For months, the economy has been like a jigsaw with one mismatched piece: Consumer spending has been holding up and overall growth has been solid, but the job market has looked treacherously wobbly.
As of Friday, the last piece of that puzzle is finally clicking into place.
Fresh employment data for September showed that hiring picked up strongly, the unemployment rate dipped and wage growth came in strong last month. While it is just one report, it matches up with a number of recent signals that the economy is robust.
Data revisions released last week showed that growth has been stronger and incomes have been more solid than previously understood. Retail sales data are holding up. And now, it looks as if employers are meeting resilient consumer demand by continuing to expand their workforces. In fact, the report reinforced that by many measures, the job market is as healthy as it has ever been.
“The monster upside surprise suggests that the labor market may actually be a picture of strength, not weakness,” Seema Shah, chief global strategist at Principal Asset Management, wrote in a research note after the report.
The fresh data is good news for both the Federal Reserve and the White House, both of which had been anxiously watching a recent tick up in the unemployment rate. When joblessness rises, it can herald a coming recession. If people are struggling to find work, they are likely to pull back on spending, which can further slow the economy.
But the September data showed that unemployment ticked down to 4.1 percent, keeping it at a historically low level. And joblessness fell for Black workers, who often struggle more to find work when the economy is weakening.
By several measures, hiring conditions are historically strong. People in their prime working years of 25 to 54 are employed at a rate only previously seen in the early 2000s. Average hourly earnings are strong — and climbing — even after adjusting for inflation. Women in their peak working ages are participating in the labor market at the highest levels on record.
That combination is all the more notable given the economic ride that America has been on over the past four years. First, the pandemic shuttered businesses and pushed unemployment to towering heights. Then inflation took off, prodding Fed officials to sharply lift interest rates.
Historically, such campaigns by the Fed have resulted in significant labor market slowdowns and even painful recessions.
This time, though, the central bank appears to be on the cusp of achieving a rare soft landing, a situation in which inflation slows without causing a lot of economic pain in the process. In fact, there is no precedent in which the Fed has cooled inflation from levels as high as those reached in 2022 without incurring significant labor market costs in the process.
But the fresh jobs data suggest that a gentle cooling is more than possible — it may be happening.
Source: Elections - nytimes.com
