This morning the August official jobs report was released. There were 1.37 million jobs produced, down from last month’s 1.73 million. It was expected to fall as workers return and states continue the process of reopening. The unemployment rate fell more than expected to 8.4% from 10.2%.

The surprise was that the average hourly earnings jumped .4% when it was expected to be flat after a very small increase of .1% last month. With high unemployment, there should be very little pressure on employers to raise salaries.  However, that is not what happened because a .4% increase in one month is a strong number. Are we starting to see wage inflation on top of increased prices for food and autos?

The Fed said they are going to let inflation rise above their target of 2% and let it run for a while. What that means exactly is anyone’s guess, but it certainly is a change from what the Fed has done in the past.