Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
U.S. payrolls grew by 261,000 last month, easily beating the 205,000 Dow Jones forecast. Adding a cherry on top of this impressive number was a 52,000 upward revision to September’s figure, raising it to 315,000. Through the first 10 months of 2022, monthly job growth has averaged 407,000—not too shabby.
While the unemployment rate ticked up to 3.7% from 3.5% in September, I wouldn’t read too much into that. It’s still at a very low level, and remember that the unemployment rate comes from a different survey than the payroll data, so they can sometimes seem out of sync.
One remaining point of concern is wages, which grew at a 4.7% rate over the past year. Normally, that would be good news, but with inflation simultaneously raging at 8.2%, the purchasing power of workers continues to erode.
For those who want to read the Labor Department’s full report, you can find it here.
We also got great reports this week on jobless claims and job openings. Weekly jobless claims unexpectedly fell last week, while the number of job openings jumped to 10.72 million, or 1.9 available jobs for each job seeker.
If we were really in a recession, would job openings be rising while fewer people are filing for unemployment?
To sum up, this great labor market data is a nice surprise, and it should lead to at least a one-month moratorium on using the word recession. That said, the continued strength of the labor market will keep the Fed hiking rates longer than expected, causing concern in the stock market. The stock market, after all, does not favor rising rates.
The Fed Hikes Another 0.75%
As expected, the Federal Reserve brought short-term interest rates up another 75 basis points in its continuing effort to bring inflation under control. I won’t go too deep into this, as it would bore even me.
Here’s what you need to know:
The Fed hinted they might be open to smaller hikes in the future (this was their fourth-straight 75 basis point hike).
This temporarily excited the stock market, until Chairman Jerome Powell held his press conference.
Stocks quickly tanked after he said not to expect an end to rate hikes anytime soon, and not to even dream about the Fed reversing course and cutting rates for a long time.
As a public service, here’s a good article on what this rate hike means for you.
Say it Isn't So, McDonald's!
Sad news for fast food junkies out there, as McDonald’s has announced the farewell tour for their McRib sandwich. I must admit, I love the McRib, and I always look forward to the rare occasions when it’s available. When I heard about this farewell tour, I was sad, although there are many out there who think this is just a marketing ploy. After all, McDonald’s has already had McRib farewell tours in 2005, 2006, and 2007.
That said, I’m not taking any chances on missing out on what could be my last chance at such a delicious sandwich, which I’ve loved since 1980. I may even be forced to buy some of the merch McDonald’s plans in the McRib’s honor. Now that I’ve made myself hungry, I guess it’s a good time to sign off and wish you a great week.