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    Hispanic unemployment rate falls sharply in September, but fewer workers join labor force

    The unemployment rate among Hispanic workers dropped sharply in September, but declining labor force participation indicated fewer eligible adults found employment or searched for work.
    The unemployment rate fell to 3.8% from 4.5% in August.
    Labor force participation dipped to 66.1% from 66.8% in August.

    A “Now Hiring” sign is displayed during a job fair for Hispanic professionals in Miami, Florida.
    Marco Bello | Bloomberg | Getty Images

    The unemployment rate among Hispanic workers dropped sharply in September, but that could be due to fewer eligible adults looking for a job.
    Hispanic workers saw their unemployment rate fall to 3.8% from 4.5% in August. Broken down by gender, unemployment declined to 3.2% among Hispanic males over 20 years old and 3.6% among females.

    The decline is much bigger than the one seen at the country level. The government said the overall jobless rate fell to 3.5% from 3.7% in August, its lowest level since July. A total of 263,000 jobs were created last month, less than a Dow Jones forecast of 275,000.

    But Hispanics saw a sharp decline in labor force participation, which tracks how many people are employed or searching for work. It fell to 66.1% from 66.8% in August, indicating fewer individuals are finding employment or searching for work as the employment-to-population ratio tracking the proportion of the population employed dipped to 63.5%.
    “That decline from 4.5% in August to 3.8%, while really significant, has to be tempered by the fact that clearly, Latinx workers withdrew from the workforce,” said Michelle Holder, a distinguished senior fellow at Washington Center for Equitable Growth. Many Hispanic workers do seek employment in some areas of the market heavily affected by Federal Reserve interest rate hikes, she added.

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    While Hispanic workers saw the biggest declines on a month-to-month basis, she noted that Black women have still seen the sharpest decline in labor force participation since the start of the pandemic.
    While the decline in participation is a reason for concern, areas of the labor market where Hispanic workers are overrepresented did experience significant gains in September, noted William Spriggs, chief economist of the AFL-CIO. Those sectors included leisure and hospitality and construction where payrolls were up 83,000 and 19,000, respectively.

    But those numbers don’t come without their downsides, he said.
    “This is disturbing because it means Hispanic workers are finding great difficulty moving out of their pockets and the big story of this recovery has been the success of women and Black workers to move out of the trap of just being in low-wage industries,” he said.

    Fluctuations in the employment market tend to show up among Black and Hispanic workers first, Spriggs said, noting that unemployment among Black workers ticked down and labor force participation rose after two months of a concerning trend of rising unemployment and declining participation.
    “The good news for Black workers is in many ways wiped out for Hispanic workers,” he said.
    To be sure, Valerie Wilson, director of the Economic Policy Institute’s program on race, ethnicity and the economy, said individuals should hold off on drawing firm conclusions from one month of data.
    Fluctuations are common in monthly reports and require several consecutive periods of a similar move before one can deduce a trend.
    “It’s still hard to understand whether we’re just seeing volatility in the series because it’s a smaller sample size,” Wilson said.
    — CNBC’s Gabriel Cortes contributed reporting.

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    Here’s where the jobs are for September 2022 – in one chart

    Leisure and hospitality was the standout sector, growing by 83,000 jobs.
    Health care has now returned to its pre-pandemic employment levels, according to the labor department, and hospitals and ambulatory services each added 28,000 jobs in September.

    Job growth remained strong overall in September, but declines in several sectors led to a slowdown compared to hot readings during the summer.
    Leisure and hospitality was the standout sector, growing by 83,000 jobs. The sector has been consistently adding jobs since the Covid restrictions in 2020 shuttered many bars and restaurants. However, the sector is still more than 1 million jobs below its pre-pandemic levels, according to the Labor Department.

    “It is a positive sign to see a sector that has been hit so hard continue its bounce-back with really strong gains here. It is moving closer to its pre-pandemic level, but it’s still 6.7% below where it was back in February 2020. It’s going to take a long time at its current pace to get back there,” said Nick Bunker, economic research director for North America at the Indeed Hiring Lab.
    “That’s very clearly a part of the economy that can add more workers, but I think we are at a point now where we can say that leisure and hospitality’s share of employment in the U.S. labor market is probably going to be lower than it was before the pandemic,” he added.
    Health care and social assistance also had a strong month, adding more than 75,000 jobs. Health care has now returned to its pre-pandemic employment levels, according to the labor department, and hospitals and ambulatory services each added 28,000 jobs in September.
    The Labor Department includes those sectors in a broader sector, which includes private education, and that larger group added 90,000 jobs for the month.
    But there were several areas that shed jobs last month, contributing to the slowdown in job gains. Government was the biggest laggard, dropping 25,000 jobs. Retail trade and transportation and warehousing combined to shed 9,000 jobs, reflecting a weakness in consumer spending on goods.

