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    U.S. payrolls increased by 150,000 in October, less than expected

    Nonfarm payrolls increased by 150,000 for the month, against the consensus forecast for an increase of 170,000. That was a sharp decline from the gain of 297,000 in September.
    The unemployment rate rose to 3.9%, the highest level since January 2022, amid a sharp decline in household employment.
    From a sector standpoint, health care led with 58,000 new jobs. Other leading gainers included government (51,000), construction (23,000) and social assistance (19,000).
    Manufacturing posted a decline, mostly due to the auto strikes.

    The U.S. economy saw job creation decelerate in October, confirming persistent expectations for a slowdown and possibly taking some heat off the Federal Reserve in its fight against inflation.
    Nonfarm payrolls increased by 150,000 for the month, the Labor Department reported Friday, against the Dow Jones consensus forecast for an increase of 170,000. The United Auto Workers strikes were primarily responsible for the gap as the impasse meant a net loss of jobs for the manufacturing industry.

    The unemployment rate rose to 3.9%, the highest level since January 2022, against expectations that it would hold steady at 3.8%. Employment as measured in the household survey, which is used to compute the unemployment rate, showed a decline of 348,000 workers, while the rolls of the unemployed rose by 146,000.
    A more encompassing jobless rate that includes discouraged workers and those holding part-time positions for economic reasons rose to 7.2%, an increase of 0.2 percentage point. The labor force participation rate declined slightly to 62.7%, while the labor force contracted by 201,000.
    “Winter cooling is hitting the labor market,” said Becky Frankiewicz, chief commercial officer at staffing firm Manpower Group. “The post-pandemic hiring frenzy and summer hiring warmth has cooled and companies are now holding onto employees.”
    Average hourly earnings, a key measure for inflation, increased 0.2% for the month, less than the 0.3% forecast, while the 4.1% year over year again was 0.1 percentage point above expectations. The average work week nudged lower to 34.3 hours.
    The Fed uses wage data as one component of its inflation watch. The central bank has opted not to raise interest rates at its past two meetings despite inflation running well above its 2% target. Following Friday’s jobs data, markets further reduced the probability of a rate hike in December to just 10%, according to a CME Group gauge.

    Markets reacted positively to the report, with futures tied to the Dow Jones Industrial Average adding 100 points.
    From a sector standpoint, health care led with 58,000 new jobs. Other leading gainers included government (51,000), construction (23,000) and social assistance (19,000). Leisure and hospitality, which has been a leading job gainer, added 19,000 as well.
    Manufacturing posted a loss of 35,000, all but 2,000 of which came because of the auto strikes. Transportation and warehousing saw a decline of 12,000 while information-related industries lost 9,000.
    “After years of incredible strength, the labor market could finally be slowing. The topline miss, plus downward revisions and higher unemployment, deliver a strong message to [Chair] Jerome Powell and the Fed,” said David Russell, global head of market strategy at TradeStation. “Further tightening is now highly unlikely, and rate cuts could be back on the table next year.”
    In addition to the October slowdown, the Bureau of Labor Statistics revised lower its counts for the previous two months: September’s new total is 297,000, from the initial 336,000, while August came in at 165,000 from 227,000. Combined, the revisions took the original estimates down by 101,000.
    Job creation skewed heavily to full-time workers, reversing a recent trend. Full-time jobs grew by 326,000, while part-time tumbled by 670,000 as summertime seasonal jobs wrapped up.
    The report comes at an important time for the U.S. economy.
    Following a third quarter in which gross domestic product expanded at a 4.9% annualized pace, even better than expected, growth is expected to slow considerably. A Treasury report earlier this week put expected fourth-quarter GDP growth at just 0.7%, and 1% for the full year 2024.
    Fed policymakers have deliberately tried to slow the economy in order to tackle inflation
    . On Wednesday, the Fed’s rate-setting committee chose to hold the line for the second consecutive meeting following a series of 11 hikes since March 2022.
    Markets expect the Fed is likely done raising, though central bank officials insist they are dependent on incoming data and still could hike more if inflation doesn’t show consistent signs of falling.
    Inflation data has been mixed lately. The Fed’s preferred gauge showed the annual rate fell to 3.7% in September, an indication of steady but slow progress back to its goal.
    Surprisingly strong consumer spending has helped propel prices higher, with strong demand giving companies the ability to charge higher prices. However, economists fear that rising credit card balances and increased withdrawals from savings could slow spending in the future. More

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    Here’s what to watch in Friday’s big October jobs report

    Economists surveyed by Dow Jones are expecting Friday’s nonfarm payrolls report to show job growth of just 170,000 in October, down from 336,000 the previous month.
    Though long-standing trends such as aggressive job switching and big wage gains now show signs of reversing, hiring is still strong, one staffing executive said.
    A potentially important trend to watch Friday has been the hiring of part-time workers in recent months.

