Jobs Report: The Good, the Bad, and Lots of the Ugly

August 10, 2026   Friday’s jobs report was pretty brutal. I expended considerable energy looking for something positive to write in this month’s the Good, the Bad, and the Ugly. Like the Cowboys come playoff time, it was much easier to find the Bad and the Ugly.

Last Week This Morning

• 10T: 4.64%

• 2T: 4.20%

• SOFR: 3.65%

• Term SOFR: 3.64%

• Jobs Report

  • NFP: -23k actual vs 80k expected

  • UR: 4.1% actual vs 4.2% expected 

• UWMC, the largest mortgage lender in the country, needed a $2B investment Friday as its stock plunged toward $1

• Fed Speeches:

  • Kashkari: “I’m not calling for a dramatic increase in interest rates…I’m simply saying I don’t see evidence of monetary policy [being] marginally restrictive right now, and I think we have more work to do to get inflation back down. And I would rather get going now in small steps than wait till later, then we have a really entrenched inflation problem and have to raise rates aggressively.”

  • Cook: “Inflation is too high, and I consider the risks to the inflation side of the dual mandate higher than the risks to the employment side at this point…As such, I am prepared to act by raising rates, if necessary.”

  • Barkin: “When you talk to employers, the employers still ⁠aren't hiring, and of course the good ⁠news is they're not firing either.”

The Good

• Unemployment rate dropped from 4.2% to 4.1%.

• A 23k loss isn’t as bad as it would have been 2 years ago, given what immigration policies have likely done to the monthly breakeven rate.

• Private payrolls added 30k.

• If you’re in Healthcare, you are experiencing quite the boom.

• Construction added 22k, and manufacturing of durable goods added 18k.

• About half of the Labor Force Participation Rate drop this year is really just the result of the BLS revising its measure. It’s still down, and 1mm have stopped looking for work over the last 2 months, but be wary of graphs showing LFPR plunging if they don’t account for the January update.

• July had 5 weeks, so there’s some chance this overall report had more seasonality than usual and that next month we’ll see a rebound. Almost all of the 53k local government losses were “education,” which counts teachers as unemployed in the summer.  

• For just a few hours, everyone stopped talking about inflation!

The Bad

• How much worse will it look next month when it’s revised down even further?

• The last 2 months were revised down by a combined 103k.

• 264k gave up looking for work, on top of the 720k who gave up the month prior.

• Full-time jobs are down 6 out of the last 7 months.

• Although the private sector added 30k jobs, it’s below the 3 and 6 month averages of 40k and 54k, respectively.

• Hiring and Quits are below pre-pandemic averages. Both of these are signals of labor market health.

• Remember when CNBC called the May jobs report “hot”? It’s been revised down from 129k to 63k.

• Layoffs in the Information sector are accelerating, already matching levels seen during Covid.

• Temporary layoffs jumped by 153k.

• Leisure and Hospitality lost 40k.

• Retail lost 19k.

The Ugly

• 2 out of 7 months this year have experienced job losses. The last times this occurred were Covid and the GFC.

• Over 2mm Americans have exited the labor force since the start of the year.

• Average hourly earnings rose just 0.1% m/m, while the annual increase of 3.2% was the lowest in 5 years (and obviously not keeping pace with inflation).

• Remember in “The Good” when I said the Labor Force Participation Rate wasn’t as bad as the graphs suggested? The flip side to that coin is that the update confirms the labor market was weaker than initially reported over the last 5 years.

• Long-term unemployed (right before they give up) are up 218k.

• In the last 18 months, Healthcare and Social Assistance have added 952k jobs. Everything else has lost 362k jobs.

CPI This Week

Core CPI is expected to come in at 2.5% this week. Historically, this number is about 0.5% above Core PCE. That implies we are pretty close to the 2% inflation target. 

Of course, that target measuring stick will change by year end when the task force suggests a change away from Core PCE. 

Don’t be surprised if the monthly CPI number bumps positive after last month’s -0.4% print. Remember, last month’s CPI report had that huge downside surprise following the temporary truce with Iran. This week’s report should report the opposite since that fell apart.

Pretty please, with sugar on top, tell me why we should be hiking into falling CPI and job losses. Odds of a September hike have dropped to 45%, which feels too high to me. If CPI cooperates this week, I expect this to plunge.  Odds of a hike by year end are still 78%.

The 10T is going to keep testing that key resistance level of 4.66% until inflation fears subside.