US beats expectations and adds 261,000 jobs in October

The hot jobs market continued in October when the country added 261,000 to the payrolls, the Bureau of Labor Statistics announced on Friday, while the unemployment rate rose to 3.7% from a five-decade low of 3.5%.

October’s number beat expectations and gave President Joe Biden a bit of good news headed into next week’s midterm election. 

But with the good comes the bad. While October’s number was a sign of resilience in the labor market, it also indicated the Federal Reseve’s attempts to bring inflation down from near a 40-hear high remain a challenge. 

Also in October, average hourly earnings grew 4.7% from a year ago and 0.4% for the month, indicating that wage growth is still likely to pressure inflation. 

Economists had expected 205,000 jobs to be added last month as the Federal Reserve increases interest rates in an attempt to rein in the high inflation that has caused the cost of living to skyrocket.

The Fed wants to see job growth slowing and wage growth taping off – all without tumbling the country into a recession. 

Instead, October’s job numbers were about the same rate as the 263,000 jobs added in September. In that month, there were roughly 1.9 job openings for every unemployed worker.

While steady hiring, solid pay growth and a low unemployment rate have been good for workers it’s also kicked the interest rate up to 8.2 percent, driving up the price of food, energy and housing.

Voters have been clear their top concern is inflation and the economy. They give President Biden low marks for his handling of it. Democrats worry that anger will hurt them at the ballot box on November 8th

Biden is in California on a campaign swing and will likely address the economic situtation during events there. 

Voters give President Joe Biden low marks for his handling of the economy, a troubling sign for Democrats headed into next week’s midterm election

Republicans have hammered Biden on the state of the economy. The president has been defensive of his economic record.

‘Here’s the deal: economic growth is up, price inflation is down, real income’s up, gas prices are down,’ Biden said Thursday night at a rally near San Diego in support of Democratic Rep. Mike Levin, who is in a tight race to hang on to his seat. 

Election forecasters predict Republicans will win control of the House. The GOP only needs to net five seats to take the majority in that chamber. The Senate is seen as up for grabs.  

Also closely watching the October numbers were the Federal Reserve. The Central Bank is following economic indicator closely to see if their aggressive efforts to roll back inflation are working.

The Federal Reserve hiked interest rates by 0.75 percentage points on Wednesday – the fourth such increase in a row – in order to combat rampant inflation.

Although inflation could decrease through the hikes, the cost of borrowing for American’s is expected to surge, with mortgage rates hitting 7.16 percent last week, well above the rates prior to the 2008 economic crisis. 

Following the hike, the Fed signaled that although another bump is scheduled before the end of the year, it remains unclear if it will be smaller than the recent increases. 

‘No decision has been made,’ Fed Chair Jerome Powell said on Wednesday. 

‘My colleagues and I are strongly committed to bring inflation down to our 2 percent goal… We will stay the course until the job is done.’ 

The nation’s central bank is in a delicate dance of trying to rein in raging prices without tipping the economy into a recession. 

The Fed next meets Dec. 13 and 14. 

There are other numbers coming out they’ll be watching as part of their assessment: another monthly employment report due Dec. 2 and two more releases of the consumer price index. 

Fed Chair Jerome Powell, pictured on Wednesday, said it remains unclear how much December’s expected interest hike will be, noting that the central bank is fully committed on doing everything it can to bring inflation down to 2 percent

The Federal Reserve pushed interest rates up by another 0.75 percentage points on Wednesday, the fourth-consecutive time this year

The consumer price index rose 8.2 percent in September from a year ago.

In the third quarter, which just ended in September, real wages did rise 0.8 percent, the first quarterly increase after two straight years of decline or stagnation.

And the real gross domestic product, the measure of all economic output in the country, returned to growth last quarter after half a year of contraction, rising 2.6 percent on an annualized basis in a preliminary estimate.

It followed two straight quarters of shrinking GDP, which is one informal definition of a recession, though Biden denied a recession has begun. Most economists agreed, but many believe a true recession is inevitable in the next year. 

During the pandemic, the Fed lowered interest rates to near zero to assist businesses and allow American’s to enjoy low borrowing rates. 

But in March, the Federal Reserve began increasing interest rates by historic levels to reach 3.25 percent in just seven months.