No recession in sight: The economy added 261,000 jobs in October 2022

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No recession in sight: The economy added 261,000 jobs in October

Employment advanced by 261,000 jobs in October, and the unemployment rate rose to 3.7 percent, compared with 315,000 new jobs in September and an unemployment rate of 3.5 percent. Economists surveyed by Bloomberg expected 198,000 new jobs.

This is the last major economic data release before Tuesday’s midterm election.

Grid Politics Editor Leah Askarinam asked Domestic Economics Reporter Matthew Zeitlin about the September jobs report.

Leah Askarinam: So, in a nutshell, is this good news for the economy?

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Matthew Zeitlin: That’s all up to one man: Jerome Powell. If he sees this report, especially the portion showing average hourly earnings going up, as a reason to continue with more and higher interest rate hikes, it will mean that asset prices fall further and the housing market will continue to slow.

A low unemployment rate means that employers are desperate to hire employees, who can demand higher wages. While the Federal Reserve does not necessarily want high unemployment, its overwhelming priority is to bring down inflation. Federal Reserve Chair Jerome Powell said in a press conference Wednesday, after the Fed increased interest rates by another 0.75 percent, that controlling inflation — what he called “price stability” — is “the bedrock of our economy.” Without it, he said, “the economy does not work for anyone.”

The Fed isn’t targeting the payroll numbers — that is, the actual number of people who are employed. They’re more fixated on wage growth and the number of job openings per unemployed worker. But it is the case that a strong labor market — where employers have to compete with each other to find workers — makes it tougher to bring down inflation.

For right now, however, it’s pretty much good news. Employers are still hiring despite inflation, six recent hikes in interest rates and gloomy economic forecasts. It basically pushes off a recession.

LA: Does this report significantly change the way you see the health of the overall economy before the election?

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MZ: Not really. We are in a strange situation right now. If we look at the 2010 midterms, Democrats lost dozens of seats in the House of Representatives, a defeat that was largely chalked up to sluggish economic activity as the economy slowly pulled itself up out of the Great Recession.

While the economy had begun expanding by that point (the recession technically ended in June 2009), unemployment was still quite high, over 9 percent. Today, unemployment is 3.7 percent, which is pretty close to its lowest levels in about five years.

And yet, if you look at survey data about how people feel about the economy, it’s as bad as it was since the absolute depths of the Great Recession and better than at any point in 2020, even when 20 million jobs disappeared in a month.

When Gallup asks people what they think the most important problem facing the country is, 38 percent cite some kind of economic issue, with 20 percent saying it’s the cost of living/inflation or gas prices and only 2 percent who it’s say unemployment or jobs. If the Democrats do poorly on Tuesday, the fact that the public seems to hate inflation more than it appreciates a low unemployment rate will be a big reason why.

LA: Why did the unemployment rate rise even if the number of jobs increased?

MZ: The unemployment rate and the jobs number come from two different surveys. The jobs number is derived from a survey of employers, while the unemployment rate comes from a survey of households. In the household survey, the number of people who were unemployed rose by 306,000, while the size of the labor force actually shrank a little. It’s not uncommon for the household and establishment surveys to point in different directions in a given month, but over time they tend to move together.

LA: What does this report tell us about productivity?

MZ: It’s hard to say. Quarterly productivity numbers are notoriously volatile, but we do know that economic growth overall has been sluggish — two negative quarters in the first of the year and mild growth in the third quarter. This puts pressure on productivity. Since productivity is output per worker, weak output and expanding employment could be a sign that productivity overall is going down.

Thanks to Lillian Barkley for copy editing this article.

  • Matthew Zeitlin
    Matthew Zeitlin

    Domestic Economics Reporter

    Matthew Zeitlin is an economics reporter at Grid focused on the domestic impact of major stories such as coronavirus, the supply chain and economic volatility.

  • Leah Askarinam
    Leah Askarinam

    Senior Editor

    Leah Askarinam is Senior Editor at Grid, overseeing coverage of politics, misinformation and the economy.