One & One Green Technologies stock soars 100% after IPO debut
Once again, we find ourselves waiting on the all-important BLS labor report. The markets and the Fed are heavily dependent on the monthly BLS employment data; however, there are other labor market data sources that can provide a more frequent indication of labor market conditions.
For instance, the weekly BLS data on jobless claims helps us appreciate the rate at which people are being laid off and how quickly those who were laid off in previous months have found jobs. Equally telling is the amount of withholding taxes the IRS receives on a daily basis.
The graph below shows the three-week moving average of the weekly US dollar amount of IRS withholding taxes. Moreover, the withholding tax data is adjusted for wage growth. By doing so, we capture the change in taxes due to job gains or losses, rather than wage changes.
The gap between 2023 and 2022 and 2024 and 2023 shows that IRS withholding tax collections increased at a good clip over those two years. Until about week 16, or the end of April of this year, a similar gap existed compared to 2024.
However, that gap is closed as we highlight below. Moreover, the current reading is actually slightly less than the same week last year. We are careful not to read too much into the recent withholding tax data, but if the 2025 collections continue to run below those in 2024, it’s highly likely that job growth has halted or even declined.
The Week Ahead And PCE Prices
PCE prices came in as expected on Friday. The graph below shows that PCE prices, both headline and core, have remained relatively flat over the last year. The impact of tariffs has yet to have an impact on inflation data. Furthermore, check out the Tweet of the Day. It shows that PCE goods prices, which are most susceptible to tariffs, were flat for the month.
- PCE: 2.6% YoY vs. 2.6% est.
- PCE: 0.2% MoM vs. 0.2% est.
- Core PCE: 2.9% YoY vs. 2.9% est.
- Core PCE: 0.3% MoM vs. 0.3% est.
The holiday-shortened week will provide us with an updated look at the labor markets. JOLTS on Wednesday and ADP on Thursday will set the market’s expectations for Friday’s BLS data. Currently, the market expects the economy to have gained a modest 70,000 jobs in August, in line with last month’s 73,000. Bear in mind that the BLS sharply revised payroll growth lower for the prior two months in last month’s report.
Thus, the average payroll growth for the previous three months is around 35k. Another weak employment reading is likely to leave the Fed with little doubt about cutting rates on the 17th. However, a hot CPI print on the 11th could cause some hesitation.
Tweet of the Day
