The Job Market Is Chugging Along, Completing a Solid Economic Picture
After months of wobbling, a fresh jobs report showed that hiring and wage growth are strong, aligning with other robust economic data.
For months, the economy has been like a jigsaw with one mismatched piece: Consumer spending has been holding up and overall growth has been solid, but the job market has looked treacherously wobbly.
As of Friday, the last piece of that puzzle is finally clicking into place.
Fresh employment data for September showed that hiring picked up strongly, the unemployment rate dipped and wage growth came in strong — adding to a string of recent data pointing to economic resilience.
And the incoming evidence points to a clear conclusion: The economy is robust.
Data revisions released last week showed that growth has been stronger and incomes have been more solid than previously understood. Retail sales data are holding up. And now, employers appear to be meeting resilient consumer demand by continuing to expand their work forces.
In fact, the report reinforced that by many measures, the job market is as healthy as it has ever been.
The fresh data is good news for the Federal Reserve, for the White House and for Kamala Harris’s campaign as the vice president and Democratic nominee tries to make an economic case to voters ahead of the presidential election in November.
It supports the idea that the economy either is headed for or has possibly already achieved a soft landing, in which inflation comes down without spurring economic pain in the process.
“Inflation has been quelled, and the economy’s fine — that’s a soft landing,” said Neil Dutta, head of economics at Renaissance Macro Research. The jobs report was “a sign that the economy is not falling off a cliff, a sign that it is stabilizing, and maybe perking up.”
Until very recently, economists had reason to regard the economy cautiously. In July, the unemployment rate jumped unexpectedly to 4.3 percent — the highest level in three years — and job growth was slowing sharply. Years of heavy spending had left Americans with depleted savings accounts and rising credit card balances. The economy didn’t necessarily look weak, but it did look brittle — less equipped to withstand a shock if something went wrong.
But now, the economic picture looks markedly more optimistic.
Not only did the revisions make it clear that income growth has been stronger than previously understood, giving Americans the wherewithal to keep up their spending, but the September employment report showed that unemployment ticked down to 4.1 percent and that job growth was stronger over the summer than initially believed.
“Maybe underestimating the U.S. economy is a bad plan,” said Michael Madowitz, principal economist at the Roosevelt Institute, a progressive group.
By several measures, the job market is historically strong. People in their prime working years of 25 to 54 are employed at a rate previously seen only in the early 2000s. Average hourly earnings are strong — and climbing — even when adjusted for inflation. Women in their peak working ages are participating in the labor market at the highest levels on record.
Taken together, the recent data suggests that the economy has found a measure of stability after the roller-coaster ride of a pandemic recession and recovery. Workers are no longer changing jobs at a frenetic pace; spending patterns and work habits are no longer in a state of constant flux. That is giving companies an opportunity to reset.
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The Job Market Is Chugging Along, Completing a Solid Economic Picture
After months of wobbling, a fresh jobs report showed that hiring and wage growth are strong, aligning with other robust economic data.
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A woman walking past a "now hiring" sign.
The fresh data is good news for both the Federal Reserve and the White House, both of which had been anxiously watching a recent tick up in the unemployment rate.Credit...Hiroko Masuike/The New York Times
Jeanna SmialekBen Casselman
By Jeanna Smialek and Ben Casselman
Oct. 4, 2024
For months, the economy has been like a jigsaw with one mismatched piece: Consumer spending has been holding up and overall growth has been solid, but the job market has looked treacherously wobbly.
As of Friday, the last piece of that puzzle is finally clicking into place.
Fresh employment data for September showed that hiring picked up strongly, the unemployment rate dipped and wage growth came in strong — adding to a string of recent data pointing to economic resilience.
And the incoming evidence points to a clear conclusion: The economy is robust.
Data revisions released last week showed that growth has been stronger and incomes have been more solid than previously understood. Retail sales data are holding up. And now, employers appear to be meeting resilient consumer demand by continuing to expand their work forces.
In fact, the report reinforced that by many measures, the job market is as healthy as it has ever been.
The fresh data is good news for the Federal Reserve, for the White House and for Kamala Harris’s campaign as the vice president and Democratic nominee tries to make an economic case to voters ahead of the presidential election in November.
It supports the idea that the economy either is headed for or has possibly already achieved a soft landing, in which inflation comes down without spurring economic pain in the process.