    Now Hiring banner in window of FedEx Office storefront, Queens, New York.
    Lindsey Nicholson | UCG | Universal Images Group | Getty Images

    Apologies if you’ve heard this one before, but the jobs market is slowing down. No, really.
    Aside from the long-standing calls for a recession to hit the U.S., the expectation for a hiring retreat is probably the most oft-heard — and, so far, incorrect — economic call of at least the last year.

    True to form, the consensus Wall Street call is that the October nonfarm payrolls report, which the Labor Department is scheduled to release Friday at 8:30 a.m. ET, will show a sharp decline from September. Economists surveyed by Dow Jones are expecting growth of just 170,000, down from the shockingly high 336,000 the previous month and well below the 260,000 monthly average so far in 2023.
    Don’t hold your breath looking for that big of a decline, said Amy Glaser, senior vice president at global staffing firm Adecco.
    “This is going to be another surprising month. We’re still seeing resilience in the market,” Glaser said. “We’re still seeing a ton of positivity on the ground with our clients.”
    Though long-standing trends such as aggressive job switching and big wage gains now show signs of reversing, hiring is still strong as employers look for incentives such as flexible work scheduling to bring in new talent, she added.
    “Folks aren’t able to jump from one job to another and gain these huge, astronomical pay increases, which is good news for the employers,” Glaser said. “On the flip side, we’re seeing a return of the workforce … The folks coming off the bench are really going to make an impact over the upcoming months.”

    Trends in labor force participation will be one metric worth watching closely when the report hits, as the participation rate is still half a percentage point below its pre-pandemic level. Here are a few more:
    Average hourly earnings
    Wages increased 4.2% from a year ago in September. That is expected to decrease to 4% for October. The earnings picture is an important component to inflation, and one policymakers will be viewing with a careful eye.
    The Dow Jones estimate is for a 0.3% monthly gain, after rising 0.2% in September. Federal Reserve officials have said they don’t think wages have been the key driver of inflation, though Chair Jerome Powell said Wednesday that the labor market could emerge as a more significant factor ahead.
    Full-time vs. part-time
    “In recent months, firms are hiring relatively more part-timers, indicative of the uncertainty in near-term business conditions,” said Jeffrey Roach, chief economist at LPL Financial.
    Indeed, a potentially important trend has been the hiring of part-time workers in recent months. Since June, their rolls have swelled by 1.16 million, according to Labor Department data. Conversely, full-time positions have dropped by 692,000.
    “Employers are creating more part-time opportunities that are bringing in players off the bench,” Glaser said. “There’s still a bit of caution on the side of employers, and they’re choosing to open part-time roles in this wait-and-see mentality.”
    The unemployment rate
    While the rise in the jobless rate over past months has generally flown under the radar considering how historically low it is, the level actually is approaching a potential danger zone.
    An economic premise known as Sahm’s Rule states that recessions happen when the unemployment rate’s three-month average runs half a percentage point above its 12-month low. The current rate of 3.8% is 0.4 percentage point above the recent low last seen in April.
    “Most investors expect additional deterioration in the job market before we see a meaningful deceleration of inflation,” Roach said.
    Strike impact
    Close to half a million American workers have gone on strike in recent months. While a number of those high-profile stoppages have been resolved, some of the activity will show up in the October jobs report.
    Specifically, the Bureau of Labor Statistics is estimating that about 30,000 striking United Auto Workers will subtract from last month’s count, posing potential downside risks for the report.
    Homebase, which compiles widely watched high-frequency data on employment trends, said the jobs market generally is turning lower.
    The firm’s database indicates that employees working declined 2.4% in October, computed on a seven-day average using January as the baseline. Hours worked, another important metric, fell 2%, Homebase said. More

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    Are Higher Rates Slowing the Economy? A Zoo Offers Clues.

