The United States economy continues to resist all adversities. The figures for the month of September reflect a thriving labor market, but which seemed to have lost some strength in recent months, but which is gaining strength by surprise. Last month, the world’s leading economy created 254,000 jobs. With this, the unemployment rate was reduced to 4.1%, according to figures published this Friday by the Bureau of Labor Statistics. The figures show an economy in top shape just over a month before the presidential elections on November 5.
The 254,000 jobs are the highest number since March and clearly exceed the average of 203,000 monthly jobs created over the last year. They are also well above the forecasts of analysts, who estimated that around 140,000 jobs would be generated in September.
In addition, the figures for the months of July and August have been revised upwards. With the new data, the United States created 144,000 jobs in July (55,000 more than estimated so far) and 159,000 in August (a revision of 17,000 upwards). The economy is in a soft landing phase, but the specter of recession that emerged with the last two months’ jobs reports is fading again.
The data reinforces the idea that the Federal Reserve does not need to rush or act aggressively at the next meeting, on November 7, after last month’s half-point cut in interest rates. Before that appointment, among others, the inflation data for September and the employment data for October will have to be known, which may affect the decision, but everything indicates that the next cut will be 0.25 points, up to the range of 4.5%-4.75%.
After this Friday’s employment report, investors almost ruled out another half-point drop, which was their bet just a week ago. Now, federal funds futures market quotes only give a 10% implicit probability to that scenario, while giving a 90% probability to the 0.25 point cut. In fact, investors are only expecting that cut and another of the same amount at the December meeting, a forecast that coincides with that anticipated by the members of the Federal Reserve.
The president of the central bank, Jerome Powell, insisted in his last press conference on conveying a message of optimism that the facts confirm. “The American economy is in good shape. It is growing at a solid pace. Inflation is going down. The labor market is at a strong pace. We want to keep it that way. That is what we are doing,” he stressed after the meeting of the monetary policy committee. The more some journalists insisted on the risks and threats that loom over the future, the more Powell insisted on conveying optimism.
Inflation has dropped and is approaching 2%, economic growth remains strong, the labor market is buoyant, consumer spending is resilient, and interest rates have begun to fall. In addition, salaries are gaining purchasing power, having risen 0.4% in September and 4% in the last 12 months. The economy seems at times in top shape.
Earlier in the week, Powell already cooled expectations of an aggressive rate cut in November. During an event in Nashville (Tennessee), he assured that the Federal Open Market Committee (FOMC), in charge of setting monetary policy, “is not a committee that is in a hurry to cut rates quickly.” And he later insisted: “From the point of view of the base case, we see it as a process that will develop over some time, not as something in which we have to go quickly.”
Employment data for October may be affected by the Boeing and dockers’ strikes – the latter already called off – and by the flooding caused by the hurricane Helenewhich has hit the southeastern United States hard and left more than 200 dead.
While waiting for this month’s figures, the Democrats are approaching the presidential and parliamentary elections on November 5 with an extraordinary balance in the labor market. During Joe Biden’s presidency, 16 million jobs have been created and the unemployment rate has been reduced, despite the rebound in recent months and the increase in the active population.
These figures contradict the apocalyptic message of the Republican candidate, Donald Trump, who presents a country in crisis and a sinking economy that do not match reality. What is certain is that the rise in prices over the last four years eclipses much of the achievements of Biden’s mandate.
The president took the opportunity to claim victory: “With today’s report, we have created 16 million jobs, unemployment remains low and salaries are growing faster than prices. Under my Government, unemployment has been the lowest in 50 years, a record 19 million new businesses have been created, and inflation and interest rates are falling. And we are seeing the power of collective bargaining to raise workers’ wages,” he said in a statement distributed by the White House.
Biden has even launched into some campaigning for Democrats and criticizing his rivals: “Republicans in Congress have a different plan: more gigantic tax cuts for billionaires and big businesses, ending the Health Care Act Affordable, undercut workers by cutting overtime and making it harder to unionize, and impose a national sales tax that would increase costs by nearly $4,000 a year. While they prioritize billionaires, we will continue fighting for the growth of the middle class.”
An hour after the report was published, neither Donald Trump nor his campaign had reacted.
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