“Inflation has been quelled, and the economy’s fine — that’s a soft landing,” said Neil Dutta, head of economics at Renaissance Macro Research. The jobs report was “a sign that the economy is not falling off a cliff, a sign that it is stabilizing, and maybe perking up.”
Until very recently, economists had reason to regard the economy cautiously. In July, the unemployment rate jumped unexpectedly to 4.3 percent — the highest level in three years — and job growth was slowing sharply. Years of heavy spending had left Americans with depleted savings accounts and rising credit card balances. The economy didn’t necessarily look weak, but it did look brittle — less equipped to withstand a shock if something went wrong.
But now, the economic picture looks markedly more optimistic.
Not only did the revisions make it clear that income growth has been stronger than previously understood, giving Americans the wherewithal to keep up their spending, but the September employment report showed that unemployment ticked down to 4.1 percent and that job growth was stronger over the summer than initially believed.
“Maybe underestimating the U.S. economy is a bad plan,” said Michael Madowitz, principal economist at the Roosevelt Institute, a progressive group.
By several measures, the job market is historically strong. People in their prime working years of 25 to 54 are employed at a rate previously seen only in the early 2000s. Average hourly earnings are strong — and climbing — even when adjusted for inflation. Women in their peak working ages are participating in the labor market at the highest levels on record.
Taken together, the recent data suggests that the economy has found a measure of stability after the roller-coaster ride of a pandemic recession and recovery. Workers are no longer changing jobs at a frenetic pace; spending patterns and work habits are no longer in a state of constant flux. That is giving companies an opportunity to reset.
“Two years ago, companies were in a position where their head count was turning over, and for companies it takes a long time to onboard and to train,” said Nela Richardson, chief economist at ADP, the payroll processing company. “I think we kind of are seeing a new kind of jobs market right now. It’s still healthy, but it looks different.”
The result is a labor market that is arguably stronger than the one that prevailed immediately preceding the pandemic, Ms. Richardson said. Recent hiring has been broad-based, not limited to a handful of sectors. Wage growth, too, has been widespread, with low-income households experiencing some of the fastest recent gains. Productivity has been increasing, which should allow workers, consumers and business owners to benefit at the same time, rather than being locked in a zero-sum game.
That sunny combination is all the more notable given the economic ride that America has been on over the past four years. First, the pandemic shuttered businesses and pushed unemployment to towering heights. Then inflation took off, prodding Fed officials to sharply lift interest rates.
Historically, such campaigns by the Fed have resulted in significant labor market slowdowns and even painful recessions.
This time, though, the central bank appears to be on the cusp of achieving a rare soft landing, a situation in which inflation slows without causing a lot of economic pain in the process. In fact, there is no precedent in which the Fed has cooled inflation from levels as high as those reached in 2022 without incurring significant labor market costs in the process.
“We’re not in an emergency anymore — not in an inflation emergency or a labor market emergency,” said Julia Coronado, founder of MacroPolicy Perspectives.
For the Fed, which cut interest rates by half a percentage point last month in its first reduction in more than four years, the report paves the way for more measured pace of cuts. While officials started out with a big reduction, they can now lower rates in standard quarter-point increments, unworried that the job market is about to take a sudden and marked turn for the worse.
“You don’t need to be in a hurry,” Ms. Coronado said. “I think it just means some gradual adjustments — it doesn’t stop them. There’s no re-acceleration here, or inflationary pressure.”
And for the Biden administration, the report could serve as a final victory lap, assuming the strength persists through the election.
After years of struggling to take credit for a strong job market because of rapid inflation, the White House is now presiding over an economy with only moderate price increases and in which the labor market is still chugging along. Now, Ms. Harris will be able to point to substantial and continuing progress as she makes her case to voters.
“It’s not just a strong recovery,” but “the kind of recovery that is quite sustainable,” Mr. Madowitz of the Roosevelt Institute said.
Jeanna Smialek covers the Federal Reserve and the economy for The Times from Washington. More about Jeanna Smialek
Ben Casselman writes about economics with a particular focus on stories involving data. He has covered the economy for nearly 20 years, and his recent work has focused on how trends in labor, politics, technology and demographics have shaped the way we live and work. More about Ben Casselman
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