Economist forecasts significantly underestimated US job growth in recent report.

Jobless Rate Remains at 4.1% Despite Slowing Economy

The United States’ economy added just 12,000 jobs in October, a significant drop from the expected 100,000 jobs, according to a report released by the Labor Department on Friday. Economists have attributed this slowdown to the impact of strikes and hurricanes that affected many workers temporarily.

Effects of Strikes and Hurricanes on Job Market

The report highlights that the effects of strikes and hurricanes were substantial in October. While economists initially thought the economy would gain 100,000 jobs, it is estimated that up to 100,000 jobs were lost due to these events.

Hurricanes Helene and Milton’s Impact

Hurricanes Helene and Milton had a significant impact on the job market in October. The storms led to many workers being temporarily off payrolls, which contributed to the slower growth of employment.

Strikes at Boeing and Other Companies

The strikes at Boeing and other companies also played a role in the slowdown of job growth. According to the report, factories shed 46,000 jobs in October due to these strikes.

Downward Revisions to Job Growth

Despite the recent shocks to the economy, economists have noted that the United States has proven resilient. Comerica Bank’s chief economist, Bill Adams, commented on the downward revisions to job growth: "The big one-off shocks that struck the economy in October make it impossible to know whether the job market was changing direction in the month… But the downward revisions to job growth through September show it was cooling before these shocks struck."

Economy Showing Signs of Slowing Down

Despite the strong growth of 2.8% annual rate last quarter, economists have noted that consumer spending is still driving growth. However, many Americans are unhappy with the state of the economy due to high prices.

Inflation and Interest Rates

With inflation having cooled significantly, the Federal Reserve is set to cut its benchmark interest rate next week for a second time and likely again in December. This series of Fed rate cuts should lead to lower borrowing rates for consumers and businesses.

Job Market Indicators

This week, the Labor Department reported that employers posted 7.4 million job openings in September. Although this is still more than on the eve of the pandemic, it amounts to the fewest openings since January 2021. Additionally, 3.1 million Americans quit their jobs in September, the fewest in over four years.

Implications for Policy

The slower growth of employment and cooling inflation may have implications for policy. Economists are closely watching the job market to determine whether it is changing direction.

Conclusion

The recent report on the job market highlights that despite its resilience, the economy has shown signs of slowing down. The impact of strikes and hurricanes will likely continue to affect employment growth in the coming months. As policymakers monitor these developments, they must be cautious in their decision-making to ensure the continued health of the US economy.

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