A Blowout Jobs Report Has Wharton’s Jeremy Siegel Saying Only the Midterms Are Stopping a Rate Hike
Wharton's Jeremy Siegel says the Fed would already be hiking rates if not for one thing sitting on the calendar. The jobs market just gave the committee every reason it needs, and working-class borrowers may feel the consequences first.
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Jeremy Siegel, the Wharton finance professor whose calls on Fed policy tend to move desks, is testing fate. He said this week that the only thing standing between American borrowers and a rate hike is a calendar. In his view, the August jobs report was strong enough that the Federal Open Market Committee (FOMC) would already be tightening if the November midterms were not weeks away. That is a striking claim to make about an institution that insists it is independent and does not watch elections; it lands because the underlying data backs him up.
Total nonfarm payrolls climbed to 159.08 million in August from 158.91 million in July, a monthly gain of roughly 162,000 jobs that topped every published estimate. Unemployment held at 4.1%, and job openings, the Fed’s favorite gauge of labor demand, rose to 7.27 million in the latest JOLTS release. Wells Fargo Chief Economist Tom Porcelli told clients the report pushed September rate-hike odds toward 60%. Stocks absorbed the news accordingly: the S&P 500 ETF closed down 0.39%, and the 10-year Treasury yield settled at 4.78%, with the 30-year at 5.24%.
A Boom That Splits the Political Map
The paradox is what makes the story sting. Venture capitalist Chamath Palihapitiya captured it in a two-word reaction on X, “Bad for Democrats.” He posted atop a Kalshi note pointing out that Americans without college degrees are enjoying one of the best labor markets in decades. The hiring strength that helps blue-collar workers is the same data point that raises the odds of a rate move hitting their car loans, credit cards, and mortgages. The Fed’s target range currently sits with an upper bound of 3.75%, unchanged since December 2025. Another 25 basis points would flow directly into variable-rate consumer debt within a billing cycle.
Inflation is the reason a hike is even on the table with unemployment this low. The Consumer Price Index (CPI) reached 332.8 in July, a fresh cycle high, and the core Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, printed 130.66, also a new peak in the supplied series. Both measures have ground higher every month since last fall. The latest tell could be right around the corner when August CPI data is released later this week.
Here is where the boom looks less generous. Real average hourly earnings for total private workers registered $11.31 in July 2026, essentially flat against $11.32 in July 2025. The paychecks buy roughly what they did a year ago; there are simply more of them. That is a jobs recovery measured in headcount rather than purchasing power, and it explains why consumer sentiment has lagged the payroll strength.
What to Watch Next
The September FOMC meeting is the immediate test of Siegel’s thesis. If Chair Kevin Warsh holds at 3.75% while citing “data dependence,” the political-calendar reading gains credibility. If the committee hikes, mortgage rates that are already near 7% push higher, and the working-class wage story turns quickly into a debt-service story. The signal to watch is the September dot plot: any median that drifts above the current range tells you Siegel was reading the room correctly.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
