#SeptemberJobsReport #USEconomy #FederalReserve
The latest jobs report for September has significantly bolstered the U.S. economy, moving it further away from the shadows of a potential recession and enhancing the Federal Reserve's chances of achieving a soft landing in 2024.
The September jobs data showed a robust increase, with businesses and government agencies collectively adding 254,000 jobs, far exceeding the Dow Jones forecast of 150,000. This strong performance not only surpassed expectations but also reversed a trend of declining job growth that had raised concerns about an economic slowdown.
This job growth has been characterized as a "Goldilocks" scenario – ideal, yet with lingering inflation worries impacting consumer spending. The resilient job market, combined with a deceleration in price hikes and decreasing interest rates, creates a positive macroeconomic environment. Ann Bino, an economist at U.S. Bank, noted, "We anticipated a soft landing, and this data boosts our confidence in that outlook. It also raises the odds of an even more favorable economic performance in 2025 than currently projected."
The job growth was driven primarily by sectors such as food services, healthcare, and government, which have benefited from substantial fiscal spending. However, this spending has also pushed the 2024 budget deficit toward nearly $2 trillion. Additionally, methodological issues with the report, including a low response rate from survey participants, may lead to downward adjustments in future months.
The strong job report has altered market expectations regarding the Federal Reserve's future actions. Futures markets now predict a quarter-point interest rate increase at the November meeting, followed by another similar increase in December, according to the CME Group FedWatch tool. Previously, there were anticipations of a half-point rate cut in December and quarter-point reductions in 2025.
Economists are questioning whether the Fed's recent half-percentage point rate cut was premature, given the strength of the September jobs report. David Royal, chief financial investment officer at Thrivent, speculated that it is "doubtful" the Fed would have made such a significant cut had it anticipated the strength of this report.
The Federal Reserve is set to convene on November 6-7, shortly after the U.S. presidential election, and will have additional data to consider. This meeting will be crucial as the Fed determines its appropriate policy response. Kathy, chief income strategist at Charles Schwab, highlighted the ongoing challenge: "How does everyone keep misjudging these figures?" The stability of the economy and the robust labor market will likely reassure officials, giving them time to deliberate their next steps.
In an election year, economic reports can provoke strong reactions, but overall economic indicators suggest the U.S. economy has been robust and continues to be so. This resilience, despite some skeptics and lackluster consumer sentiment, is a positive sign for both policy and political strategies moving forward.
Original Article: [Fed close to pulling off the elusive economic soft landing in 2024 after great September jobs report]
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