    Bunker said the slowdown in retail appeared to be a matter of hiring slowing, as opposed to widespread layoffs, and that the government number could have been impacted by seasonal adjustments.
    Strength in the construction and manufacturing areas, which added 19,000 and 22,000 jobs respectively, could cool some fears of an imminent recession in the U.S. Those areas have continued to add jobs even as the housing market and industrial survey data has suggested those sectors are seeing a slowdown in growth.

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    Unemployment rate falls to 3.5% in September, payrolls rise by 263,000 as job market stays strong

    Nonfarm payrolls increased 263,000 for the month, short of the Dow Jones estimate for 275,000.
    The unemployment rate was 3.5%, down 0.2 percentage point as the labor force participation rate edged lower.

    Job growth fell just short of expectations in September and the unemployment rate declined despite efforts by the Federal Reserve to slow the economy, the Labor Department reported Friday.
    Nonfarm payrolls increased 263,000 for the month, compared to the Dow Jones estimate of 275,000.

    The unemployment rate was 3.5% vs the forecast of 3.7% as the labor force participation rate edged lower to 62.3% and the size of the labor force decreased by 57,000. A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons saw an even sharper decline, to 6.7% from 7%.
    September’s payroll figure marked a deceleration from the 315,000 gain in August and tied for the lowest monthly increase since April 2021.
    In the closely watched wage numbers, average hourly earnings rose 0.3% on the month, in line with estimates, and 5% from a year ago, an increase that is still well above the pre-pandemic norm but 0.1 percentage point below the forecast.
    Stock market futures moved lower after the release while government bond yields rose. Investors were looking at the numbers for an indication of how the Federal Reserve will react as it tries to tamp down inflation.
    “This puts the nail in the coffin for another 75 [basis point rate increase] in November,” said Jeffrey Roach, chief economist at LPL Financial. A basis point is 0.01 percentage point.

    From a sector view, leisure and hospitality led the gains with an increase of 83,000, a gain that still left the industry 1.1 million jobs short of its February 2020 pre-pandemic levels.
    Elsewhere, health care added 60,000, professional and business services rose 46,000 and manufacturing contributed 22,000. Construction was up 19,000 and wholesale trade was up 11,000.
    A drop of 25,000 in government jobs was a big contributor to the report missing expectations. Hiring at the state and local level is highly seasonal, so the decline points to a report that otherwise was largely in line with expectations and shows a resilient jobs market.
    Also on the negative side, financial activities and transportation and warehousing both saw losses of 8,000 jobs.
    The report comes amid a months-long Fed effort to bring down inflation running near its highest annual rate in more than 40 years. The central bank has raised rates five times this year for a total of 3 percentage points and is expected to continue hiking through at least the end of the year.
    Despite the increases, job growth had remained relatively strong as companies face a massive mismatch between supply and demand that has left about 1.7 job openings for every available worker. That in turn has helped drive up wages, though the increase in average hourly earnings has fallen well short of the inflation rate, which most recently was at 8.3%.
    Fed officials including Chairman Jerome Powell have said they expect the rate hikes to inflict “some pain” on the economy. Federal Open Market Committee members in September indicated they expect the unemployment rate to rise to 4.4% in 2023 and hold around that level before dropping down to 4% over the long run.
    Markets widely expect the Fed to continue the pace of its rate hikes with another 0.75 percentage point increase in November. Traders assigned a 78% chance of a three-quarter point move following the jobs numbers, and expect another half-point increase in December that would take the federal funds rate to a range of 4.25%-4.5%.
    This is breaking news. Please check back here for updates.

