U.S. employers added just 29,000 jobs in September, while the unemployment rate rose to 4.2% from 4.1% in August. Economists had expected about 90,000 new jobs. That shortfall came in the same week consumer confidence fell to its lowest level in more than a decade.
The Labor Department also cut its earlier estimates, reducing combined July and August payrolls by 60,000 jobs. Average hourly wages rose 3% from a year earlier, the smallest year-over-year increase since May 2021.
Who Is Feeling the Squeeze
The Conference Board's consumer confidence index dropped 6.7 points to 81.9 in September, from 88.6 in August. The survey hasn't recorded a lower reading since April 2014, and the figure sits below the lowest level recorded during the pandemic. Respondents' view of their present situation fell 7.9 points to 109.3. Their short-term outlook slid 5.9 points to 63.6.
Responses collected Sept. 1-23 were mostly pessimistic. People often pointed to the cost of gasoline, goods and services. The Associated Press reported that prices stayed elevated and wages stagnated amid the Iran war.
Housing costs added to the squeeze. Freddie Mac said the average 30-year fixed-rate mortgage climbed to 7.28% from 7.03% the previous week. That's the sixth straight weekly increase and the highest since Nov. 22, 2023. A year ago, the average stood at 6.34%. The 15-year rate rose to 6.60% from 6.42%, compared with 5.55% a year earlier.
Consumer prices increased 3.4% in August from a year earlier, below economists' expectations of 3.7%. Prices excluding energy and food rose 3%. The AP said inflation had cooled slightly, even as prices remained high.
A Low-Hire Market and a Wealth-Driven Boom
Job openings declined to 7.08 million in August from a revised 7.34 million in July, missing the 7.2 million forecast. Monthly hiring remains well below the 166,000-a-month average of 2023 and 2024, and far below the 491,000 a month recorded during the 2021-2022 hiring boom.
Ken Mahoney, chief executive at Mahoney Asset Management, called it a "'low hire, low fire' situation." He said, "AI may be taking a little of the edge off new hiring, but this is not a wave of firings." Going into the report, the 12-month average gain stood at only about 45,000 jobs a month, he noted.
Spending data paint a brighter picture, with caveats. Consumer spending rose 0.9% in August, or 0.6% after inflation, its strongest inflation-adjusted monthly gain since March 2025. Bank of America said its card data suggest "consumers are increasing their spending because they want to and not because they have to." From April through June, the economy grew at a 2.2% pace, while consumer spending, about 70% of economic activity, grew at a 3.8% annual pace.
The AP said a strong stock market supported spending. Enthusiasm about artificial intelligence lifted markets and increased the resources of wealthy investors.
Chicago Federal Reserve President Austan Goolsbee asked who was actually doing the spending. "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 and what is it going to mean for overall employment," he said. Goolsbee said sentiment has become a much less reliable leading indicator of consumer spending, and economists increasingly rely on objective measures like inflation, hiring and growth.
The White House Message
The New York Times reported that President Trump called the economy strong and said the missing element was "good public relations." He campaigned for Republicans in Alabama, Oklahoma, Texas and Washington, highlighting economic growth, booming financial markets and increased construction. His aides pointed to a burst of construction hiring in September.
Overall hiring, though, cooled. Wages again failed to keep pace with consumer prices, and Americans faced higher costs for gasoline, auto loans, credit cards and mortgages. Trump said his sales pitch wasn't resonating.
More data arrive this week. The Institute for Supply Management releases its services index Monday, Federal Reserve minutes come Wednesday, and weekly unemployment claims arrive Thursday. The University of Michigan publishes its October sentiment survey Friday. The Fed's minutes could shed light on its decision to raise interest rates.
Why This Matters: The numbers describe an economy where headline growth and household experience have split apart. Wages are rising 3% while consumer prices are up 3.4%, leaving paychecks behind. Mortgage rates at 7.28% put homeownership further out of reach. Hiring has slowed to a trickle, leaving job seekers with fewer options. Goolsbee's warning about spending concentrated among a small share of people raises a larger question for policymakers: does growth fueled by stock-market gains reach workers at all? Federal Reserve rate decisions and elected officials' choices will shape how families absorb these costs. According to the survey, those families aren't feeling better.