How the Fed Might Respond to August's Strong Jobs Report

Hiring picked up in August as US employers added a stronger-than-expected 201,000 jobs, a sign of confidence that consumers and businesses will keep spending despite the Trump administration's conflicts with trading partners, per the AP. The Labor Department says the unemployment rate remained 3.9%, near an 18-year low. Americans' paychecks grew at a faster pace. Average hourly wages rose in August and are now 2.9% higher than they were a year earlier, the fastest annual gain in eight years. Still, after adjusting for inflation, pay has been flat for the past year.

The economy is expanding steadily, fueled by tax cuts, confident consumers, greater business investment in equipment, and more government spending. Growth reached 4.2% at an annual rate in the April-June quarter, the fastest pace in four years. The good news might not necessarily be a boon for investors. The Wall Street Journal notes that stock futures dropped and the dollar surged in the immediate aftermath of the report's release—on fears the Fed will step up rate increases with wages and inflation on the rise. (More unemployment stories.)