August Jobs Report Disappoints, but Unemployment Rate Drops

Though the jobless rate fell from July, hiring wasn't as strong as expected.

During the month of August, weekly jobless claims came in at a pretty slow pace compared to previous months, leading economists to believe that things were improving on the unemployment front. And now, August's jobs report confirms that the economy did, in fact, improve. The unemployment rate fell from 5.4% in July to 5.2% in August, reaching its lowest level since the coronavirus outbreak took hold. But the news wasn't all positive.

Job creation stalled

While the unemployment rate may have fallen in August, job creation wasn't strong. The economy only added 235,000 new positions last month, which is well shy of the 720,000 experts were predicting. In fact, August's jobs total was the worst since January.

All of this is coming at a time when the $300 weekly boost to unemployment benefits is about to come to an end. There are still millions of Americans who are collecting unemployment. They may not have much (or anything) in the way of savings to fall back on. And now, they may be seeking jobs at a time when open positions aren't popping up as rapidly as expected.

Now, one silver lining is that wages showed signs of growth in August. Last month, they rose 4.3% on a year-over-year basis and 0.6% on a monthly basis. But given the way inflation has taken hold, that doesn't necessarily mean workers today are getting more buying power.

Will more stimulus aid come through?

At this point, lawmakers have not made any attempts to extend the $300 weekly unemployment boost that will expire this weekend. Given that many states pulled the plug on that boost during the summer, that's not surprising. But what about a fourth stimulus check?

While the number of new jobs added in August may be a disappointment, the reality is that the unemployment rate did fall as expected. And that alone is probably reason enough to assume that a follow-up stimulus check won't be hitting Americans' bank accounts anytime soon.

That said, it would be premature to write off the idea of a fourth stimulus check completely. Right now, the Delta variant is wreaking havoc on a national level, causing COVID-19 cases to spike across the country. So far, we haven't seen lockdowns or restrictions that mimic those that were implemented early on in the outbreak. But if things worsen, non-essential businesses may be forced to shutter on a temporary basis like they had to during the spring of 2020. If that were to happen, more jobs could easily be shed, leading lawmakers to potentially consider a fourth stimulus.

Of course, that's not a scenario we should hope for. Nobody wants to see a health crisis grow even more devastating, and we certainly don't want to see the jobless rate start ticking upward after the progress that's been made in recent months. And while it's hard to predict what the jobs situation will look like for the remainder of 2021, there's reason to be hopeful that more positions will be added and the unemployment rate will manage to drop even further before the year is over.