<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1665087816802,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1665087816802,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_65087805", "obj": {"id":"27789","width":"16","height":"9","video":"1111685"} }); ","_id":"00000183-aef7-d5ff-a7af-beffbbd00000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedThe economy beat expectations by adding 263,000 jobs in September, a sign that the labor market is holding up despite the Federal Reserve‘s efforts to cut inflation through interest rate hikes.
The unemployment rate fell two-tenths of a percentage point to 3.5%, a historically low figure, the Bureau of Labor Statistics reported Friday morning.
The reading follows several months of strong job gains, which have been key positive economic data that President Joe Biden has touted even as historic inflation cuts deeply into the paychecks of people across the country.
The September jobs report is further bolstering that narrative and will undoubtedly be touted by the White House in light of other major economic challenges.
“The good news is that we remain at near full employment, which means that most everyone that wants a job can find one, but in a high inflationary environment, that is also the bad news,” Chris Campbell, chief policy strategist for Kroll, told the Washington Examiner. “With a strong jobs number, we are almost certain to see the Federal Reserve continue to raise interest rates and use its other tools to slow the economy and bring down inflation.”
JOB OPENINGS PLUMMET BY MORE THAN A MILLION IN SIGN OF SLOWDOWN
One note of caution regarding Friday’s report is that labor force participation shrunk by 57,000, an unwanted development that helped lower the unemployment rate (because fewer people were counted among the unemployed). Wage growth also remained strong — average hourly earnings have grown 5% over the past year. Those gains have been undercut by inflation, though, and Fed officials would like to see nominal wage growth slow as part of the effort to contain inflation.
Still, the jobs report once again suggests that the economy is not in recession. It stands in contrast to the most troubling economic data, which are that gross domestic product has declined for two consecutive quarters — a phenomenon typically defined as a recession. Biden officials, though, have highlighted the still-strong labor market to say that the United States is not in recession.
After tumbling in the first quarter, GDP fell at a 0.6% annualized rate in the second quarter, a final estimate from the Bureau of Economic Analysis showed last month.
The National Bureau of Economic Research, which is regarded by the government and economists as the authority on declaring recessions, defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
The Fed has been on a historic rate hiking cycle to drive down inflation. Last month, the central bank conducted a monster rate hike to the tune of three-quarters of a percentage point, or 75 basis points. It was the third such increase in just four months.
While the Fed is focused on bringing down inflation, which clocked in at 8.3% in August, according to the consumer price index, doing so can cause the labor market to falter as rates increase. Friday’s report indicates that the behemoth rate hikes aren’t hurting the labor market as much as most economists had anticipated.
In another sign that the Fed’s actions are taking a toll on the economy, the number of job openings collapsed in August. Openings across all sectors decreased to 10.1 million in August, down from 11.239 million the month before, according to data released on Tuesday by the Bureau of Labor Statistics.
Friday’s report showed that employment in some industries performed better than others. There were notable gains in healthcare, with staffing finally returning to pre-pandemic levels. The leisure and hospitality industry, which includes bars and restaurants, added 83,000 jobs in September, but it still has not regained its pre-pandemic employment level.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Fed Chairman Jerome Powell has made it clear the Fed will not be swayed from its mission of lowering inflation, even if there is some economic “pain” along the way.
“Reducing inflation is likely to require a sustained period of below-trend growth,” Powell said in a high-profile speech in August. “Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.”