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    Wharton’s Jeremy Siegel says today’s biggest threat isn’t inflation — it’s recession

    The U.S. Federal Reserve has been raising rates too quickly, and recession risks will be “extremely” high if it continues to do so, said Jeremy Siegel, professor emeritus of finance at the Wharton School of the University of Pennsylvania.
    “They should have started tightening much, much much earlier,” he told CNBC’s “Street Signs Asia” on Friday. “But now I fear that they’re slamming on the brakes way too hard.”
    Not everyone agrees. Thomas Hoenig, former president of the Federal Reserve Bank of Kansas City, said rates need to go up “much higher.”

    The U.S. Federal Reserve has been raising rates too quickly, and recession risks will be “extremely” high if it continues to do so, said Jeremy Siegel, professor emeritus of finance at the Wharton School of the University of Pennsylvania.
    “They should have started tightening much, much much earlier,” he told CNBC’s “Street Signs Asia” on Friday. “But now I fear that they’re slamming on the brakes way too hard.”

    Siegel said he was one of the first to warn of the Fed’s “inflationary policies” in 2020 and 2021, but “the pendulum has swung too far in the other direction.”
    “If they stay as tight as they say they will, continuing to hike rates through even the early part of next year, the risks of recession are extremely high,” he said.

    Most of the inflation is behind us, and then the biggest threat is recession, not inflation, today.

    Jeremy Siegel
    Wharton professor

    Official data, which typically lags by a month, may not immediately show the changes happening in the real economy, he said. “Most of the inflation is behind us, and then the biggest threat is recession, not inflation, today.”
    Siegel said he thinks interest rates are high enough that they could bring inflation down to 2%, and the terminal rate, or end point, should be between 3.75% and 4%.
    In September, the Fed raised benchmark interest rates by another three-quarters of a percentage point to a range of 3%-3.25%, the highest it has been since early 2008. The central bank also signaled that the terminal rate could be as high as 4.6% in 2023.

    “I think that that is way, way too high — given the policy lags, that really would force a contraction,” he said.
    According to the CME Group’s FedWatch tracker of Fed funds futures bets, the probability that the target range of rates will reach 4.5% to 4.75% in February next year is at 58.3%.

    If it were up to him, Siegel said, he would hike rates by half a point in November, then wait and see. If commodity prices start to rise and money supply increases, the Fed would have to do more.
    “But my feeling is that when I look at sensitive commodity prices, asset prices, housing prices, even rental prices, I see declines, not increases,” he said.
    But not everyone agrees. Thomas Hoenig, former president of the Federal Reserve Bank of Kansas City, said rates need to be higher for longer.

    “My own view is you’ve got to get the rate up. If inflation is 8%, you need to get the rate up much higher,” he told CNBC’s “Street Signs Asia.”
    “They need to stay there and not back off of that too soon to where they reignite inflation, say in the second quarter [of] 2023 or the third quarter,” he added.
    — CNBC’s Jihye Lee contributed to this report.

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    Global Fallout From Rate Moves Won’t Stop the Fed

    The Federal Reserve, like many central banks, sets policy with an eye on the domestic economy. Its battle to control prices is causing pain abroad.The Federal Reserve has embarked on an aggressive campaign to raise interest rates as it tries to tame the most rapid inflation in decades, an effort the central bank sees as necessary to restore price stability in the United States.But what the Fed does at home reverberates across the globe, and its actions are raising the risks of a global recession while causing economic and financial pain in many developing countries.Other central banks in advanced economies, from Australia to the eurozone, are also lifting rates rapidly to fight their inflation. And as the Fed’s higher interest rates attract money to the United States — pumping up the value of the dollar — emerging-market economies are being forced to raise their own borrowing costs to try to stabilize their currencies to the extent possible.Altogether, it is a worldwide push toward more expensive money unlike anything seen before in the 21st century, one that is likely to have serious ramifications.Higher rates slow inflation by cooling consumer demand and allowing supply to catch up, paving the way for more moderate price increases. But in the process, they slow down hiring, weaken wage growth, prompt job losses and ripple through financial markets in sometimes disruptive ways.How much pain today’s moves will ultimately cause remains unclear: So many countries are raising rates so quickly — and so in sync — that it is difficult to determine how intense any slowdown will be once it takes full effect. Monetary policy takes months or years to kick in completely.But many economists and several international bodies have warned that there’s a pronounced danger or overdoing it, including a United Nations agency that warned the damage could be particularly acute in poorer nations. Developing economies had already been dealing with a cost-of-living crisis because of soaring food and fuel prices, and now their American imports are growing steadily more expensive as the dollar marches higher.The Fed’s moves have spurred market volatility and worries about financial stability, as higher rates elevate the value of the U.S. dollar, making it harder for emerging-market borrowers to pay back their dollar-denominated debt.It is a recipe for globe-spanning turmoil and even recession. Despite that, the Fed is poised to continue raising interest rates. That’s because the Fed, like central banks around the world, is in charge of domestic economy goals: It’s supposed to keep inflation slow and steady while fostering maximum employment. While occasionally called “central banker to the world” because of the dollar’s foremost position, the Fed goes about its day-to-day business with its eye squarely on America.“Of course, as a human, you care about the pain other countries are experiencing — but as a policymaker, I have a single tool,” Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said in an interview on Tuesday. “It’s a blunt tool, even for the U.S. goals of full employment and price stability.”Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Biden Visits IBM to Promote Investments in U.S. Semiconductor Production

