Ever since the mere hint of a possible recession last decade, I have kept Bill McBride’s Calculated Risk blog as one of my go-to blogs. In recent years, I have continued to make return visits as he’s generally good at offering a sober look at the economic data, including jobs reports. The latest job report has come in and as McBride notes, it is another solid report.
Just a few clips from what McBride summarizes:
The headline jobs number was decent. Job growth was somewhat below the consensus forecast (161,000 vs forecast of 170,000), however job growth for August and September were revised up – and the unemployment rate ticked down to 4.9%.
Job growth has averaged 181,000 per month this year.
In October, the year-over-year change was 2.36 million jobs – a solid gain.
In terms of wage growth, which for a long time had been weak to non-existent, here is the latest:
The graph shows the nominal year-over-year change in “Average Hourly Earnings” for all private employees. Nominal wage growth was at 2.8% YoY in October. This series is noisy, however overall wage growth is trending up – especially over the last year and a half.
Note: CPI has been running around 2%, so there has been real wage growth.
Other tidbits include the employment-population ratio of 25-54 year-olds, which increased in October, government employment (which is still pretty stagnant), long-term unemployment (which is trending downward but still elevated), and labor underutilization (U-6), which is also trending downward.
Overall, trends are going in the right direction. What this will mean for the election is hard to say, given all the noise in the mass media, blogs, and social media. Historically, an economic upswing tends to favor Presidential candidates representing the incumbent party. That should bode well for Clinton. The argument that the economy is a disaster is hard to make when hiring is on a consistent upswing, and wages are now on a consistent upswing. That won’t stop Trump and his surrogates from making that false argument, but it carries no substance.
My guess is that the recovery is solid enough that barring some catastrophe (for example a Trump victory plunging various markets), the Fed will begin to once more slowly lift interest rates. That’s merely conjecture on my part. As some others on this blog might say, we shall see.
