September is shaping up to be a critical month for the fate of the U.S. economy as the labor market’s recovery and the Federal Reserve’s tapering and rate-hike plans remain in limbo.

U.S. hiring slowed sharply last month as a resurgence in COVID-19 infections stunted job gains. Nonfarm payrolls added 235,000 workers in August, widely missing the 728,000 jobs that were expected. More than 1.05 million jobs were added in July.

The disappointing reading came just days before the $300 per week in supplemental unemployment benefits were set to expire in the 25 states that had not already ended the payments. Economists are eager to see the impact that the Child Tax Credit, which pays American families up to $3,600 per year per child, has on workers reentering the labor force.

This month’s data will be “fascinating to examine, in terms of how these things potentially transition (UI benefits ending, Summer weather cools, hospitalizations potentially abate, children return to school, etc.) and how quickly the momentum toward full employment accelerates again,” said Rick Rieder, who oversees approximately $2.4 trillion in assets as chief investment officer of global fixed income at BlackRock.

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