    President Biden traveled to Poughkeepsie, N.Y., to connect a $20 billion investment by IBM to the bipartisan bill meant to spur production of critical microchips.During his visit to IBM’s Hudson Valley facility in New York, President Biden highlighted the CHIPS and Science Act that provides subsidies to companies that sign up to jump-start domestic production of semiconductor chips.Erin Schaff/The New York TimesPresident Biden visited the Hudson Valley of New York on Thursday to tour an IBM facility after the company announced it would invest $20 billion across the region to increase its production of semiconductors and develop advanced technologies, including artificial intelligence and quantum computing.Mr. Biden has ramped up his travel schedule to promote the bipartisan legislative achievements that his administration has guided as the November midterm elections approach. At the company’s campus in Poughkeepsie, N.Y., he highlighted an industrial bill he signed in August that provides subsidies to companies that sign up to jump-start domestic production of semiconductor chips.The White House has held up the law as a way to keep up with China and other countries — including South Korea, Japan, India and Germany — that offer subsidies for the production of semiconductors, which are critical components in everything from smartphones to military technology.“More is going to change in the next 10 years than it has in the last 40,” Mr. Biden said. “Where in God’s name is it written that we can’t be the manufacturing hub of the world? There’s a lot of reasons to be optimistic.”The legislation, called the CHIPS and Science Act, contains $52 billion in subsidies and tax credits for companies that manufacture chips in the United States, with more than half of the amount dedicated to helping companies build facilities for making, assembling and packaging some of the world’s more advanced chips.In a news release before Mr. Biden’s visit, IBM hailed the bill for its effort to “secure supply of next-generation chips for today’s computers and artificial intelligence platforms as well as fuel the future of quantum computing by accelerating research, expanding the quantum supply chain, and providing more opportunities for researchers to explore business and science applications of quantum systems.”IBM’s announcement came two days after Micron Technology, the Idaho-based computing company, announced that it planned to spend as much as $100 billion over the next two decades or more to build a computer chip factory complex in upstate New York.“There is no doubt that without the CHIPS Act, we would not be here today,” Sanjay Mehrotra, the chief executive of Micron, said on Tuesday.During his remarks, Mr. Biden emphasized that the law would bolster American competitiveness in research and technology at a time when other countries have pulled ahead.“We’re going to make sure that any company that uses federal research and development funding to invest in new technologies has to make the product in America,” Mr. Biden said to applause, adding later: “It matters. This is about economic security, folks. It’s about national security. It’s about good-paying jobs you can raise a family on.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-ok2gjs{font-size:17px;font-weight:300;line-height:25px;}.css-ok2gjs a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Administration officials hope that the bill’s bipartisan support, coupled with a windfall of pledged investment from large technology companies, is the sort of accomplishment that could appeal to voters ahead of the midterms. Seventeen Republicans voted for the bill in the Senate, while 24 Republicans supported it in the House.At one point, Mr. Biden, citing news reports, accused the Chinese government of lobbying in Congress against the law. “The Chinese Communist Party actively lobbied against the CHIPS and Science Act that I’d been pushing in the United States Congress,” Mr. Biden said. “Unfortunately, some of our friends on the other team bought it.”Representative Sean Patrick Maloney of New York, the chairman of House Democrats’ campaign arm, accompanied the president on his trip, as did Paul Tonko, and Pat Ryan, two Democratic congressmen from New York. Gov. Kathy Hochul, a Democrat, greeted Mr. Biden when he arrived in New York.Mr. Biden’s visit was also meant to bolster the fortunes of two Democrats facing tight races in next month’s elections. Mr. Maloney is facing a challenge from Assemblyman Michael Lawler in his district, which includes the Hudson Valley.Mr. Ryan, who won a special House election in August, is in a tight race against Assemblyman Colin Schmitt of New Windsor for the swing-district seat. The special election was seen as a potential test of the impact that June’s Supreme Court decision that ended the constitutional right to abortion might have on the midterm elections.After leaving Poughkeepsie, Mr. Biden traveled to Red Bank, N.J., to participate in a reception for the Democratic National Committee. On Thursday evening, he attended another reception for the Democratic Senatorial Campaign Committee. More

