

Consumer sentiment stabilizes

Consumer sentiment regarding the economy has stabilized over the last month, signaling that Americans are slightly more positive about where the economy is at than they were a few years ago. In August, sentiment inched up by 2.1%, marking the fourth consecutive month sentiment remained about the same, PYMNTS reported.

The future economic outlook hasn’t remained as steady, instead shooting up to its highest level in five months, largely due to the election season. Election years don’t tend to alter the current economic sentiment but can impact American’s future thoughts on where the economy is going.

“Survey responses generally incorporate who, at the moment, consumers expect the next president will be,” explained Joanne Hsu, director of the University of Michigan Surveys of Consumers. “Some consumers note that if their election expectations do not come to pass, their expected trajectory of the economy would be entirely different.”

The rise in consumer sentiment for the future is thanks, in part, to Democrats feeling more confident in the new Democratic presidential nominee, Vice President Kamala Harris. Lowering inflation has also contributed to a brighter outlook, PYMNTS reported.

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HOUSING AFFORDABILITY TOP CONCERN FOR YOUNGER VOTERS THIS PRESIDENTIAL ELECTION: SURVEY

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Finance

Zero-day options are fueling the unprecedented volatility on Wall Street amid tariff chaos

Published

43 minutes ago

April 14, 2025

Business Finance News

A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 11, 2025.

Brendan Mcdermid | Reuters

Wild intraday gyrations in stocks since “liberation day” have put investors more on edge than ever, and the popularity of zero-day-to-expiration options is partly to blame.

Zero-day-to-expiration options are contracts that expire the same day that they’re traded. The trading volume of 0DTE options tied to the S&P 500 surged to 8.5 million in April, a 23% jump since the beginning of the year and accounting for roughly 7% of the total volume in U.S. option markets, according to data from JPMorgan.

These securities have become a popular tool for investors, big and small, to make a quick buck or hedge against sudden event-driven moves in the broader market. Many argued that large volumes of these short-lived vehicles can exacerbate price swings in the market as dealers and market makers buy and sell underlying assets to balance their positions.

“You’re seeing the zero data options market amplify and exaggerate almost up or down. If you go back 10, 20 years, you didn’t have these catalysts,” said Jeff Kilburg, KKM Financial CEO and CIO. “It’s almost like gasoline on a fire when you see a move being exaggerated by the underlying options move.”

S&P 500

Volatility surged as Trump introduced steep tariffs on U.S. key trading partners and repeatedly reversed and changed his own policy. On Wednesday, the S&P 500 posted its third-biggest gain in post-World War II history, following a four-day rout that briefly pushed it into bear market territory. Last week also saw the Dow Jones Industrial Average fall at least 1,500 points on back-to-back days, the first time in history.

S&P 500’s intraday volatility almost doubled last week to 44%, exceeding the 2020 highs and is now reaching levels last seen during the depth of the 2008 financial crisis, according to data from Cboe Global Markets. This extreme uncertainty fueled the demand for 0DTEs as investors look to hedge risk and take advantage of the volatility.

“We find that 0DTE (+1DTE) have been instrumental in driving more intraday volatility, with this higher intraday activity not necessarily getting captured on a close-to-close basis,” Maxwell Grinacoff, UBS’ head of U.S. equity derivatives research, said in a note.

These options are also made more accessible for retail investors using online broker Robinhood. An option is a contract that gives its owner the right, but not the obligation, to buy or sell a specific amount of an underlying asset at an agreed-upon price, known as the strike price, and on a specific date.

“Options have been an institutional tool for decades now, and the sophistication of retail investors is allowing more and more people to utilize options to hedge or to simply speculate,” Kilburg said.