U.S. employers added just 29,000 jobs in September, far short of the roughly 90,000 economists expected. The unemployment rate edged up to 4.2% from 4.1% in August. The Labor Department also cut combined July and August payrolls by 60,000. Average hourly wages rose 3% from a year earlier, the smallest annual gain since May 2021.
The numbers look soft. Yet other data tell a more complicated story: Americans keep spending even as they tell pollsters they’re unhappy.
The Jobs Picture
Job openings slipped to 7.08 million in August from a revised 7.34 million in July, below the 7.2 million forecast. That’s the lowest since openings hit 6.9 million in March. Monthly hiring remains below the 166,000-a-month average of 2023 and 2024, and well below the 491,000 a month recorded during the 2021-2022 rebound after COVID-19 lockdowns.
Still, the Labor Department’s survey showed layoffs fell, quits changed little and gross hiring ticked up modestly. Weekly unemployment claims, a proxy for layoffs, remain historically low.
Ken Mahoney, chief executive at Mahoney Asset Management, called it a “‘low hire, low fire’ situation.” He said: “Companies aren’t adding many people, and they aren’t laying many off either. A lot of firms already right-sized earlier, and AI may be taking a little of the edge off new hiring, but this isn’t a wave of firings. The 12-month average gain going into this report was only about 45,000 jobs a month, so September fits a slow trend more than a break in the economy.”
Sentiment Versus Spending
The Conference Board’s consumer confidence index fell 6.7 points to 81.9 in September, its lowest reading since April 2014 and below its lowest level during the pandemic. Responses collected Sept. 1-23 frequently cited the cost of gasoline, goods and services. The Associated Press tied the gloom to elevated prices and stagnant wages amid the Iran war.
Yet people kept opening their wallets. Consumer spending rose 0.9% in August from July. Adjusted for inflation, it rose 0.6%, the strongest monthly gain since March 2025. Bank of America, analyzing its customers’ card activity, said Americans “are increasing their spending because they want to and not because they have to.”
Chicago Federal Reserve President Austan Goolsbee said sentiment has become “a much less good leading indicator of consumer spending” than it once was. Economists, he said, increasingly rely on objective measures: inflation, spending, hiring and growth.
Those measures look sturdier. The economy grew at a 2.2% pace from April through June, after 2.5% in the first quarter. The second-quarter figure topped the Commerce Department’s earlier 1.5% estimate. Consumer spending, about 70% of the economy, grew at a 3.8% annual pace, up from 0.7%. The AP said a strong stock market, buoyed by enthusiasm over artificial intelligence, supported that spending by boosting the resources of wealthy investors.
Goolsbee offered a caution of his own. “If we got into a world where 90% of the spending was done by 10% of people, we have to think about what does it mean for overall GDP growth,” he said.
Prices, Rates and the Politics
Consumer prices rose 3.4% in August from a year earlier, below the 3.7% economists expected. Excluding energy and food, prices rose 3%. Monthly prices rose 0.3%, up from 0.1% in July.
Borrowing costs are climbing. Freddie Mac said the average 30-year fixed mortgage rate rose to 7.28% from 7.03% a week earlier, its sixth straight weekly increase and the highest since Nov. 22, 2023. A year ago it was 6.34%. The 15-year rate reached 6.60%, compared with 5.55% a year earlier. The Federal Reserve raised interest rates at its previous meeting.
President Trump described the economy as strong and said the missing ingredient was “good public relations.” He campaigned for Republicans in Alabama, Oklahoma, Texas and Washington, pointing to growth, booming financial markets and construction. His aides cited a burst of construction hiring in September. The New York Times reported, however, that wages again lagged prices and Americans faced rising costs for gasoline, auto loans, credit cards and mortgages. Trump acknowledged his sales pitch wasn’t resonating.
Wall Street shrugged off the jobs data. Lower bond yields helped the S&P 500 climb to within 0.8% of its August record. Investors’ concern that a hot economy might force another Fed rate increase eased.
This week brings the Institute for Supply Management’s services index Monday, Fed minutes Wednesday, jobless claims Thursday and the University of Michigan’s October sentiment survey Friday.
Why This Matters:
September’s data shows an economy that’s slow on hiring but not breaking. Spending, growth and low layoffs suggest households and businesses are still adapting without a crisis. That matters to anyone who thinks policymakers should be cautious about reacting to a single weak survey or jobs report. The weak spots are real, though. Wages trail prices, mortgage rates are at their highest since November 2023, and growth leans on spending supported by stock-market gains among wealthier households. If the Fed has to keep raising rates to contain inflation, borrowing costs for families and small businesses will stay high. Goolsbee’s push for better inflation-expectation measures also signals that central bankers are looking past mood readings to hard data. Voters will judge the economy by their own budgets, and Trump’s acknowledgment that his message isn’t landing shows how wide the gap is between aggregate numbers and daily costs.