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    The Fed Wants to Quash Inflation. But Can It Do It More Gently?

    Federal Reserve officials have raised rates five times this year as they try to beat back the worst inflation in 40 years, and the past three moves have been especially rapid. That has prompted Wall Street and policymakers to contemplate when the Fed might start to slow down.Jerome H. Powell, the Fed chair, has signaled that moving less rapidly will be appropriate at some point in the future, though he has declined to put a date on when that might begin. On Thursday, Lisa D. Cook, one of the Fed’s newest governors, echoed that stance, saying that “at some point” the central bank will decide to “slow the pace of increases while we assess the effects of our cumulative tightening on the economy and inflation.”Based on the central bank’s statements and economic projections, markets are betting heavily that the pace will not step down until December. But a debate is beginning to firm up ahead of the central bank’s meeting in early November: Some officials are open to a potential slowdown as soon as the meeting next month, while others believe that the central bank needs to push ahead with very rapid policy adjustments as it races to control inflation.Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said she could potentially support a half-point move at the central bank’s meeting next month. While still a larger increase than in normal times, a half-point move would be less aggressive than the three-quarter-point change the Fed made at each of its last three meetings.Ms. Daly is less aggressive than the majority of her colleagues, favoring one percentage point of further rate increases before the end of the year — less than the at least 1.25 percentage points that most people on the committee view as warranted.“I think we don’t need to signal that we’re resolute anymore; I think people really understand that we’re resolute,” Ms. Daly said during an interview with The New York Times this week. “I am very open to stepping down the pace. But the data will help me determine whether I’m supportive of 75 followed by 25, or whether I’m supportive of 50 followed by 50.”Christopher Waller, a Fed governor, said on Thursday that inflation had not shaped up the way he would want “to support a slower pace of rate hikes” than the Fed had previously projected, and argued that a few more data points were unlikely to change his mind.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Friday’s jobs report could be a case where good news isn’t really good

    In normal times, strong job gains and rising wages would be considered a good thing. But these days, they’re exactly what the U.S. economy doesn’t need.
    Economists surveyed by Dow Jones expect the report will show that payrolls increased 275,000 in September, while the unemployment rate held at 3.7%.
    An upside surprise could mean a more aggressive Fed that could roil markets.
    Along with the headline job number, investors will be watching wage growth closely.

    A worker takes a panini sandwich off a grill at a restaurant in the Union Market district in Washington, D.C., on Tuesday, Aug. 30, 2022.
    Al Drago | Bloomberg | Getty Images

    Investors are closely watching the nonfarm payrolls report due out Friday, but not for the usual reasons.
    In normal times, strong job gains and rising wages would be considered a good thing. But these days, they’re exactly what the U.S. economy doesn’t need as policymakers try to beat back an inflation problem that just won’t seem to go away.

    “Bad news equals good news, good news equals bad news,” Vincent Reinhart, chief economist at Dreyfus-Mellon, said in describing investor sentiment heading into the key Bureau of Labor Statistics employment count. “Pretty much uniformly what is dominant in investors’ concerns is the Fed tightening. When they get bad news on the economy, that means the Fed is going to tighten less.”
    Economists surveyed by Dow Jones expect the report, due out Friday at 8:30 a.m. ET, will show that payrolls increased 275,000 in September, while the unemployment rate held at 3.7%. At least as important, estimates are for average hourly earnings to increase 0.3% month over month and 5.1% from a year ago. The latter number would be slightly below the August report.