    Leesburg Animal Park in Northern Virginia has seen strong business at its Pumpkin Village festival this autumn. Even with rainy weekends and a jump in admission prices, families have been coming out to visit the petting zoo, ride on giant slides and zigzag through a hay-bale maze.Shirley Johnson, the park’s owner, had been nervous that demand might recede. Headlines were warning all year about impending recession as the Federal Reserve raised interest rates to cool growth and contain inflation. That downturn hasn’t happened, but the uncertainty and higher borrowing costs have influenced her investment plans.“You can’t stick your neck out quite as far as you could,” she said. The park has held off on an expansion of its gibbon pen, a big project that would have given the playful primates more space, but would have also required taking out a loan.The park’s experience is one example of a story playing out across the country. More than a year and half into the Fed’s campaign to cool the economy, higher borrowing costs are clearly weighing on business investment and some interest-rate-sensitive sectors, but consumers are spending at a much stronger clip than had been expected.To cover rising expenses, the park has raised ticket prices. So far, people are still coming.Erin Schaff/The New York TimesThat resilience has central bankers on watch. For now, they are pleased that the labor market and economic growth have held up even as inflation has come down substantially, and this week Fed officials chose to leave interest rates unchanged as they wait to see whether that can continue. But they are also looking for further evidence that their moves are working to restrain the economy.“Everyone has been very gratified to see that we’ve been able to achieve pretty significant progress on inflation without seeing the kind of increase in unemployment that is very typical” with interest rate increases, Jerome H. Powell, the Fed chair, said on Wednesday. “The same is true of growth.”But he said that economic growth, which is mainly powered by consumer spending, would most likely need to slow for inflation to fully return to a normal pace. It is now running at about 3.4 percent, still well above the Fed’s 2 percent goal.“What we do with demand is still going to be important,” he said.Surveying the economy reveals that the effects of the Fed’s rate moves are clear in some places, are mixed in others and have yet to make much of a dent elsewhere.What has the Fed done with interest rates?Starting in March last year, the Fed has raised its key rate, which is now set to a range of 5.25 to 5.5 percent. That is above the level that central bankers think is necessary to slow the economy over time.Higher Fed rates have also helped to push up longer-term borrowing costs in markets, sending mortgage rates to nearly 8 percent, a more than two-decade high.Despite that, growth remains a lot quicker than economists think is normal. The economy expanded at a 4.9 percent annualized rate from July through September, the Commerce Department reported last week. That has prompted a debate about whether the Fed’s policies are succeeding at cooling things down.While economists think higher borrowing costs are having an effect, policymakers are watching the data to get a sense of whether they are weighing on the economy enough to fully wrangle inflation.“There’s a question of calibration,” William English, a former Fed economist who is now at Yale, said of the higher rates. “But are they working? Sure.”The park has made some medium-size investments this year, like improving its camel enclosure.Erin Schaff/The New York TimesWhere are the effects of higher rates clear?Higher rates tend to dent stock prices: Higher borrowing costs hurt the outlook for corporate profits and prod investment funds toward higher returning interest-bearing securities like bonds. That effect has begun to show up, although markets have been volatile.The S&P 500 fell for three consecutive months, from August through October, which coincided with a rise in longer-term market rates. Stocks are off to a stronger start in November, as long-term yields have dipped in recent days.Higher rates have driven up the value of the dollar, which makes imports cheaper for local buyers and U.S. exports more expensive abroad, among other effects.And steeper borrowing costs slow business investment. For instance, investment in equipment has been negative for three of the past four quarters, which could be a sign of rate increases at work. Caterpillar, the maker of industrial equipment, spooked investors this week when it reported a shrinking order backlog.Where are the effects mixed?While the Fed’s rate moves have made it more expensive to borrow to buy a house or a car, both of those markets have had shortages recently — making it complicated to see the effects.Take cars. They were in painfully short supply for months during the pandemic, as supply chain problems collided with strong demand. Supply has returned, but now there is a hole in the used car market, since far fewer new cars than usual were sold in 2021 and 2022.Car buyers have pulled back in recent months, but pent-up demand means that sales have eased, not plummeted.“It’s been more resilient than we thought this year,” John Lawler, the chief financial officer at Ford Motor, said on a recent earnings call. He noted that vehicles now cost about 14 percent of a consumer’s monthly disposable income, up from 13 percent before the pandemic, and Ford expects a gradual return to normal over the next 12 to 18 months.The housing market is even more complex. Housing supply is limited, partly because people who have locked in low mortgage rates are now hesitant to sell. Given a dearth of older houses on the market, existing home sales are way down, but new home sales have stabilized and home prices are popping.Higher interest rates are weighing on business investment and interest rate-sensitive sectors. And zoos.Erin Schaff/The New York TimesWhere are the effects not showing up?If there’s one place where it’s tough to see higher rates biting, it’s the consumer sector.The job market has held up even as the Fed’s rate moves have weighed on some parts of the economy: Hiring has slowed on average this year compared with last year, but it remains quicker than what was normal before the pandemic. Wage gains have cooled, but are also faster than the pre-2020 pace.That has allowed Americans to keep shopping, even through price increases and fading government pandemic relief. Spending climbed faster in September than economists had expected.Strong consumption could be a concern for the Fed, if it lasts, because it could enable companies to keep raising prices to cover their own costs or protect profits without losing customers — which could keep inflation rising.Take the animal park. It has made some medium-size investments this year, like improving its camel enclosure. But those projects cost money, and day-to-day operations have become more expensive.To keep up, the business raised prices. They scrapped a cheaper child ticket for the Pumpkin Village. Ordinary weekday visits also cost more: $17.95 for adults, per the park’s website, up from $15.95 at the end of 2021.So far, consumers are still coming.“People just want to be outside,” Ms. Johnson said. “It’s good old-fashioned fun.” More

