Job Market Finally Shows Signs of Slowing Down
Employers hired 150,000 new workers in October, the Labor Department announced Friday, marking a slowdown in the pace of hiring in the U.S. economy. Job gains in August and September were revised lower, as well, with the September reading moving down by 39,000 to a still robust 297,000.
The labor force decreased by 201,000 last month, and the unemployment rate rose slightly to 3.9% — low by historic standards, but the highest reading since January 2022.
Wage pressures also eased in October. Average hourly pay rose 0.2% on a monthly basis and 4.1% year over year, the lowest annual reading since June 2021.
What the experts are saying: Some analysts think the latest data is a signal that the long-expected economic slowdown has arrived. “October could be the turning point for the economy,” said Kathy Bostjancic, chief economist at Nationwide, per The Wall Street Journal. “We are seeing a cooling in labor demand and slow income growth which means we’re poised to see consumer spending slow quite dramatically.”
Still, it may be too soon to declare that the economy is on the verge of a recession. For one thing, the strike by autoworkers weighed on manufacturing employment last month, a temporary factor that will reverse next month. More broadly, the labor market may simply be returning to something like normal conditions following months of exceptionally high growth in the wake of the pandemic.
Economist Mike Konczal of the Roosevelt Institute, a left-leaning think tank, noted that the October hiring number isn’t far off the average level of hiring recorded in 2018 and 2019, before the pandemic warped the economy from top to bottom (see his chart above). “If you told me these numbers in a vacuum, only knowing unemployment has been below 4 percent for 22 months, I'd say they are great,” he wrote. At the same, Konzal said he was concerned that the decline in hiring in October may have been “too steep” given the Federal Reserve’s pledge to maintain high interest rates for an extended period of time.
Mark Zandi, chief economist at Moody’s Analytics, was more optimistic, saying the jobs report is just one of several signs pointing to the much-desired “soft landing” for the economy, in which inflation is brought under control without a recession. “Wow. What a great week for the economy,” he wrote. “The Oct jobs report was as good as it gets. Resilient, but moderating job growth, and easing wage pressures. And with oil prices back down to near $80/barrel, 10-yr T-yields close to 4.5%, and stocks showing lots of green, it’s tough not to think there will be a soft landing.”
Whether this is a turning point or just a smaller step along a gently sloped path, one thing seems certain: The Fed is more likely to hold off on more rate hikes. “Put a fork in it – they are done,” said Jay Bryson, chief economist at Wells Fargo, per Bloomberg. “If you are an [Federal Open Market Committee] official, this is what you wanted to see. This is very good news for the Fed.”
House GOP Passes Bill to Cut Environmental Protection Agency Budget by 40%
The Republican-led House on Friday approved another 2024 appropriations bill, passing legislation that would slash the Environmental Protection Agency’s budget by nearly 40%.
The funding bill covering the Department of Interior, Environment and Related Agencies passed by a 213-203 vote that fell almost entirely along party lines. Three Republicans — Reps. Brian Fitzpatrick of Pennsylvania and Mike Lawler and Marc Molinaro of New York — voted against it, while Democrat Vicente Gonzalez of Texas voted for it.
The GOP plan would provide 35% less in total funding than in fiscal 2023 and reportedly would provide the Environmental Protection Agency with its smallest budget in three decades, about $6.2 billion. It would cut 39%, or nearly $4 billion, from the EPA’s 2023 funding and would provide nearly $6 billion less for the agency than President Joe Biden requested in his budget.
“In addition to the top-line EPA cuts, the GOP bill would also rescind provisions from the climate, tax and health care bill that Democrats passed last year,” The Hill notes. “It targets funding aimed at helping underserved communities combat climate change and pollution. It additionally seeks to defund the EPA’s efforts to curtail toxic pollution and planet-warming emissions, preventing the agency from using funding to enforce its rules on power plants.”
The bill would also deliver $14.3 billion for the Interior Department, reducing its funding by $677 million, or 4.5%. It would cut the National Park Service funding by $436 million, or 13%, among other provisions.
Republican amendments seeking to slash the salaries of officials including Interior Secretary Deb Haaland, EPA Administrator Michael Regan and Bureau of Land Management Director Tracy Stone-Manning all to $1 fell far short of being adopted.
