Weekly Economic Update: August 12th 2026

Jobs continue to weaken

Looks like June’s jobs report wasn’t a fluke after all. We thought the last number was weak when it was reported that 57,000 new jobs were created in June. Well, that number was revised down to 20,000 — and then July came in at decrease of 23,000.¹ Yes, we lost 23,000 jobs last month. Yikes.

Most of the losses were attributed to fewer government payroll jobs plus hospitality positions declining after the World Cup. That may be true for July, but it doesn’t account for June’s revision. Over the past two months, jobs were overreported by 103,000 jobs and we’ve been averaging 34,000 new jobs per month. That’s pretty weak.

Expectations were initially for 100,000 new jobs before dipping to a more modest increase of 88,000. We missed the forecast by 100,000! That’s just not going to cut it. Jobs were the only part of the economy that seemed to be avoiding stress; now they’re under stress, and it’s a very bad development.

The Job Openings and Labor Turnover Summary (JOLTS) for late July met consensus with the number of job openings at 7.4 million but declined by almost 200,000 jobs.² The ADP employment report also missed consensus, coming in at an increase of 44,000 versus the expected 75,000.³

The deceleration is noticeable and throws the whole picture out of whack. Until now, we’ve had a so-so economy with a grumpy consumer who complained but continued to spend. Things were too expensive, gas was too high, affordability was out of reach, etc., but at least there were jobs to be had. We want the Federal Reserve to lower rates to help the stock market and spur the economy, but lowering rates to get jobs back on track isn’t the conversation we want to have.

Let’s also not forget that inflation is elevated thanks to higher energy costs because of all the turmoil in the Persian Gulf. A word to the wise: Keep a close eye on this market and the economic situation. We could take a nasty turn soon if things keep going the way they are.

Oil drops, markets set new records

Another week, another deal with Iran. Talks were reported to be underway last week, resulting in oil prices retreating once again to below $80 per barrel.⁴

The market has been restrained by the ongoing tensions in the Gulf, with higher energy prices and their impact on inflation keeping markets from taking the next step. Earnings have been stellar, and the only fly in the ointment was the Iran situation. Once the talks were announced, that was all the market needed to hear and take off.

The Dow Jones broke through 54,000 to set a new record last Wednesday, and the S&P 500 breached 7,700 multiple times last week.^5,6 Even the downright horrible jobs data last Friday wasn’t enough to faze the market; all it took from the jobs report was that the Fed would probably be unable to raise rates now that we may be headed into a stagflationary environment.

Sure, records are good, but it’s hard to be enthusiastic about what’s going on with this market. It feels like we’re getting to the end of the party where the wine keeps flowing but guests are beginning to duck out. It’s a good idea to stay vigilant and be prepared for anything.

Coming this week

• Last week’s jobs report will likely sour the market at the start of this week. Markets will also look carefully at the consumer price index (CPI) numbers coming out on Wednesday. The nightmare scenario would be a high CPI tacked on to the weak jobs report. That wouldn’t be welcomed by the markets. With oil yo-yoing last month because of all the activity in the Persian Gulf, it will be interesting to see how much inflation was impacted.
• Wednesday will also feature MBA mortgage applications.
• We’ll see producer price index (PPI) numbers on Thursday, which will also be interesting given the drop in energy costs in July. Thursday will also include the usual weekly job claims.
• Finally, on Friday the University of Michigan consumer confidence survey is expected to cool slightly, mostly due to higher gas prices.
• We’ll also see Fed speakers all week. With the new, less communicative Fed, there may be some interesting tidbits that emerge from one or two of their speeches about the direction of rates this year.
• We’re on the downhill side of earnings reporting for the second quarter.⁷ With 88% of S&P 500 companies reporting results, 86% have reported positive earnings per share (EPS) and 77% have reported positive revenue. Earnings growth for the second quarter for the S&P 500 is 50.4% (up from 27.7% last quarter). If 50.4% is the actual growth rate for the quarter, it will mark the highest earnings growth for the index since the first quarter of 2021.
• Valuations are near historical averages for the S&P 500, with the forward 1-month price-to-earnings (P/E) ratio at 20.0 vs. 21.4 last quarter. This ratio is in line with the 5-year average (19.9) and slightly higher than the 10-year average (19.0). P/E will likely jump again next quarter due to the market’s recovery since the March lows. Earnings have been stellar, which explains a lot of why the market has been on such a roll despite some obvious areas of concern.

Sources:

¹ U.S. Bureau of Labor Statistics. Aug. 7, 2026. “The Employment Situation — July 2026.” https://www.bls.gov/news.release/pdf/empsit.pdf. Accessed Aug. 9, 2026.

² U.S. Bureau of Labor Statistics. Aug. 4, 2026. “Job Openings and Labor Turnover Summary.” https://www.bls.gov/news.release/jolts.nr0.htm. Accessed Aug. 9, 2026.

³ ADP Research. July 2026. “ADP National Employment Report.” https://adpemploymentreport.com/. Accessed Aug. 9, 2026.

⁴ Business Insider. “Oil (WTI).” https://markets.businessinsider.com/commodities/oil-price?type=wti. Accessed Aug. 9, 2026.

⁵ Yahoo! Finance. “Dow Jones Industrial Average (ˆDJI).” https://finance.yahoo.com/quote/%5EDJI/. Accessed Aug. 9, 2026.

⁶ Yahoo! Finance. “S&P 500 (ˆGSPC).” https://finance.yahoo.com/quote/%5EGSPC/. Accessed Aug. 9, 2026.

⁷ John Butters. FactSet. Aug. 7, 2026. “Earnings Insight. ” https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_080726.pdf. Accessed Aug. 9, 2026.

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