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    Labor costs show surprise decline in the third quarter

    Construction workers at a project in the Upper East Side neighborhood of Manhattan, NY on Oct. 6th, 2023. 
    Adam Jeffery | CNBC

    The cost of labor unexpectedly declined in the third quarter, providing at least some relief on the inflation front, the Labor Department reported Thursday.
    Unit labor costs, a measure of hourly compensation against productivity, fell 0.8% for the July-through-September period at a seasonally adjusted rate. Economists surveyed by Dow Jones had been looking for a gain of 0.7%. On a 12-month basis, unit labor costs increased 1.9%.

    The breakdown reflected a 3.9% increase in hourly compensation, offset by a 4.7% rise in productivity.
    That increase in productivity also was more than expected, beating the Dow Jones estimate for a rise of 4.3% for the biggest quarterly gain since the third quarter of 2020. Output climbed 5.9%, while hours worked rose 1.1%.
    The developments come as the Federal Reserve is seeking to tamp down inflation through a series of interest rate increases.
    On Wednesday, Fed Chair Jerome Powell said wage gains “have really come down significantly over the course of the last 18 months to a level where they’re substantially closer to that level that would be consistent with 2% inflation over time,” the central bank’s target.
    In other economic news Thursday, initial filings for unemployment benefits for the week ended Oct. 28 totaled a seasonally adjusted 217,000, up 5,000 from the previous period and higher than the 214,000 estimate, the Labor Department said in a separate report.
    Continuing claims, which run a week behind, totaled 1.82 million, an increase of 35,000 and higher than the 1.81 million FactSet estimate. More

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    Risk of a Wider Middle East War Threatens a ‘Fragile’ World Economy

