If you’ve pried yourself away from the Olympics for a few minutes, you’ve undoubtedly heard that the Fed kept interest rates stable at this week’s meeting.  That’s about to change.  The low unemployment rate has been allowing Americans to buy stuff at increasingly inflated prices for the last two years. And for the last year or so, regulators have been keenly tuned in to the labor sector, waiting for any weakness in the jobs report before considering any rate cuts.  As of today, that hurdle has been crossed.

The Bureau of Labor Statistics Jobs Report published today shows increasing weakness in every observed data point. The Unemployment Rate increased from 4.1% to 4.3%; the newer U6 model jumped from 7.5% to 7.8%. Hourly earnings have increased only 0.2% month-over-month compared to last month’s 0.3%, bringing the year-over-year figures to 3.6% compared to last month’s annualized 3.8%. Lastly, the 185K expected new jobs turned out to only be 114K.  The resulting fallout of that last detail will be seen in next month’s report.

Consequently, the likelihood of a rate cut by the Fed on September 18 now stands at 100%.  There’s a 25% chance for a 0.25% drop and a 75% chance for a 0.5% reduction. While a rate cut sounds all well and good, it does come as a result of underlying economic weakness, and more signs of trouble are sure to come. Anticipating some tough times ahead, the stock market sold off 2.28% this morning. The VIX, which measures market volatility has risen 42% just today.  So, um, the times are a changing.