---
title: 'Jobs Report Blowout: 4-Sigma Beat and What It Means for the Fed'
source: 'https://youtube.com/watch?v=ZR16P8x0VHs'
video_id: 'ZR16P8x0VHs'
date: 2026-09-04
duration_sec: 862
channel: 'Meet Kevin'
---

# Jobs Report Blowout: 4-Sigma Beat and What It Means for the Fed

> Source: [Jobs Report Blowout: 4-Sigma Beat and What It Means for the Fed](https://youtube.com/watch?v=ZR16P8x0VHs)

## Summary

The video analyzes a surprisingly strong US jobs report, which came in at 168,000 jobs versus an expected 55,000, representing a 4-standard-deviation beat. The host, Kevin, discusses the implications for the labor market, the Federal Reserve, and the broader economy, while also promoting his courses and software.

### Key Points

- **Labor Market Blowout** [00:00] — The labor market report massively beat expectations, with 168,000 jobs added versus the expected 55,000. This is a 4-standard-deviation move, indicating a significant positive surprise.
- **Coupon Code Expiration** [00:38] — Kevin reminds viewers that coupon code JHOLE expires today, and that Meet Reinvest Homes AI lifetime access is going away. He directs viewers to meetkevin.com and meetreinvest.com.
- **The Magnitude of the Beat** [01:04] — The jobs report came in at 168,000, far exceeding the median estimate of 55,000. The lowest estimate was -25,000, and the highest was 125,000. This represents a multiple standard deviation beat.
- **Labor Force Participation Warning** [02:28] — Kevin had previously warned that labor force participation was falling off a cliff. He notes that it has now started to reverse up, and that this requires a blowout in job numbers to offset the rise, otherwise the unemployment rate would go up.
- **Revisions Are Positive** [03:41] — Prior months' negative revisions have been revised up. For example, a -23,000 revision was revised up to +21,000. The six-month revision in March was -70,000, but this is not as bad as it sounds on a monthly basis.
- **Trend U-Turn** [04:17] — The three-month and six-month average job gains are showing a U-turn, with the three-month average at $75,000 and the six-month average at $106,000. This indicates a solid recovery since the end of the year.
- **Bearable Scale Increase** [06:14] — Kevin moved his 'bearable scale' from 7.1 to 7.4 based on ADP reports, and then to 7.6 after the BLS report. He notes he trusts ADP more than BLS, suspecting potential political rigging in the BLS report before midterm elections.
- **Household Survey Volatility** [07:20] — The household survey showed a massive gain of 682,000, but this is volatile. The labor force participation rate popped 0.2%, which requires about 300,000 jobs to overcome. If the household survey reverses next month, the unemployment rate could pop up.
- **Unemployment Rate Nuance** [10:38] — The unemployment rate is currently at 4.1%. If it pops up to 4.5%, people probably won't care, but if it goes above half a percent, the Sahm rule could trigger and cause nervousness.
- **Wage Growth and Inflation** [12:10] — Average hourly earnings rose 0.3%, which is not particularly inflationary and is consistent with 2% inflation. This is because not all wage gains feed through to CPI or PCE.
- **Market Reaction** [12:49] — The 10-year yield is up about 0.18, briefly popping over 4.8% before settling at 4.78%. The two-year treasury is up more, indicating some bear flattening. Kevin advises not to read too much into the 40 basis point hit on the 2/10 spread.
- **Overall Optimism** [13:42] — Longer term, the report is good for the economy and could help prevent stock market nervousness over a skyrocketing unemployment rate. While it could all reverse next month, the trend on the three and six-month averages calls for more optimism than pessimism.

### Conclusion

The jobs report is a strong positive surprise for the economy, but there are risks, particularly the volatility of the household survey and the potential for a reversal next month. Overall, the trend is positive, and Kevin sees it as a long-term buying opportunity.