    After shocks from the pandemic and Russia’s invasion of Ukraine, there’s little cushion if the fighting between Hamas and Israel becomes a regional conflict.Fears that Israel’s expanding military operations in Gaza could escalate into a regional conflict are clouding the global economy’s outlook, threatening to dampen growth and reignite a rise in energy and food prices.Rich and poor nations were just beginning to catch their breath after a three-year string of economic shocks that included the Covid-19 pandemic and Russia’s invasion of Ukraine. Stinging inflation has been dropping, oil prices have stabilized and predicted recessions have been avoided.Now, some leading international financial institutions and private investors warn that the fragile recovery could turn bad.“This is the first time that we’ve had two energy shocks at the same time,” said Indermit Gill, chief economist at the World Bank, referring to the impact of the wars in Ukraine and the Middle East on oil and gas prices.Those price increases not only chip away at the buying power of families and companies but also push up the cost of food production, adding to high levels of food insecurity, particularly in developing countries like Egypt, Pakistan and Sri Lanka.As it is, nations are already struggling with unusually high levels of debt, limp private investment and the slowest recovery in trade in five decades, making it tougher for them to grow their way out of the crisis. Higher interest rates, the result of central bank efforts to tame inflation, have made it more difficult for governments and private companies to get access to credit and stave off default.Israeli soldiers surveying destruction in Kfar Azza, a community near the Gaza border that Hamas militants raided last month.Tamir Kalifa for The New York Times“All of these things are happening all at the same time,” Mr. Gill said. “We are in one of the most fragile junctures for the world economy.”Mr. Gill’s assessment echoes those of other analysts. Jamie Dimon, the chief executive of JPMorgan Chase, said last month that “this may be the most dangerous time the world has seen in decades,” and described the conflict in Gaza as “the highest and most important thing for the Western world.”The recent economic troubles have been fueled by deepening geopolitical conflicts that span continents. Tensions between the United States and China over technology transfers and security only complicate efforts to work together on other problems like climate change, debt relief or violent regional conflicts.The overriding political preoccupations also mean that traditional monetary and fiscal tools like adjusting interest rates or government spending may be less effective.The brutal fighting between Israel and Hamas has already taken the lives of thousands of civilians and inflicted wrenching misery on both sides. If the conflict stays contained, though, the ripple effects on the world economy are likely to remain limited, most analysts agree.Jerome H. Powell, the Federal Reserve chair, said on Wednesday that “it isn’t clear at this point that the conflict in the Middle East is on track to have significant economic effects” on the United States, but he added, “That doesn’t mean it isn’t incredibly important.”Mideast oil producers do not dominate the market the way they did in the 1970s, when Arab nations drastically cut production and imposed an embargo on the United States and some other countries after a coalition led by Egypt and Syria attacked Israel.At the moment, the United States is the world’s largest oil producer, and alternative and renewable energy sources make up a bit more of the world’s energy mix.“It’s a highly volatile, uncertain, scary situation,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University. But there is “a recognition among most of the parties, the U.S., Europe, Iran, other gulf countries,” he continued, referring to the Persian Gulf, “that it’s in no one’s interest for this conflict to significantly expand beyond Israel and Gaza.”Mr. Bordoff added that missteps, poor communication and misunderstandings, however, could push countries to escalate even if they didn’t want to.And a significant and sustained drop in the global supply of oil — whatever the reasons — could simultaneously slow growth and inflame inflation, a cursed combination known as stagflation.Women buying and selling grain in Yola, Nigeria. The aftereffects of the pandemic have stunted growth in emerging markets like Nigeria.Finbarr O’Reilly for The New York TimesGregory Daco, chief economist at EY-Parthenon, said a worst-case scenario in which the war broadened could cause oil prices to spike to $150 a barrel, from about $85 currently. “The global economic consequences of this scenario are severe,” he warned, citing a mild recession, a plunge in stock prices and a loss of $2 trillion for the global economy.The prevailing mood now is uncertainty, which is weighing on investment decisions and could discourage businesses from expanding into emerging markets. Borrowing costs have soared, and companies in several countries, from Brazil to China, are expected to have trouble refinancing their debt.At the same time, emerging markets like Egypt, Nigeria and Hungary have experienced some of the worst scarring from the pandemic, according to Oxford Economics, a consulting firm, resulting in lower growth than had been projected.Conflict in the Middle East as well as economic strains could also increase the stream of migrants heading to Europe from that region and North Africa. The European Union, which is teetering on the brink of a recession, is in the middle of negotiations with Egypt over increasing financial aid and controlling migration.China, which gets half its oil imports from the Persian Gulf, is struggling with a collapse in the real estate market and its weakest growth is nearly three decades.By contrast, the United States has confounded forecasters with its strong growth. From July through September, the economy grew at an annual rate of just a shade under 5 percent, buoyed by slowing inflation, stockpiled savings and robust hiring.India, backed by enthusiastic consumers, is on track to perform well next, with estimated growth of 6.3 percent.A natural gas pipeline terminal in Ashkelon, Israel, in 2017. When it comes to energy markets, events in the Middle East “will not stay in the Middle East,” said M. Ayhan Kose, a World Bank economist.Tamir Kalifa for The New York TimesThe region with the gloomiest prospects is sub-Saharan Africa, where, even before fighting broke out in Israel and Gaza, total output this year was estimated to fall 3.3 percent. Incomes in the region have not increased since 2014, when oil prices crashed, said M. Ayhan Kose, who oversees the World Bank’s annual Global Economic Prospects report.“Sub-Saharan Africa has already experienced a lost decade,” Mr. Kose said in an interview. Now “think about another lost decade.”As far as energy markets are concerned, something that “happens in the Middle East will not stay in the Middle East,” he added. “It will have global implications.” More

