Today’s Employment Situation report is very good news. Not only was the top line number of 535,000 was well above expectations, the 235,000 jobs add to August and September in revision make those numbers much more in line with a continuing strong recovery. Wages continue to rise and seem to be rising a bit faster than inflation so this is real growth, inflation appears to have peaked and ticking down while wages continue a steady rise. The highly watched participation rate was unchanged and with these strong number that is showing that hiring is keeping pace with people returning to the workforce, if you want a job you can find one pretty quickly.
This is broad based jobs gains, the only real sector showing declines was public education. While most will attribute this to seasonal adjustment artifacts, I actually think it is looking like a culture war artifact. With school boards as battle grounds there just seems to be to much friction for normal operations.
The problem I see is this report can give a bit of a boost to the we don’t need to do anything crowd. Looking at this report is seems clear that the economy is going to run strong at least through the first half of 2022. If we don’t get something more then the infrastructure deal passed soon that good economy will be claimed by the do nothings. This would be very unfortunate as we are in an economic sweet spot that could allow us to bump the long term growth rate up. The pandemic force companies into productivity enhancement spending, but it seems that the economy is absorbing that without hurting wages or job openings. We need to keep that labor pressure up so that the as the supply chain unkinks we can keep the wealth transfer going. The interesting thing is this transfer is really of new money entering lower on the scale and not pinching the top. This is actually a good thing politically as the top end is only whining and not really pressuring, they are right now willing to let the bottom catch up a bit.
This was a quick first look.