## Transcript

The labor market just absolutely smokes expectations, and this isn't a, oh, it's a big beat, they're just going to revise it down again. We'll talk about revisions in just a moment, but the last revision was up.
March was better than expected for the six-month revisions. This is actually potentially economically a good trend, hopefully. We'll talk about that, what this means for race, and what this means for the Federal Reserve,
But I want you to see the magnitude of this beat because it's absolutely insane. And I'm only going to take 10 seconds to say, yes, it's coupon code expiration day.
Yes, we had to extend it because there was a technical glitch last week. That ends today. It's a big price increase coming. And the Meet Reinvest Homes AI lifetime access is going away unless you lock it in today.
So go to meetkevin.com and meetreinvest.com. Okay, what do we have right here? Look at this. Look at this blowout. This is a bell curve distribution of, well, you can sort of see the yellow draws a bell curve over this.
But even without the yellow, you can kind of see you have a bell curve distribution. If anything, it kind of leans slightly to the left over here. But because you have some larger numbers here, when you get to the median and the average,
we were really expecting something around 50,000, 55,000 median and average estimate. The lowest estimate was actually calling for a loss of 25,000 jobs.
That's right here. The highest estimate was at 125,000 jobs. And obviously, out of 76 estimates, 69 of them qualified economists, we were expecting a 55,000 jobs rate, and we literally got this.
This is a multiple standard deviation myth. We got 168,000. If I subtract that from the average expectation of 56, that's 112.
I divide that by the standard deviation of 27. This right here represents a 4 standard deviation move. We are almost at Vlad versus a 5 Sigma event.
I got to work on my Vlad voice. from the GameStop days of 2021. January of 2021! Who was there for that? That was the craziest birthday I've ever had. But anyway, what the heck? What does this mean?
Well, first of all, labor force participation went up. And I made a warning about this a few days ago. My warning was, we need to watch what happens with labor force participation because it's falling off a cliff.
And it's going to come back up. And in order to offset a rise in the labor force participation, You need to blow out job numbers, otherwise the unemployment rate is going to go up.
And we did. Apparently, the household labor report skyrocketed by 682,000. Now, to show you that labor force participation rate, in case you didn't watch the video before,
this is it. This is the labor force participation rate. And if this jumps up because people go back to work or they get new jobs or whatever, but you don't have enough people going back to work, the unemployment rate goes up at the same time as learning before your course participation rate normalizes.
Well right now we had that line go up The trend has for the first time started to reverse up And we offsetting that by massive gains Now I know it is desirable to be jaded that these are all just going to get revised
away but look at what's been happening so far. Prior months negative 23,000 got revised up by the tune of about 43,000 jobs. Got revised up to 21,000 jobs. In
March we had a six month labor revision that historically those six month revisions have come in with like negative 400, negative 700, these massive revisions to the downside.
Yeah, negative 70K. That was the March revision. So in fairness, you know, for a six-month period, though, so on a monthly basis, that revision overall over a six-month period wasn't that much on a monthly basis.
And that's where now, if you look at the three-months and the six-month average job gains, we are U-turning. Take a look at this. this is actually kind of remarkable because Goolsbee over at the Federal Reserve told us,
hey, you know, the labor market doesn't just go down, stop at a level, and then start recovering at some magical floor level. Well, it turns out the actual economy decided to do exactly that
at a magical floor level of like, I don't know, whatever you want to call that, negative 5,000 or negative 10,000, zero you could call it, the effective lower bound, you could call it. Doesn't matter.
You've got a rebound. You are now sitting at average monthly gains on three months. This is not just one report. You're now sitting on average monthly gains on the three months of $75,000.
That's bested over a year. That's fantastic. You are sitting on six-month job gains of $106,000. That's that darker blue line right here.
The lighter blue line right here is the three-month average. So on a trend basis, we have solidly been recovering since the end of the year. Now, we were concerned that the pop that we had in the spring was temporary,
as manufacturing firms tried to get ahead of the tariff year-over-year expected inflation, but also the geopolitical inflation coming from potentially the Red Sea blockaded
and Hormuz blockaded and higher oil prices. And so there were some thoughts that this would come down, and the hope that was that it wouldn't crash. It didn't. It stabilized. ADP reports are stable at around 35 to 40.
ADP doesn't suggest this sort of blowout, but ADP does suggest stability. In fact, based on the ADP reports, we moved our bearable scale from 7.1 to 7.4.
I put less credence on the BLS jobs report because I personally think there's a higher likelihood that the politicians are trying to rig this before the election, that's my jaded hat.
But if I take off the jaded hat, where I think that there's some political rigging going on here that's desirable for politicians right before midterm elections,
if I remove that jade for just a moment, economically this is fantastic, short-term this is a little bearish. Okay, let's try to break that down and explain that a little bit.
So, economically, this actually increases our positioning on a variable scale from 7.4 to 7.6 because of the trend. It's less than the bump we got from the stabilization ADAP because I trust BLS less,
but this is overall really good for the economy if we can sustain that I don know if we can sustain the household report going up 680 every monthly report to offset this sort of labor force participation rate move,
