Surprise Jobs Report Adds to Economic Confusion

(iStockphoto)
By Michael Rainey and Yuval Rosenberg

Good evening. Former Presidents George W. Bush and Joe Biden and former Vice Presidents Kamala Harris, Mike Pence, Al Gore and Dan Quayle were among the mourners who gathered Thursday at the Washington National Cathedral for the funeral of Dick Cheney, the polarizing former vice president and longtime D.C. power player who died early this month at the age of 84. President Trump, a target of Cheney's criticism after the Jan. 6, 2021, attack on the U.S. Capitol, was not invited to the service.

Here's what else is happening.

Jobs Report Shows Resilient Economy - and Signs of Weakness

U.S. employers added 119,000 jobs in September, a sharp rebound from the loss of 4,000 jobs in August recorded in revised data. Delayed by about seven weeks due to the government shutdown, the results announced by the Labor Department Thursday beat expectations for an increase of 50,000 jobs.

At the same time, the unemployment rate rose a tenth of a percentage point to 4.4%, the highest level in four years. The increase was driven by the entry of nearly half a million people into the labor market.

Job gains were concentrated in leisure and hospitality (+47,000), healthcare (+42,800) and construction (+19,000). Job losses were seen in federal employment (-3,000), manufacturing (-6,000) and transportation and warehousing (-25,300).

What the experts are saying: The September data provides some relief for analysts who were worried that the labor market may have deteriorated sharply during the government shutdown, when no data was collected or reported. The better-than-expected growth suggests that the labor market is still expanding, though at a slower pace than last year. Analysts at Goldman Sachs say the underlying pace of payroll growth is now a relatively modest 39,000 per month.

Overall, the labor market continues to send mixed signals, with the surprise increase in the number of jobs set against a backdrop of slowing growth this year. The unemployment rate increased, continuing a trend, but it remains low by historical standards, and the increase in the unemployment rate occurred due to growth in the size of the labor market, typically a sign of health.

"The jobs market is still rather fragile, but this is one sign that maybe it's not as ugly as markets had worried," U.S. Bank Chief Economist Beth Ann Bovino told The Wall Street Journal. Bovino attributed the solid September job growth to seasonal factors: "summer's over, people leave the beaches and come back to work," she said.

Jed Kolko, a senior fellow at the nonpartisan Peterson Institute for International Economics, noted that average job growth in 2025 has averaged 76,000 per month - the "lowest annual average this century outside of a recession." He added that while household employment levels remain near recent highs, payroll growth "is flashing red."

Eyeing the Fed: The September jobs report isn't expected to change many minds at the Federal Reserve as officials contemplate the need for the third straight interest rate cut at their final meeting of the year in December. At their October meeting, Fed officials appeared to be leaning toward holding rates steady amid concerns about inflation and the uncertainty surrounding an extended government shutdown.

The odds that the Fed will cut rates fell yesterday after the Bureau of Labor Statistics announced that it will not publish an October employment report due to the shutdown, but they inched higher today as investors weighed the significance of the increase in the unemployment rate. Markets now predict a 39% chance of a quarter-point rate cut in December, up from 30% yesterday, according to CME FedWatch.

Heather Long, chief economist at Navy Federal, said that although the economy appears to be "treading water," she expects the Fed to hold steady on rates. "The Fed probably won't cut in December," she wrote on social media. "But it's hard to argue things look better in the labor market. It's still 'no hire, no fire.'"

Still, some analysts think the Fed's focus on the strength of the labor market could mean another rate cut is coming. "The unemployment rate matters more," George Catrambone, head of fixed income at DWS Americas, told Bloomberg. The fact that the unemployment rate rose "casts doubt on the labor balance argument," Catrambone added, and that could push more Fed officials to lean toward a rate cut in a bid to maintain economic growth.

Quote of the Day

"SEDITIOUS BEHAVIOR, punishable by DEATH!"

− President Trump, in a social media post Thursday morning, responding to a group of six Democratic intelligence and military veterans in Congress who posted a video on Tuesday reminding active service members that they can and must defy "illegal" orders.

In the video, Sens. Elissa Slotkin and Mark Kelly and Reps. Jason Crow, Maggie Goodlander, Chris Deluzio and Chrissy Houlahan speak directly to the camera. "Right now, the threats to our Constitution aren't just coming from abroad, but from right here at home," they say. "No one has to carry out orders that violate the law or our Constitution."

In a series of posts about the video, Trump called the Democrats' comments "dangerous to our country" and amped up his rhetoric from there. "Their words cannot be allowed to stand," he wrote. "SEDITIOUS BEHAVIOR FROM TRAITORS!!! LOCK THEM UP???" About an hour later, he added the post suggesting the Democrats deserve the death penalty. Trump also reposted comments from others attacking the Democrats, including one that said, "HANG THEM GEORGE WASHINGTON WOULD !!"

Democratic leaders demanded that Trump take down his posts and called on Republicans to condemn them, warning that the president's words endanger the lawmakers. "Let's be crystal clear: the President of the United States is calling for the execution of elected officials. This is an outright threat, and it's deadly serious," Senate Minority Leader Chuck Schumer said. "When Donald Trump uses the language of execution and treason, some of his supporters may very well listen."

The Democrats behind the video responded to Trump in a joint statement that said, in part: "We are veterans and national security professionals who love this country and swore an oath to protect and defend the Constitution of the United States. That oath lasts a lifetime, and we intend to keep it. No threat, intimidation, or call for violence will deter us from that sacred obligation."

White House press secretary Karoline Leavitt told reporters Thursday that Trump did not mean that members of Congress should be executed.

Fiscal News Roundup

Views and Analysis

Fiscal News Roundup

Views and Analysis