Jobs (from the New York Times): Job Growth Slows, Sowing a Mix of Concern and Calm-U.S. employers added 150,000 workers in October, falling short of expectations, but the labor market retains spark nearly three years into a recovery.
The labor market has been relentlessly hot since the U.S. economy began to recover from the shock of the pandemic. But there are signs of cooling as the holidays approach.
Employers added 150,000 jobs in October on a seasonally adjusted basis, the Labor Department reported on Friday, a number that fell short of economists’ forecasts.
Hiring figures for August and September were revised downward, subtracting more than 100,000 jobs from earlier reports. And the unemployment rate, based on a survey of households, rose to 3.9 percent from 3.8 percent in September.
But there were extenuating factors in the data. Some 96,000 people reported being out of work because of a strike or labor dispute, the most since 1997 — largely because of auto industry walkouts that have since ended.
Accounting for those quirks, job creation still looks healthy. The three-month average — a frequent reference point for economists — is 204,000, a robust pace by historical standards. And the economy has generated job gains for a remarkable 34 straight months.
Markets reacted positively to the news. The signs of recent cooling reinforced expectations that the Federal Reserve would hold off on further interest rate increases in its fight against stubborn inflation. Bond prices rose, and stocks delivered a fifth straight day of gains.
Because they worry that rapidly growing incomes can spur higher prices, Fed policymakers have been encouraged by recent decelerations in wage growth. The Labor Department report showed average hourly earnings up 0.2 percent in October from the previous month, slightly less than expected, and 4.1 percent higher than a year earlier.
The economy expanded at a 4.9 percent annualized rate from July through September, the Commerce Department reported last week. Throughout the year the economy has defied forecasts of a downturn, even as inflation lingered, driving down consumer sentiment and, to some extent, business confidence.
The economy has also experienced tremendous bifurcation in the past couple of years, with median household net worth surging while the poverty rate has ticked back up from its lows in 2021.
The Fed’s mammoth increase in interest rates — to more than 5 percent from near zero early last year — could be felt in new ways as winter approaches, with low-income borrowers and indebted businesses looking especially vulnerable. Car loans are prohibitively expensive for many. The housing market, crimped by a lack of supply and mortgage rates approaching 8 percent, has nearly frozen in many regions and locked out scores of potential middle-class home buyers.
Many market analysts are telling clients that unless a major shock occurs, the economy could keep chugging along, albeit at a more sluggish rate. Layoffs, a constant worry, are well below historical averages. And measures of labor force productivity have made impressive gains as well in recent months.
Last fall, mainstream surveys found that a vast majority of experts had a high level of confidence that recession was ahead. This fall, forecasts for the coming year are more mixed.
In a CNBC survey of economists, Wall Street strategists and market analysts, 49 percent said that they still expected a recession in the next 12 months, while 42 percent predicted a “soft landing,” in which inflation continues to abate without a broad contraction.
Throughout this year, there has been tension between dour consumer sentiment and impressive resilience in general economic data. Inflation has come down significantly from its peak in June 2022 and commercial activity has remained bright.
But many Americans are still wrestling with a more structural affordability crisis — in housing, health care, child care and more — that was festering well before this bout of inflation. The cumulative uptick in consumer prices in recent years has often added to that struggle. According to a report by Bank of America, the average child care payment for U.S. households has risen over 30 percent since 2019.
Interest Rates (from the Financial Times): US Federal Reserve holds interest rates at 22-year high-The Federal Reserve held interest rates at a 22-year high on Wednesday but kept open the possibility of additional monetary tightening amid mounting evidence the US economy remains strong.
Bank of England holds interest rates at 5.25%-The Bank of England has kept interest rates on hold at 5.25 per cent for the second successive meeting, following the footsteps of other central banks around the world.
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Jobs: US jobs growth slows more than forecast in October-Jobs growth in the US slowed sharply in October, according to a fresh labour market report that is likely to shape interest rate expectations for the world’s biggest economy.