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    Fed Holds Interest Rates Steady and Pledges to Proceed Carefully

    The Federal Reserve left interest rates at 5.25 to 5.5 percent, but its chair, Jerome Powell, said policymakers could still raise rates again.The Federal Reserve left interest rates unchanged on Wednesday while keeping alive the possibility of a future increase, striking a cautious stance as rapid inflation retreats but is not yet vanquished.Rates have been on hold in a range of 5.25 to 5.5 percent since July, up from near-zero as recently as March 2022. Policymakers think that borrowing costs are high enough to achieve their goal of curbing economic growth if they are kept at this level over time.By cooling demand, the Fed is hoping to prod companies to raise prices less quickly. While the economy has held up so far — growth was unusually strong over the summer — inflation has come down since 2022. Overall price increases decelerated to 3.4 percent as of September, from more than 7 percent at their peak.Fed policymakers are now trying to wrestle inflation the rest of the way back to 2 percent. The combination of economic resilience and moderating inflation has given officials hope that they might be able to slow growth gradually and relatively painlessly in a rare “soft landing.” At the same time, the economy’s surprising endurance is forcing the Fed to question whether it has done enough to tamp down demand and price increases.The major question facing Fed officials is whether they will need to make one final rate increase in the coming months, a possibility they left open on Wednesday.“The full effects of our tightening have yet to be felt,” Jerome H. Powell, the Fed chair, said at a news conference after the decision. “Given how far we have come, along with the uncertainties and risks we face, the committee is proceeding carefully.”Jerome H. Powell, the Fed chair, said Wednesday that policymakers had not determined whether further interest rate increases would be needed to get inflation down to 2 percent.Haiyun Jiang for The New York TimesMr. Powell said officials would base decisions about the possibility and extent of additional policy firming — and how long rates will need to stay high — on economic data and how various risks to the outlook shaped up.Stock prices in the S&P 500 index rose as Mr. Powell spoke, and odds of further rate increases declined, suggesting that investors took his comments as a sign that interest rates were probably at their peak. But Diane Swonk, chief economist at KPMG, said she thought markets were getting ahead of themselves.“They are not declaring victory,” she said, explaining that while she did not expect the Fed to move rates in December, an early-2024 move seemed possible. “They are hesitant to say, ‘We’re done.’”Other analysts suggested that by not pushing back on the market’s expectation that the Fed was done raising interest rates, Mr. Powell was essentially endorsing that view, barring an unexpected surprise.At the Fed’s previous meeting, in September, policymakers had forecast that one more quarter-point increase in rates would probably be appropriate before the end of 2023. But officials did not release updated economic projections on Wednesday — they are scheduled to do so after the Fed’s Dec. 12-13 meeting — and conditions have changed since their last assessment.That is because longer-term interest rates in markets have jumped higher. While the Fed sets short-term borrowing costs, longer-term rates adjust at more of a delay and for a variety of reasons.The recent rise has made everything from mortgages to business loans more expensive, which might help cool the economy. The change may make it less necessary for Fed officials to raise rates further.“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the Fed said in its statement Wednesday, newly pointing to financial conditions as a restraint on growth.“It’s their way of saying that higher interest rates matter,” Gennadiy Goldberg, a rates strategist at TD Securities, said of the line. “Interest rates are doing some of the Fed’s work for them.”Mr. Powell made it clear that the Fed was closely watching higher market interest rates — particularly to see whether the jump was sustained, and to what extent it squeezed consumers and businesses.But Mr. Powell said the Fed’s staff economists were not predicting an imminent recession, which suggests that they do not see the higher borrowing costs hurting the economy too severely.And he said policymakers were still focused on whether interest rates were high enough to ensure that inflation would cool fully, given recent evidence of continued economic strength.“We are not confident yet that we have achieved such a stance,” Mr. Powell said.While the Fed’s moves have held back some parts of the economy, including sales of existing homes, the labor market continues to chug along. Hiring is still quicker than before the pandemic. Wage gains have cooled, but are also faster than pre-2020.As Americans win jobs and raises, they have continued to open their wallets. Spending climbed faster than economists expected in September, and growth overall has been much faster than what most forecasters would have expected a year and half into the Fed’s campaign to cool it.That strength could become a problem for central bankers, should it persist. If consumers remain ravenous for goods and services, companies may continue raising prices, making it more difficult to eliminate what is left of rapid inflation.At the same time, Fed officials do not want to brake too hard, which could unnecessarily cause a recession. Policy changes often act with a lag, and it can take months for the cumulative effects of interest rate increases to fully bite.“Everyone has been very gratified to see that we’ve been able to achieve pretty significant progress on inflation without seeing the kind of increase in unemployment that is very typical” with interest rate increases, Mr. Powell said. “The same is true of growth.”But he also made it clear that the Fed still thought a slowdown in the job market and overall growth were likely to prove necessary. Healing supply chains and a fresh supply of workers have helped to bring the economy into balance so far, but those forces may not be enough to bring inflation fully back to normal, he said.“What we do with demand is still going to be important,” he said, later adding that “slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more.” More

