US employment disappoints, inflation could repeat the 1960s

Markets were mixed on Friday.

The S&P 500 finished flat after a report showed that US nonfarm payrolls rose 235,000 in August, well below economists' expectations for a gain of 720,000.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said that based on this report, an announcement by the Federal Reserve of plans to taper bond purchases at this month’s FOMC meeting “is no longer likely”.

However, Goldman Sachs chief economist Jan Hatzius said that “the situation is improving somewhat” and expects “better numbers in coming months”.

Meanwhile, inflation remains a concern and there is a risk that inflation could be repeating the trajectory of the late 1960s.

“My sense is that we are not heading for the 1970s but we could be rerunning the late 1960s, when famously the Fed chair then, McChesney Martin, lost control of inflation expectations,” said economic historian Niall Ferguson.