The Labor Department on Friday overcame “technical difficulties” and announced that only 22,000 payroll jobs were created in August, which was a massive disappointment, since economists were expecting 75,000 payroll jobs. Even worse, payrolls were revised lower by a cumulative 21,000 in the past two months, and June now shows a drop of 13,000 payroll jobs (down from a 14,000 increase that was previously reported), which represents the first monthly decline in payroll jobs since December 2020. The unemployment rate rose to 4.3% in August, up from 4.2% in July, and is now at the highest level since 2021. The labor force grew by 436,000 in August, and the labor force participation rate actually rose to 34.3 hours per week. Average hourly earnings rose 0.3% by 10 cents to $36.53 per hour and 3.7% in the past 12 months.Treasury yields declined substantially after the disappointing August payroll report, and Wall Street now expects three 0.25% key interest rate cuts. A 0.5% key cut is now possible, but the Fed may not want to show that it is “panicking” and grossly behind where key interest rates should be. It will be interesting if the call to cut key interest rates 0.5% escalates, especially if the August Consumer Price and Producer Price indices come in below economists’ expectations. Due to lower crude oil prices as well as softening existing home prices, the upcoming inflation data may be bordering on deflation, which would merit a 0.5% key interest rate cut on September 17th.Additionally, the Fed’s Beige Book survey released on Wednesday reported that all of the Fed’s 12 districts report flat to declining consumer spending. The previous Beige Book reported a slight increase in consumer spending. Due to this latest Beige Book survey, plus a poor JOLTS report that showed that job openings declined to pre-COVID levels, and the disappointing jobs report, the stage is being set for key interest rate cuts on September 17th.