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Consumer Spending (From the New York Times): Halloween Shoppers Not Spooked as Economic Slowdown Remains Elusive- From apple picking to skeleton cows, early seasonal spending seems solid. It’s the latest sign that Federal Reserve policy to combat inflation hasn’t slowed growth.
Economists spent much of 2023 warning that a recession could be imminent as the Federal Reserve raised interest rates to the highest level in more than two decades. But for companies like Soergel Orchards in western Pennsylvania, a slowdown is nowhere in sight.
Sales are up even though a string of rainy weekends have held back attendance at the farm’s annual fall festival. Demand at the hard cider shop has been solid. And the owners are bracing for a strong season in their store selling Christmas decorations.
That is great news for American companies. But it is a also a source of confusion. Why is the economy still growing so quickly more than a year and a half into the Fed’s campaign to slow it down, and how long will the upswing last?
Fed officials have lifted interest rates above 5.25 percent, making it more expensive to take out a mortgage, borrow to expand a business or carry a credit card balance. Those moves were meant to trickle out through markets to cool the real economy. Some parts of the economy have felt the squeeze — existing home sales have slowed, for instance. Yet employers continue to hire and families keep spending.
It is difficult to predict what comes next as the all-important holiday shopping season approaches. A solid job market and cooling inflation could combine to give consumers the wherewithal to keep powering the economy forward. But many companies are being careful not to build up too much inventory or predict too strong a sales outlook, worried that higher borrowing costs could collide with smaller savings piles and the accumulated effects of more than two years of rapid inflation to make Americans thriftier.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
How does inflation affect the poor? Inflation can be especially hard to shoulder for poor households because they spend a bigger chunk of their budgets on necessities like food, housing and gas.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
What happens with holiday shopping could help shape what the Fed does next.
The central bank has been trying to slow growth for a reason: Inflation has been above 2 percent for 30 months now. To get prices under control, policymakers think they need to tamp down demand.
The logic is fairly simple. If rapid hiring continues and wage gains prove quick, people who are earning more money are likely to feel confident and keep spending. And if shoppers are eager to buy restaurant dinners, new gadgets and updated wardrobes, it will be easier for companies to protect their profits by raising prices.
That is why Fed officials are keeping an eye on how strong consumers and the job market remain as they contemplate what to do next with interest rates. Policymakers are almost sure to leave rates unchanged at their meeting on Nov. 1, and a number of them have suggested that they may be done raising borrowing costs altogether.
But top officials have kept alive the possibility of one final quarter-point increase, if economic data were to remain buoyant.
Inflation (from the Financial Times): Eurozone inflation falls more than expected to 2.9%-Eurozone inflation has fallen more than economists had expected after consumer prices rose 2.9 per cent in the year to October, the slowest increase since July 2021.
Economic Growth: from the Financial Times: US economic growth accelerated to 4.9% in third quarter-The US economy expanded faster than expected in the third quarter, growing at its quickest pace in almost two years in the latest sign of the country’s economic resilience in the face of high interest rates.
From the New York Times: Europe’s Economy Falters, Diverging From Strong Growth in U.S.-Economic growth in the eurozone contracted 0.1 percent last quarter, and inflation in October fell to a two-year low, a sign that high interest rates were taking a toll.
As the United States economy powers ahead, Europe is moving along a very different path: a drawn-out economic slowdown burdened by a double dose of high interest rates and the lingering impact of Russia’s war in Ukraine.
Growth in the eurozone contracted 0.1 percent this summer, more than expected, as record-high interest rates intended to fight inflation blunted economic activity in Germany and France, the region’s two biggest economies, Europe’s statistics agency reported Tuesday.
The anemic pace is in sharp contrast to the United States, where the economy has surged despite a jump in interest rates by the Federal Reserve to tame inflation. Gross domestic product expanded 1.2 percent in the third quarter from the previous quarter — a 4.9 percent annual rate — powered by prodigious consumer spending and slowing inflation, which lifted purchasing power.
