Jobs Prove Hard to Come By in August; Investors Brace for What's Next

September 7, 2012 9:40 AM EDT
The U.S. economy added only 96,000 jobs in August, notably less than the average estimate from economists of 130,000. Amid yesterday's ADP report, some traders were expecting a beat on jobs and were disappointed. In addition to disappointing August results, July and June employment was revised down to 141,000 and 45,000, from 161,000 and 64,000 – not a good sign for the U.S. economy and the employment picture.

On the bright side, the unemployment rate fell to 8.1 percent from 8.3 percent, although less workforce participation can explain much of the lower number.

Employment will undoubtedly play a critical role in the Fed's decision on whether or not to launch another round of quantitative easing, and today's number will certainly have a few Fed watchers doubling down on their QE bets. It could also play a pivotal role in the upcoming presidential elections. These events- employment, QE and the elections- are increasingly on the mind of investors this quarter, as markets set up for a dramatic close to the year.

With difficulty in Greece, rumblings in China, slowing in the States, the upcoming election, and the ongoing crisis in the euro zone, investors have had a lot to process, and the remaining months of the year are likely to offer just as much high-drama, as these developments run their course. At the epicenter of these concerns is jobs creation in the U.S.

It is difficult to underestimate the importance this data has on the investment and political landscape. Today investors received another economic report, one among thousands. Unfortunately, the commonality of the employment report might mask its importance, not just for investors but for America and for history. Maybe . . .or maybe it's just another Friday employment report.

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