And jobs slightly lower than expected. Inflation ticked down to 3.6, which has many people wondering if the Fed will raise interest rates once again when they meet in a couple of weeks. More on the big financial picture we welcome in Morgan Stanley wealth advisor and our good friend George next. Good morning, George. Good morning, Frank. Good to have you in on a Sunday morning. Let's get your take on the numbers. They were expecting 240,000 new jobs. They got 209,000. And inflation ticking down a bit as well. Frank, in any economy, a world economy or US economy having 209,000 new jobs, that a month is usually a big number. I mean, our economy only needs between 100 to 150,000 new jobs to break even. So anything over that is really gravy. However, having said that, we've had a really hot jobs market and this is the lowest number we've had really in our post-COVID environment. We've been averaging the past three months about 325,000 new jobs. So this is a big decrease from that and it's essentially what we've seen also is that the unemployment rate, instead of ticking up, is really ticking down from 3.7 to 3.6. And this is essentially due to the fact that the 25 to 50 year olds are coming back to work. There's more participation from that group, especially women really leading the charge in that particular area available jobs are down, but we still have 9 million unfilled jobs, which means that employees still feel empowered to quit a job and to be able to get a job pretty quickly. The Fed is watching that labor market in a big way. The hot jobs market you mentioned has remained resilient despite efforts to cool that down a bit by the Fed. What does that mean for curbing inflation ? Our economy is based on consumption. 75% of our GDP report a gross domestic product report is people buying things. In order to do that, they have to be working. So when you have a low unemployment rate and you have most people working, they're still spending money. So you have a lot of money chasing too few goods, which really fights against the Fed's trying to lower the inflation rate. Well we're all concerned about inflation. How about the CPI, the consumer price index report that comes out this week on Wednesday? What are your thoughts on what we might expect coming week? Well, we're all looking forward to seeing the Consumer Price Index report that comes out, as you said, on Wednesday. And that's really an artificial bag of groceries. It has about 80,000 items in it. And the bureau of Labor Statistics tracks the increases from month to month. And so we're expecting it to come in a little bit hot from last month, up about a quarter point, which really means that our inflation rate on an annualized basis is really at about 5. You know, it was close to nine. It's down to five. But getting it from five down to the target rate of two is really going to be tough. Now, food prices increased last month a little bit. Energy was up a little bit and used cars were up significantly. So those things kind of tend to fuel the inflation rate. So the CPI report plus a pretty hot jobs report combined will have an effect on the Federal Reserve when they decide what kind of rates they want to increase the lending rate to banks at well, a CPI. That's Wednesday. The PPI is Thursday. The producer price index. Tell our viewers what that is and how that's used to curb inflation. Yeah, we very seldom look at that except for people like myself and other economy. That's what you, the producer? Well, we have to because that affects really the CPI. The producer price index is really up front. That's what the manufacturers pay for their goods and assembling things. Once they're done, then they pass them on to the retailers. For example, cars are part of the PPI report, assembling cars, passing them on to the car lots, and then they're sold to us. So when the when the when the producers have an increase in inflation, then they have to charge more to the retailers. The retailers have to mark that up to us. And that's what tends to increase inflation. So we've really seen the PPI come down slightly, even though last month it was up a little bit. So last year the producer price index was up about 2.7. That gets marked up. But now we're seeing a trend down a little bit to 2.5. So that's actually good news moving forward. I know the Fed still needs to see some of those numbers coming out this week in the weeks to come. But they meet on the 25th and the 26th. I know you don't have a crystal ball. We say this a lot, but do you think do you think interest rates will tick up a little bit? Well, we can almost bet on that even though we don't have a crystal ball. We can bet on the Federal Reserve raising the rates about one quarter of a percent, which really isn't much. But that brings the total lending rate to banks at about 5.37. Then the banks mark that up to businesses and that affects profitability of businesses and our ability to borrow. Also So we expect a raise coming at the end of this month and then we could possibly see another raise in September this this mission isn't over. The Federal Reserve has to lower the inflation rate and it's still quite high. And driven by that, of course, as we saw wages increase. Also up a little over 4% for the year. And so that gets embedded into the cost of goods, which increases inflation . So that fights against the Fed's trying to get the rates lower. So they continue to raise them. But we think, you know, two raises of a quarter point. It takes about a year really for those raises to really matriculate through the system. And some of the big raises haven't come all the way through yet. So I see the Fed more being hawkish, but a pause and a pause . And so hopefully, you know, 1 to 2 more small rates will be enough because that will eventually stifle the economy. Yeah well, they've got a ways to go from 5% down to 2. So we will see big drop. All right, George , always a pleasure. Have a great weekend. And thanks for waking up with us this morning. And giving us a little bit of knowledge with the numbers. Well, let's have let's ask