    Any deviation above that could signal that the Federal Reserve needs to get even more aggressive on inflation, meaning higher interest rates. Lower numbers, conversely, might provide at least a glimmer of hope that cost of living increases are abating.
    Wall Street forecasters were split on which way the surprise might come, with most around the consensus. Citigroup, for instance, is looking for a gain of 265,000, while Nomura expects 285,000.

    In search of middle ground

    For investors, the focus will be keen on what wages are saying about the state of the labor market.

    Even hitting the consensus 5.1% increase means wage pressure “is still high. Markets might want to reconsider a sanguine view of what the Fed plans to do,” said Beth Ann Bovino, U.S. chief economist at S&P Global Ratings. “The Fed is planning an aggressive stance. A hotter wage reading would just confirm their position.”

    Policymakers essentially are looking for Goldilocks — trying to find monetary policy that is restrictive enough to bring down prices while not so tight that it drags the economy into a steep recession.
    Comments in recent days indicate that officials still consider slowing inflation as paramount and are willing to sacrifice economic growth to make that happen.
    “I want Americans to earn more money. I want families to have more money to put food on the table. But it’s got to be consistent with a stable economy, an economy of 2% growth” in inflation, Minneapolis Fed President Neel Kashkari said Thursday during a Q&A session at a conference. “Wage growth is higher than you would expect for an economy delivering 2% inflation. So that gives me some concern.”
    Likewise, Atlanta Fed President Raphael Bostic on Wednesday said he thinks the inflation battle “is likely still in the early days” and cited a still-tight labor market as evidence. Governor Lisa Cook said Thursday that she still sees inflation running too high and expects “ongoing rate hikes” to be necessary.
    However, worries have shifted in the market lately over the Fed doing too much rather than too little, as some indicators in recent days have pointed to some loosening of inflation pressures.
    The Institute for Supply Management on Wednesday reported that its September survey showed expectations for prices around their lowest levels since the early days of the pandemic.
    Recent BLS data indicated that prices for long-distance truck deliveries fell 1.5% in August and are well off their January record peak (though still up nearly 22% from a year ago).
    Finally, outplacement firm Challenger, Gray & Christmas reported Thursday that job cuts surged 46.4% in September from a month ago (though they are at their lowest year-to-date level since the firm began tracking the data in 1993). Also, the BLS reported Tuesday that job openings fell by 1.1 million in August.

    Correcting a mistake

    Still, the Fed is likely to keep pushing, with chances rising that the economy enters into recession if not this year then in 2023.
    “The Fed’s mistake is already made i.e. not moving in advance of inflation rising. So it has to double-down if it’s going to deal with the inflation problem,” Reinhart said. “Yes, recession is inevitable. Yes, the Fed’s policy is probably going to make it worse. But the Fed’s policy mistake was earlier, not now. It’s going to catch up because of it’s previous mistake. Hence, recession is around the corner.”
    Even if Friday’s number is weak, the Fed rarely reacts to a single month’s data point.
    “The Fed will keep hiking until the labor market cracks. To us this means the Fed is confident that payrolls growth has slowed and unemployment is on an upward trajectory,” Meghan Swiber, rates strategist at Bank of America, said in a client note. In real terms, Swiber said that likely means no change until the economy is actually losing jobs.
    There was, however, one instance where the Fed did seem to react to a single data point, or two points more specifically.
    In June, the central bank was set to approve a 0.5 percentage point rate increase. But a higher-than-expected consumer price index reading, coupled with elevated inflation expectations in a consumer sentiment survey, pushed policymakers in an 11th-hour move to a 0.75 percentage point move.
    That should serve as a reminder on how focused on the Fed is on pure inflation readings, with Friday’s report possibly viewed as tangential, said Shannon Saccocia, chief investment officer at SVB Private Bank.
    “I don’t think the Fed is going to pivot or pause or anything of that nature before the end of the year, certainly not because of jobs data,” Saccocia said.
    Next week’s CPI reading is likely to be more consequential when it comes to any shift in Fed attitudes, she added.
    “Wages are embedded in the cost structure now, and that’s not going to change. They’re probably going to put more emphasis on food and housing prices in terms of their areas of interest, because all that can happen now [with wages] is we stabilize at current levels,” Saccocia said. “Any sort of lift we got out of this print [Friday] is likely to be temporary, and tempered by the perception that this is all really about CPI.”

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