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    JOLTS Report Shows U.S. Job Openings Steady in September

    The NewsJob openings changed little in September, the Labor Department announced on Wednesday.There were 9.6 million job openings in September, slightly up from August’s revised total of 9.5 million, according to seasonally adjusted figures from the Job Openings and Labor Turnover Survey. The figure was greater than economists’ expectations of 9.3 million openings. The rate of workers quitting their jobs was flat, at 2.3 percent, for the third straight month.The Federal Reserve closely monitors job openings to understand whether the economy is running too hot.Jim Wilson/The New York TimesWhy It Matters: The Fed looks for signs of a soft landing.The Federal Reserve closely monitors job openings to understand whether the economy is running too hot. Since March 2022, the Fed has tried to fight inflation by raising interest rates to their highest level since 2001.The Fed has remained committed to hitting an annual inflation target of 2 percent without causing a significant spike in unemployment — a combined outcome known as a “soft landing.”Fed officials are expected to maintain a target range of 5.25 to 5.5 percent for interest rates when they meet on Wednesday. The overall trend of slowing job openings is a sign that rate increases have cooled the economy, according to experts.“All of this means the Fed probably doesn’t feel the need to raise rates further, but they’re not going to ease anytime soon,” said Sonu Varghese, global macro strategist at Carson Group, said of the report on job openings.Job openings, which reached a record of more than 12 million in March 2022, have trended down, as has the job-quitting rate, while separations have been flat. As openings rose slightly in September, the number of openings per unemployed worker was flat, at 1.5, the same as August.Less churn in the labor market indicates that rate increases are having an effect, said Julia Pollak, the chief economist at the job search website ZipRecruiter. ZipRecruiter’s latest survey of new employees found that the share of hires who received a pay increase, got a signing bonus or were recruited to their new jobs each fell.Background: ‘More wood to chop’ for the Fed.Job openings remain much higher than they were before the pandemic, and the number of unemployed workers per job opening is much lower. Both are signs of a tight labor market.Inflation also remains above the Fed’s 2 percent target. The Fed’s preferred inflation measure has fallen nearly four percentage points since the summer of 2022, to 3.4 percent.“The Fed’s primary focus remains inflation,” said Sarah House, a senior economist at Wells Fargo. “They’re reading the economy through the lens of ‘What does this mean for the path of inflation ahead?’”According to Stephen Juneau, an economist at Bank of America, the Fed still has “more wood to chop.” His team expects that the Fed will raise rates one more time, in December, to reach a soft landing.Economic growth in the third quarter accelerated, and another measure of wage growth grew faster than expected over the summer. The yield on the 10-year U.S. Treasury bond, a key measure of long-term borrowing costs that undergirds nearly everything in the economy, has reached its highest level since 2007 as the outlook for growth has improved.What’s next: The October jobs report on Friday.The report on Wednesday morning kicked off an important few days in economic news. After Fed officials meet to decide whether to raise rates, October’s jobs report will be released on Friday by the Labor Department.The data is expected to show that hiring slowed, with the addition of 180,000 jobs, according to Bloomberg’s survey of economists, down from September’s 336,000. The unemployment rate is expected to tick up to 3.9 percent, after holding steady at 3.8 percent in September. More