because the labor force participation rate move itself was a lot. It could honestly justify alone a difference of 300,000 jobs. So the way you have to think about it with the labor force participation rate is it popped 0.2%.
Well, 0.2% boost could be about 300,000 jobs that you have to overcome. So household went up 600 and, you know, whatever, 68,000,
and the actual BLS report came in at plus 160, which makes sense because you're going to lose at least 300 on just that labor force participation move. But we had so much more cushion between, you know, that 166 number
and that household number that ultimately, right, we've still got a strong beat. Now, we are still comparing two different surveys. Household survey, calling households.
Payroll survey, calls companies. There's obviously a risk of double counting in the payrolls, but the households beat so much, usually you don't reference double counting here. Just households don't get double counted. However, that household read is relatively volatile.
So what we can do is we can go look at, let's take a look, St. Louis spread, households, labor report. And so we can kind of chart that over time via the household survey. And just see how that's moving compared to Civilian Labor Force.
There we go. Civilian Labor Force. Civilian Labor Force. Compared to the DLS jobs report. And we'll do, we'll call it a change in thousands of people. So you can see here, this was last updated last month.
And you can see the volatility in this. This is what makes this household read so blurry, and it does create a lingering risk. So here's the lingering risk, and this is why it's too early to get mega bullish.
You can't say, oh, we're definitely in the clear here. Because the household survey is so messy, up and down and up and down, see September 2025, look, plus 511, then over here we're down a million, right?
Like, it's insanely volatile, the household survey. It hasn't even been updated on this chart yet, but when it gets updated, you'll have a big line that goes up roughly to where the mouse is over here. What happens if next month we go back to negative on households
and the labor force participation rate goes up? That would be really bad. Because then, let's say the labor force participation rate goes up again by 0.2%.
Now you have to overcome a $300,000 hurdle. But if you end up getting a negative household on top of that, so you have to come over this hurdle, and then you end up getting another negative household support,
you can immediately reverse this. And then what happens? The unemployment rate, I usually write UI for unemployment insurance, I know it's weird, but the UI rate, I call it, skyrockets.
So there is a setup that if we get a reversal in households next month, even though the payrolls trends are up, we could see the unemployment rate pop up. Now, it'd be popping up from 4.1% so even if it popped up to 4.5, do people
care Probably not But once you start popping up more than half of a percent people start getting nervous the SOM rule is going to trigger get triggered and all that nonsense again So the nuance here is A this is really good for the economy
longer term if we can sustain this, and we don't have that happen, right? That's the prick in the bubble that we want to pay attention to. Labor force participation up, household down, that's the prick in the bubble. Outside of that, as long as we can kind of keep trending
in the right direction, which so far we are, this is actually really bullish for the economy. So remember to join us over using coupon code JHOLE expiring today. But in our course membership this morning, we talked about how long term, you know, in
the short term, this is going to create nervousness over the September 16th rate hike. I mean, we watched these numbers come out live. And so we reacted together instantaneously when these numbers came out in our private course member live stream, which, you know, you could join, not only get all the courses,
a tax write-off, every course member live stream, every trader, portfolio, whatever fundamental analysis we do, as well as access to a lot more features in our, you know, software. But, you know, we recognize that this actually, in the short term, while it could create some
nervousness, is a long-term buying opportunity if these trends continue like this, and hence why the bearable scale moves up. Average hourly earnings at 0.3%, not particularly inflationary.
That's generally consistent with 2% employment. Labor reports somewhere around 3% to 3.5% are usually consistent with 2% inflation, just because not all of that wage gain feeds through to CPI or PCE.
And overall, $162,000, I guess was the number. I think I said $168,000 or $162,000, whatever. It's all relatively strong. And this is good.
Now, in fairness, does it add more weight to the pain that the funding market is already experiencing in artificial intelligence? Of course. The 10-year yield is up about 0.18.
That's actually surprising that it's not up more than that. We briefly, when this number came out, popped over 4.8, and now we're at 4.78. The two-year treasury is up a lot more than the 10 right now.
The two-year treasury is up about 4.7 basis points. So you are getting some of that bear flattening, if you will. Well, that's ideal.
We'll see. Thanks. Too much to read into. 40 basis point hit here or current level on the 210. I wouldn't read into this too much.
Let's see where bonds settle out later. So, longer term, good direction. Actually impressive. Could help prevent stock markets from getting nervous over, you know, skyrocketing unemployment rate.
We're offsetting a normalization of labor force organization rate, which is a risk factor we want to get rid of. Could it all reverse next month? Sure, but that's not the trend that we've been seeing on the three or six months.
So, it calls for more optimism rather than pessimism. So I think that's kind of interesting. With that, that is a good summary on the job support. I feel like nobody else knows about this.
Congratulations, man. You have done so much. People love you. People look up to you. Kevin Passerath, a financial analyst and YouTuber. It's always great to get your say.