Employment data released this week showing underlying weakness in America’s jobs market may be the foundation for new interest rate cuts from the Fed early next year, according to UBS.
The release from the U.S. Bureau of Labor Statistics yesterday, delayed due to the government shutdown, showed nonfarm payroll employment added just 64,000 jobs in November, relatively unchanged from April. Meanwhile, the unemployment rate continued its steady climb higher in the latter part of this year, and now sits at 4.6%.
The data painted a strained picture as we round out the year. For example, the number of people employed part-time involuntarily was 5.5 million in November, an increase of 909,000 on the month prior. These individuals, the Bureau of Labor Statistics (BLS) explained, would have preferred full-time employment but are working part-time because their hours were reduced or they were unable to find full-time jobs.
Elsewhere, the unemployment rate among teenagers was up month-on-month to 16.3%, while the number of people jobless for less than five weeks was 2.5 million in November, up by 316,000 from September. This suggests that labor market entrants and those bouncing from job to job are having a tough time landing more sustainable roles.
Likewise, although a full employment release wasn’t shared for October, this week’s data included the fact that Federal government employment declined by 162,000 in October.
As such, the data “raised several red flags” said UBS’s Paul Donovan in a note to clients this morning. He added that the quality of the data itself must be taken with a pinch of salt, because the government shutdown compounded the issue of lower response rates to BLS surveys.
But “the report does not raise too many concerns about the resilience of the U.S. consumer,” he added. “Employment in restaurants continues to grow, suggesting the trend to spending on having fun continues.”
“However, there are probably enough concerns about the health of the labor market to justify an insurance rate cut by the Federal Reserve next year.”
Currently, investors aren’t expecting that cut to come anytime soon. The next meeting at the end of January is unlikely to yield a further reduction to the base rate, according to CME’s FedWatch barometer. At the time of writing, the odds of a 25bps cut sit at 22%, though past meetings have seen odds shift dramatically as the meeting approaches.
The October figure was especially “jarring” chimed Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management. In a note shared with Fortune, Ausenbaugh echoed Donovan: “This report bolsters the way we have been thinking about the Fed’s current policy approach. The delivery of ‘insurance’ cuts over the past few months was prudent and brought rates to a more neutral level.
“One additional cut may be appropriate in the first quarter of 2026, but the economy looks stable enough to heed patience in taking additional action.”
Cautious optimism
Despite the data providing a jump-scare or two, Macquarie’s David Doyle sees some green shoots.
“While data are mixed, overall they support the notion of a likely bottom in hiring in the summer months with potential improvement lying ahead in 2026,” he wrote in a note to clients. Government employment was a drag on the figures overall, he argued, meaning that this should reverse itself in December data after the shutdown had ended.
Not everyone is so optimistic. ADP chief economist Nela Richardson told Fortune in an exclusive interview that she was not yet seeing a “rosy picture” in private payroll data. Per ADP’s most recent results, U.S. private employment dropped by 32,000 roles in November, led by weakness from smaller businesses. Companies with between one and 19 employees axed 46,000 roles, while those with 20 to 49 employees cut 74,000. Conversely, companies with 500-plus staff added 39,000 employees.
She explained: “Tiny firms are a big chunk of employment, but the tiny firms are making tiny moves, and they’re moving all in the same direction. It could be as small as not hiring two teenagers at the bakery or forgoing that delivery driver over a certain season, it doesn’t mean it’s a big, huge layoff, it’s not replacing a worker here or there, and those changes add up.”
The Justice Department released thousands of files Friday about convicted sex offender Jeffrey Epstein, but the incomplete document dump did not break significant ground about the long-running criminal investigations of the financier or his ties to wealthy and powerful individuals.
The files included photographs of famous people who spent time with Epstein in the years before he came under suspicion, including some candid snapshots of Bill Clinton, who flew on Epstein’s jet and invited him to the White House in the years before the financier was accused of wrongdoing. But there was almost no material related to another old Epstein friend, President Donald Trump, aside from a few well-known images, sparing the White House from having to confront fresh questions about a relationship the administration has tried in vain to minimize.
The records, consisting largely of pictures but also including call logs, grand jury testimony, interview transcripts and other documents, arrived amid extraordinary anticipation that they might offer the most detailed look yet at nearly two decades worth of government scrutiny of Epstein’s sexual abuse of young women and underage girls. Yet the release, replete with redactions, seemed unlikely to satisfy the clamor for information given how many records had yet to be released and because some of the materials had already been made public.
