Cracks are slowly emerging in the U.S. jobs market, as the numbers show a significant hiring slowdown for October.
October saw the United States add 150,000 jobs, according to data released Friday by the Bureau of Labor Statistics (BLS).
That’s roughly half the previous month’s gain of 297,000 jobs, and raises the question of whether the data signals a hiring slowdown for the coming months.
“There has been a marked slowing in new jobs created,” Desmond Lachman, a senior fellow at the American Enterprise Institute and a former official at the International Monetary Fund, told Xinhua.
Friday’s weaker-than-expected jobs numbers “suggest that the labor market is softening in a way that should please the Federal Reserve,” Lachman said.
WHAT’S NEXT?
The U.S. Federal Reserve on Wednesday left interest rates unchanged at a 22-year high of 5.25-5.5 percent, as yields on long-term U.S. Treasury bonds have spiked in recent months.
Friday’s unemployment numbers “make it likely that the Fed will not raise interest rates at its December meeting,” Lachman said.
Meanwhile, it remains unknown whether the United States will see a recession next year.
“On the expectation that the U.S. could have an economic recession in the first half of next year, one must expect a continued softening in the jobs market and a continued deceleration in wage and price inflation,” Lachman said.
Dean Baker, senior economist at the Center for Economic and Policy Research, said, “For now, it looks good.”
“Wage growth has slowed, but it is still exceeding inflation. We are adding jobs at a healthy pace. The two most cyclically sensitive sectors, construction and manufacturing, still look okay,” Baker told Xinhua.
“Bad things can always happen, but my bet is that we keep chugging along with decent job growth, low unemployment, and moderate wage growth,” Baker said.
THE POLITICS OF UNEMPLOYMENT
Some economists said a slowing job market could prompt the Fed to stop raising rates.
If that occurs, it could be good for U.S. President Joe Biden, as high rates stifle borrowing and increase consumer costs.
“Anything that reduces interest rates would be a big plus for Biden’s reelection efforts,” Brookings Institution Senior Fellow Darrell West told Xinhua, referring to next year’s race for the White House.
Christopher Galdieri, a political science professor at Saint Anselm College in the northeastern state of New Hampshire, told Xinhua a lot will depend on the overall trend, rather than a specific report, and on the unemployment rate generally.
“If (Friday’s report) is the first sign of job creation slowing down and a contraction in the labor market, that will obviously be a drag on the president and his re-election campaign,” Galdieri said.
The U.S. economy has been a sensitive issue in Washington lately. Since the recent low of 3.4 percent in April, the unemployment rate has been up by 0.5 percentage points. Despite the still robust labor market, the United States is seeing the worst inflation in 40 years.
Americans commonly complain about high prices at the grocery store, and there is no end in sight.
If unemployment rises and inflation remains high, the combination could be disastrous for whoever sits in the White House.