The downturn reflected the challenges facing policymakers at the European Central Bank, who last week paused their campaign of interest rate increases amid signs that the region’s economy has weakened. Data showed the eurozone’s inflation rate in October eased to 2.9 percent, another indication of the impact of the central bank’s higher interest rates.
From the CalChamber: California’s minority-owned businesses are a powerful asset to the state’s economy, generating $28.7 billion in tax revenue and supporting 2.6 million jobs annually, according to a new report issued earlier this month. The report also found that these minority-owned businesses contribute $192.8 billion in economic output, which is more than the annual gross domestic product (GDP) of 18 U.S. states.
And Masking (from the LA Times): L.A. won’t step up healthcare masking rules barring a wave-Officials say they’ll hold off on mandating face coverings, unlike in the Bay Area. By Rong-Gong Lin II
Most San Francisco Bay Area counties are reinstituting mask requirements among workers in healthcare settings, timed to coincide with the arrival of the annual respiratory illness season and an expected late-year resurgence of COVID-19.
To this point, however, Los Angeles County has not taken that same step. Rather, the county Department of Public Health issued a health order in September requiring healthcare workers to either get both the flu and updated COVID-19 vaccines or mask up when working in patient care areas.
COVID-19 conditions would have to substantially worsen for L.A. County to consider bringing back a more widespread mask mandate in healthcare settings, according to county health officer Dr. Muntu Davis.
The county would need to record 20 or more new coronavirus-positive hospital admissions a week for every 100,000 residents.
The county last exceeded that threshold from mid-January to mid-February 2022, when the then-emergent Omicron variant rapidly spread worldwide, ultimately spawning the second-deadliest wave of the pandemic locally.
The current rate is about 4 new weekly coronavirus-positive hospital admissions for every 100,000 residents.
When asked at a Board of Supervisors meeting Tuesday why L.A. County was not adopting universal masking policies at healthcare settings, Davis noted that COVID levels are still low, and both health officials and hospitals want to encourage healthcare workers to get their updated COVID-19 vaccination this autumn.
The nationwide requirement that most healthcare workers — those working at institutions receiving federal dollars — be vaccinated against COVID-19 was lifted in August.
As of Oct. 21, the most recent data available, coronavirus levels in L.A. County wastewater were just 11% of last winter’s peak.
During the height of the summer uptick in COVID-19 transmission in mid-September, viral concentrations were at 38% of last winter’s peak.
L.A. County is averaging about three COVID-19 deaths a day, fewer than the five seen after the late-summer uptick, but still higher than the mid-summer lull of about one per day. Most COVID-19 deaths are occurring among people who aren’t up to date on their vaccinations, health officials say.
The county ended its masking orders for patients and visitors in healthcare settings in April, and for employees in patient-care settings in August .
California also ended its statewide universal mask requirement for healthcare settings in April, but local governments can still implement more stringent orders if they see fit.
The two cities in L.A. County with their own independent public health departments have taken differing approaches.
Pasadena requires that healthcare workers in patient-care areas be up to date with the latest COVID-19 vaccine, as well as wear masks in healthcare settings. Long Beach has adopted a policy similar to L.A. County’s.
Even absent an order, healthcare facilities can decide on their own to require masking.
Farther north, most of the San Francisco Bay Area will have mask requirements for at least healthcare workers this autumn and winter.
L.A. County’s latest health order is similar to one issued annually from 2013 until the pandemic began, which required healthcare workers either get vaccinated against flu or wear masks when in patient care areas.
Since that policy was enacted, the annual flu immunization rate among the county’s hospital-based healthcare providers rose from 58% to 86% by 2020.
Like COVID, flu levels are still relatively low. Typically, health officials consider the start of flu season to be when 5% of respiratory specimens tested at sentinel labs in L.A. County come back positive for flu. But in L.A. County, that figure is still below 2%, Davis said.
Another worrisome ailment — respiratory syncytial virus, or RSV — is already on the upswing , however, with 8% of specimens turning up positive, up from 5% the week before.