Democrats and some Republicans seized on the limited release to accuse the Justice Department of failing to meet a congressionally set deadline to produce the files, while White House officials on social media gleefully promoted a photo of Clinton in a hot tub with a woman with a blacked-out face. The Trump administration touted the release as proof of its commitment to transparency, ignoring that the Justice Department just months ago said no more files would be released. Congress then passed a law mandating it.
In a letter to Congress, Deputy Attorney General Todd Blanche wrote that the Justice Department was continuing to review files in its possession, was withholding some documents under exemptions meant to protect victims and expected additional disclosures by the end of the year.
Trump, who was friends with Epstein for years before the two had a falling-out, tried for months to keep the records sealed.
But bowing to political pressure from fellow Republicans, Trump last month signed a bill giving the Justice Department 30 days to release most of its files and communications related to Epstein, including information about the investigation into his death in a federal jail. The law set a deadline for Friday.
Limited details about Trump
Trump is hardly glimpsed in the files, with the small number of photos of him appearing to have been in the public domain for decades. Those include two in which Trump and Epstein are posing with now-first lady Melania Trump in February 2000 at an event at his Mar-a-Lago resort.
Trump’s connection to Epstein is well-documented, but he has sought to distance himself from his former friend. He has said he cut off ties with Epstein after the financier hired young female employees from Mar-a-Lago and has repeatedly denied knowledge of his crimes.
The FBI and Justice Department abruptly announced in July that they would not be releasing any additional records, a decision that was supported by Trump. But the president reversed course once it became clear that congressional action was inevitable. He insisted the Epstein matter had become a distraction to the Republican agenda and releasing the records was the best way to move on.
The White House, meanwhile, has moved to shift focus away from Trump’s ties to Epstein, with Attorney General Pam Bondi last month saying that she had ordered a federal prosecutor to investigate Epstein’s connections to Trump’s political foes, including Clinton.
Neither Trump nor Clinton has ever been accused of wrongdoing in connection with Epstein, and the mere inclusion of someone’s name in the files from the investigation does not imply otherwise.
Among other prominent Epstein contacts is the former Prince Andrew, who appears in a photograph released Friday wearing a tuxedo and lying on the laps of what appear to be several women who are seated, dressed in formalwear. Pop star Michael Jackson also appears in multiple photos, including one showing him standing next to a smiling Epstein.
New photos of Clinton
Unlike Trump, Clinton is featured prominently in the files, though the records included no explanation of how the photographs of the former president related to any investigation or the context surrounding them.
Some photos showed him on a private plane, including one with a woman, whose face is redacted, seated alongside him with her arm around him. Another shows him in a pool with Epstein’s longtime confidant, British socialite Ghislaine Maxwell, and a person whose face was also redacted. He is also seen in a hot tub with a woman whose face was redacted.
This undated, redacted photo released by the U.S. Department of Justice shows Ghislaine Maxwell and former President Bill Clinton swimming with an unknown person.
U.S. Department of Justice via AP
Senior Trump White House aides took to X to promote the Clinton photos.
White House press secretary Karoline Leavitt wrote “Oh my!” and added a shocked face emoji in response to a photo of Clinton in the hot tub.
“They can release as many grainy 20-plus-year-old photos as they want, but this isn’t about Bill Clinton,” Clinton spokesman Angel Ureña said in a statement.
“There are two types of people here,” he said. “The first group knew nothing and cut Epstein off before his crimes came to light. The second group continued relationships after that. We’re in the first. No amount of stalling by people in the second group will change that.”
The Epstein investigations
After nearly two decades of court action, a voluminous number of Epstein records had already been public before Friday, including flight logs, address books, email correspondence, police reports, grand jury records, courtroom testimony and deposition transcripts.
Besides public curiosity about whether any of Epstein’s associates knew about or participated in the abuse, Epstein’s accusers have also sought answers about why federal authorities shut down their initial investigation into the allegations in 2008.
“Just put out the files,” said Marina Lacerda, who says she survived sexual assault by Epstein. “And stop redacting names that don’t need to be redacted.”
One of the few revelations in the documents was a copy of the earliest known concern about Epstein’s behavior — a report taken by the FBI of a woman in 1996 who believed photos and negatives she had taken of her 12-year-old and 16-year-old sisters for a personal art project had been stolen by Epstein. The documents don’t show what, if anything, the agency did with that complaint.
