Between the hurricanes and a strike by tens of thousands of Boeing workers, economists had low expectations for the October jobs report released Friday. TThe data fell short of even those low expectations, showing that the U.S. added just 12,000 jobs for the month instead of the 100,000 expected.
“It was a confusing report,” said Tom Hainlin, national investment strategist in U.S. Bank’s asset management group.
Downward revisions to the last two months trimmed recent gains by another 112,000 jobs. This is the smallest monthly job gain since December 2020, when the country was still reeling from the pandemic.
Although the country is in a much more stable position than it was then, the timing of this jobs report comes just days before a crucial presidential election, as well as a Federal Reserve meeting that is expected to bring some interest rate cuts. – suggests undue importance.
Overall, however, analysts say the report shows data irregularities rather than a dire economic situation. He offers confirmation that the economy is slowing at a pace likely to satisfy policymakers.
““It wasn’t weak enough for the Fed to become significantly more aggressive,” he says. Michael Green is chief strategist and portfolio manager at Simplify Asset Management.
The October jobs report wasn’t all bad news, of course. The unemployment rate remained at 4.1%, below economists’ forecasts of 4.3%, and wage growth was strong at 4% year on year.
In a statement, EY senior economist Lydia Boussour described the cooling labor market as a “gradual decline.” The unemployment rate, she added, is “consistent with a robust but slowing labor market.”
People who are employed and secure in their employment are likely to continue spending money, Heinlin says. Robust consumer spending contributed to annual GDP growth of 2.8% in the third quarter, the U.S. Commerce Department reported Wednesday.
A quarter percentage point rate cut is all but guaranteed at the Fed’s rate-setting committee meeting next week. Friday’s jobs report raised expectations that policymakers will also cut rates in December. Since lower interest rates generally make borrowing money less expensive, this is a positive development for people planning big-ticket purchases such as a home or car. It should also offer some relief for people with variable rate credit card debt.
But with a drawn-out and polarized election season, the lower-than-expected number of new jobs in October is likely to be fodder for the final days of the campaign. With presidential candidates in a virtual head-to-head race, economic anxiety could become a determining factor in the race.
“The state of the economy is one of the most important topics for voters in swing states,” Steve Rick, chief economist at TruStage, said in a statement.
The 12,000 jobs added in October were supported by 40,000 new government jobs, suggesting businesses are cutting back on hiring or cutting their payrolls. “The private sector lost 1.5 million jobs over the past year,” Greene says. It’s a slowdown that likely contributes to the feeling among many Americans that they are on the brink of a financial crisis.
The U.S. is becoming an increasingly economically divided country, with job shortages and higher borrowing costs disproportionately affecting some segments of the population, he said. Recent increases in credit card and auto loan delinquencies reflect this erosion of economic stability, while other Americans continue to reap the benefits of frozen low-interest mortgages and rising asset values.
“You’re essentially entering an environment where the haves and have-nots live,” he says.
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