Wall Street responds to lackluster jobs report
Conway Gittens: This is Conway Gittens reporting live from the New York Stock Exchange. Here’s what we’re keeping an eye on at TheStreet today.
Wall Street appears to be taking a lackluster jobs report in stride. The U.S. economy added merely 142,000 jobs in August, falling short of the anticipated 160,000. Nonetheless, this number represents an improvement over the adjusted 89,000 jobs added in July. Investors are finding solace in the first decline in the unemployment rate in five months, which now stands at 4.2%. Overall, this report creates the possibility for a modest interest rate reduction by the Federal Reserve when it convenes in September.
Gas prices decline with possibilities for additional drops
In other major news, inflation continues to be a worry, but there are new indications that it is easing. The average cost to refuel at the pump reached .31 during the initial week of August, as reported by AAA. This is down 50 cents from the previous year and marks the lowest price seen in half a year.
The optimistic news doesn’t end there. Americans might witness average gasoline prices dip below by Thanksgiving, as per Patrick DeHaan of GasBuddy. “Provided we don’t encounter a significant hurricane in the Gulf and the situation stabilizes in the Middle East, the national average could drop beneath in the next two months – GasBuddy is already monitoring eight states at that mark or lower.”
But what’s causing the reduction in gas prices? First, it’s seasonal. Typically, gas prices decrease around this time as Labor Day signifies the conclusion of the peak summer driving season. Second, it’s global. Currently, the global market is oversaturated, and oil demand remains weak globally. The principle of supply and demand indicates that when supply is abundant and demand is low, prices drop.
The decrease in gasoline prices has broader implications for your finances. Elevated energy costs initially contributed to the inflation surge that led the Fed to increase rates to a 25-year peak. With the reversal now taking place, the Fed has the flexibility to reduce interest rates, which translates to lower borrowing costs for mortgages, car loans, and credit cards.