Police in Palm Beach, Florida, began investigating Epstein in 2005 after the family of a 14-year-old girl reported being molested at his mansion. The FBI joined the investigation. Authorities gathered testimony from multiple underage girls who said they’d been hired to give Epstein sexual massages.
Ultimately, prosecutors gave Epstein a deal that allowed him to avoid federal prosecution. He pleaded guilty to state prostitution charges involving someone under age 18 and was sentenced to 18 months in jail.
Epstein’s accusers spent years in civil litigation trying to get that plea deal set aside. One of those women, Virginia Giuffre, accused Epstein of arranging for her to have sexual encounters, starting at age 17, with other men, including billionaires, famous academics, politicians and Andrew Mountbatten-Windsor, then known as Britain’s Prince Andrew.
Prosecutors never brought charges in connection with Giuffre’s claims, but her account fueled conspiracy theories about supposed government plots to protect the powerful. Giuffre died by suicide in April.
Federal prosecutors in New York brought new sex trafficking charges against Epstein in 2019, but he killed himself in jail after his arrest. Prosecutors then charged Maxwell, his longtime confidant, with recruiting underage girls for Epstein to abuse. She was convicted in 2021 and is serving a 20-year prison sentence.
The Justice Department’s extensive redactions to the Jeffrey Epstein files on Friday don’t comply with the law that Congress passed last month mandating their disclosure, according to Rep. Ro Khanna.
The California Democrat and Rep. Thomas Massie, R-Ky., led the effort on the legislation, which required that the DOJ put out its entire trove of documents by today.
But he blasted the document dump and singled out one file from a New York grand jury where all 119 pages were blacked out.
“This despite a federal judge ordering them to release that document,” Khanna said in a video posted on X. “And our law requires them to explain redactions. There’s not a single explanation. That entire document was redacted. We have not seen the draft indictment that implicates other rich and powerful men who were on Epstein’s rape island who either watched the abuse of young girls or participated in the abuse of young girls in the sex trafficking.”
He said Attorney General Pam Bondi has been “obfuscating for months” and called the files on Friday “an incomplete release with too many redactions.”
The Justice Department didn’t immediately respond to a request for comment.
In a separate X post, Massie agreed with Khanna, saying the DOJ “grossly fails to comply with both the spirit and the letter of the law” that President Donald Trump signed last month.
Deputy Attorney General Todd Blanche told Congress that the Justice Department had identified 1,200 victims of Epstein or their relatives and redacted materials that could reveal their identities, according to the New York Times.
Earlier on Friday, Blanche told Fox News that “several hundred thousand” pages would be released on Friday. “And then, over the next couple of weeks, I expect several hundred thousand more,” he added.
“Thomas Massie and are exploring all options,” Khanna warned. “It can be the impeachment of people at Justice, inherent contempt, or referring for prosecution those who are obstructing justice. We will work with the survivors to demand the full release of these files.”
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The highly anticipated Epstein files have so far landed with a thud as page after page of documents have been blacked out, with many nearly totally redacted.
While hundreds of thousands of documents have been released so far on the Justice Department’s site housing the information, there isn’t that much to see.
“Simply releasing a mountain of blacked out pages violates the spirit of transparency and the letter of the law,” Senate Minority Leader Chuck Schumer said in a statement. “For example, all 119 pages of one document were completely blacked out. We need answers as to why.”
That appeared to refer to a document titled “Grand Jury NY.”
The data dump came late Friday, the deadline that Congress established last month for disclosing the trove of files, though other documents had already been released earlier by the DOJ, Congress and the Epstein estate.
Numerous celebrities were also in that document, such as Rolling Stones singer Mick Jagger and the late pop idol Michael Jackson, who also appeared in photos with Epstein.
Former Senators John Kerry and George Mitchell were on the list as were Jes Staley, a former JPMorgan and Barclays executive, and Leon Black, a cofounder and former CEO of Apollo Global Management.
Appearing in the files doesn’t necessarily imply any wrongdoing as Epstein mingled in wider social circles and was ofter asked for charitable donations.
But Staley said he had sex with a member of Epstein’s staff, and Black was pushed out of Apollo over his Epstein ties, which Black maintains were for tax- and estate-planning services.
Numerous hotels, clubs and restaurants are listed too, plus locations simply described as “massage.” Banks included the now defunct Colonial Bank as well as Bear Stearns and Chemical Bank, which both eventually became part of JPMorgan.
Other entries fell under country categories like Brazil, France, Italy and Israel. Former Israeli prime ministers Ehud Olmert and Ehud Barak were on the list.
Politics8 years ago