Why it matters: Republicans touted the potential EPA cuts as a step toward fiscal responsibility and a blow against what they described as the Biden administration’s “extreme anti-energy policies” and costly regulatory overreach. “Cutting funding is never easy or pretty, but with the national debt in excess of $33 trillion and inflation at an unacceptable level, we had to make tough choices to rein in federal spending,” said Rep. Mike Simpson of Idaho, who heads the Appropriations subcommittee responsible for the legislation.
The House GOP’s proposed cuts have little chance of becoming law, though they set a marker for likely negotiations with the Democratic-led Senate, where a plan with bipartisan support calls for $42.7 billion in total funding, compared with $25.4 billion in the House package.
House lawmakers fended off pressure from hardliners to pursue even steeper cuts, but Democrats slammed the existing plan as austere and irresponsible. “This harmful bill debilitates America’s ability to address the climate crisis and hobbles the agencies within its jurisdiction,” said Rep. Chellie Pingree of Maine, the top Democrat on the Interior-Environment subcommittee.
The White House has threatened to veto the House bill.
The bottom line: The GOP cuts are unlikely to be enacted, but in addition to their political messaging they also signal just how much work is left to be done in the annual appropriations process. The House has now passed seven of 12 required appropriations bills, while the Senate has approved three, though the spending bills there have been moving with bipartisan support and largely reflect spending levels agreed upon by both parties earlier this year. Lawmakers will have to approve a stopgap spending bill by November 17 to avoid a government shutdown.
Burn of the Week
“Only in Louisiana, apparently, do they think that if you stop collecting taxes, your tax receipts will increase.”
‒ Washington Post columnist Dana Milbank, responding to House Speaker Mike Johnson's dismissal of a Congressional Budget Office report projecting that a $14.3 billion cut to IRS funding would raise the deficit by $12.5 billion. The speaker is from Louisiana. “Only in Washington when you cut spending do they call it an increase in the deficit,” Johnson had said, ignoring the revenue-raising effects of IRS tax enforcement.
Fiscal News Roundup
- House Sends Interior-EPA Bill Off to Uncertain Future – E&E News
- Johnson: House GOP Looking at New Twist to Stopgap Funds Fight – Roll Call
- ‘Watch Your Back’: Speaker Johnson Squares Off With Schumer – Politico
- US Announces $425 Million Ukraine Aid Package – The Hill
- U.S. Economy Adds 150,000 Jobs in October, Slower but Solid Growth – Washington Post
- Sharp U.S. Hiring Slowdown Signals Cooling Economy – Wall Street Journal
- Republicans, Fed Up With Tuberville, Plot Ways to Bust His Military Blockade – Politico
- As Billions Roll in to Fight the US Opioid Epidemic, One County Shows How Recovery Can Work – Associated Press
- Novo Nordisk, Eli Lilly Rake In Cash From Weight-Loss Drugs – Washington Post
- Rep. Owens Weighs Intercepting a House Appropriations Seat – Roll Call
- Shipping Giant Laying Off 10,000 as Pandemic Boom Turns to Bust – CNN
- New York City’s New Goal: Everyone Lives to at Least 83 – Washington Post
Views and Analysis
- Speaker Johnson Needs to Get Serious — and Fast – Washington Post Editorial Board
- Republicans Are Playing Dangerous Games With Aid for Israel and Ukraine – Josh Rogin, Washington Post
- Does Mike Johnson Even Want to Avoid a Government Shutdown? – Ed Kilgore, New York
- Israel, the I.R.S. and the Big Grift – Paul Krugman, New York Times
- ‘Tax Cheat Twelve’ Votes to Cut IRS Funding in Israel Bill – David Dayen, American Prospect
- Israel Aid Drama Is the Latest Failure of American Governance – Stephen Collinson, CNN
- As the U.S. Fights Over Aid, Ukraine’s Hopes Hang in the Balance – David Ignatius, Washington Post
- The People’s House Is Back in Business — and Crazier Than Ever – Dana Milbank, Washington Post
- The Obesity Drugs Craze Is Overlooking One Big, Open Question – Peter Lurie and Joshua Sharfstein, Washington Post
- Bezos’ Miami Move Is Not About Washington’s Taxes – Jonathan Levin, Bloomberg