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Strong U.S. Job Growth Shows Economy Is Defying Challenges

In a sign of continued economic stamina, American payrolls grew by 336,000 in September on a seasonally adjusted basis, the Labor Department said on Friday.

The increase, almost double what economists had forecast, confirmed the labor market’s vitality and the overall hardiness of an economy facing challenges from a variety of forces.

It was the 33rd consecutive month of job growth, and the increase was the biggest since January.

The unemployment rate, based on a survey of households, was steady at 3.8 percent. It has been below 4 percent for nearly two years, a stretch not achieved since the late 1960s.

“This is an economy on fire,” said Samuel Rines, an economist and the managing director at Corbu, a financial research firm.

Hiring figures for July and August were revised upward, showing 119,000 more jobs than previously recorded. Taken together, the gains reflected confidence among employers that the economic recovery has plenty of room left to run.

“Fears of an imminent recession have been easing since the spring, allowing businesses to revisit hiring plans they put on hold,” said Andrew Flowers, a labor economist at Appcast, a firm that helps companies with online recruiting efforts.

The figures were being closely watched for signals of the next move by Federal Reserve policymakers, who have tried to rein in both wages and prices by pulling up interest rates. Because further rate increases can negatively affect stock and bond prices, robust job numbers often cause a sell-off among investors.

The market reaction was generally positive on Friday, largely because the report showed an economy still growing while wage growth moderates, leading many to believe the Fed will keep rates steady. Average hourly earnings for workers rose 0.2 percent from the previous month and 4.2 percent from September 2022. While solid, the increase was smaller than anticipated, and the one-year pace was the slowest since March 2020.

“I don’t think the headline jobs number necessarily means an inflationary impulse because average hourly earnings gains are going down,” said David Cervantes, the founder of Pine Brook Capital Management, an asset management firm. For those worried about the extent to which higher wages may still be contributing to inflation, he said, this month’s number should provide some ease.

Biden administration officials celebrated the report as unambiguously positive.

“Simply put, good news is good news, full stop,” said Jared Bernstein, chair of the White House Council of Economic Advisers. “Every economy has its headwinds, but the Bidenomics job market has been a strong, persistent tailwind.”

The economy’s staying power, more than three years into the recovery from Covid pandemic shutdowns, can be seen in many ways. Inflation-adjusted economic growth accelerated over the summer as overall price increases slowed to a third of their pace a year ago. Spending has eased from the breakneck speed of 2021, yet demand for travel, hospitality and event tickets remains high. Jobless claims are hovering at February 2020 lows.

The extra savings Americans accumulated during the pandemic have lasted longer than expected. At the end of 2019, U.S. households held roughly $980 billion in “checkable deposits” — including checking, savings, and money market accounts that are easily cashable. In 2023, that figure is over $4 trillion.

But reasons for apprehension remain. The suspension of mandatory federal student loan repayments, a pandemic relief measure, ends this month. The housing market, crimped by a lack of supply and skyrocketing interest rates, has nearly frozen, and average home prices are at record highs.

The University of Michigan’s index of consumer sentiment is up substantially compared with this time last year but still far below its levels in the late 2010s. And it now appears that high interest rates will persist indefinitely, a challenge for not only households but also businesses that will soon need fresh financing.

For now, though, the wheels of commerce are spinning steadily.

The MetLife and U.S. Chamber of Commerce Small Business Index, which measures confidence among small-business owners, hit its highest mark this quarter since the start of the pandemic. The score is roughly in line with late 2019 levels — with 66 percent of small businesses reporting that business is healthy and 72 percent saying they are “comfortable with their cash flow,” despite higher labor costs.

“Main Street employers are showing remarkable resiliency in the face of high inflation and a shortage of workers,” said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. “With fears of a recession likely in the rearview mirror and inflation starting to ease, small businesses owners are feeling a lot better than they were a year ago.”

A tense backdrop throughout this year has been an uneven tug of war between an economy that has doggedly delivered greater-than-expected overall growth yet so far failed to satisfy many American families still scarred by two years of hefty increases in the cost of living. Poverty, which plunged with the help of federal aid and tax credits, has risen again as they expired. And energy prices have ricocheted unpredictably, with winter still to come.

Most indexes of “leading indicators” — which seek to mark and predict significant turning points in the business cycle — are still flashing red. But some argue these data may be a false signal, caused by the idiosyncrasies of an economy normalizing from the pandemic shock.

“The reality of the business cycle is that there are only two times when ‘all’ the data are moving in the same direction: a recovery and a recession,” said Michael Kantrowitz, the chief investment strategist at Piper Sandler & Company. “Outside those ‘tail’ periods of the cycle, the data can be mixed and less clear.”

As markets wrestle with uncertainty, many workers are pushing to get a greater share of the economy’s still-growing pie. After a jump in pay in recent years for nonsupervisory employees, private sector hourly workers are now averaging about $17 hour this year, according to the payroll processor ADP. Yet many still don’t see that as meeting their needs.

Jonathan Quito of the New York borough of Queens, who recently turned 27, makes $19 an hour, or roughly $38,000 a year, as a ramp agent at La Guardia Airport — helping guide and park aircraft in addition to loading and unloading luggage and cargo.

He watches the news and feels frustrated, he said, with the common view that workers’ pushing for better pay will push up inflation even more.

Mr. Quito got a raise of a dollar per hour last year, a 5.5 percent increase. But he said “it’s not enough” to make living affordable in the city, with rising grocery prices and public transportation costs, and a rent bill of $1700 a month, or about $20,000 in a year.

He is working with other colleagues at the airport looking to organize with the Service Employees International Union, hoping “for a better deal,” he said, and “some type of respect.”

“Eventually, you know, I want to be able to start my own family and stuff,” Mr. Quito said. “That’s one of the reasons why I’m fighting this battle.”

Joe Rennison contributed reporting.

Sumber: www.nytimes.com