US beats expectations and adds 261,000 jobs in October

The hot job market continued into October as the country added 261,000 to payrolls, the Bureau of Labor Statistics said Friday, as the unemployment rate rose to 3.7% from a five-decade low of 3.5%. .

The October figure beat expectations and gave President Joe Biden some good news ahead of next week’s midterm elections.

But while the number was a sign of resilience in the labor market, it also indicated that the Federal Reserve’s efforts to bring inflation back from nearly 40-year highs remain a challenge.

Average hourly wages grew 4.7% from a year ago and 0.4% for the month, indicating that wage growth is likely to continue to weigh on inflation.

Economists had expected 205,000 jobs to be created in October as the Federal Reserve raises interest rates in a bid to curb high inflation that has pushed up the cost of living.

The Fed wants job growth to slow and wage growth to weaken — all without plunging the country into recession.

Instead, the number of jobs in October was about the same as the 263,000 jobs added in September. In that month there were about 1.9 vacancies for every unemployed person.

While steady hiring, solid wage growth and low unemployment have benefited workers, interest rates have also risen to 8.2 percent, pushing up the price of food, energy and housing.

Voters have made it clear that their main concern is the economy and they are giving President Biden low marks for his handling of it. Democrats worry that anger will hurt them at the polls.

Biden is in California on a campaign swing and will likely discuss the economic situation at events there.

Voters give President Joe Biden low marks for his handling of the economy, a worrying sign for Democrats heading into midterm elections next week

Republicans have hammered Biden on the state of the economy. The president has defended his economic record.

“Here’s the deal: Economic growth is up, price inflation is down, real income is up, gas prices are down,” Biden said Thursday night at a rally near San Diego in support of Democratic Rep. Mike Levin, hanging from his seat in a tight race.

Election forecasters predict Republicans will gain control of the House. The GOP only needs five seats to gain a majority in that chamber. The Senate is seen as up for grabs.

The Federal Reserve also kept a close eye on the October figures. The Central Bank is closely monitoring the economic indicator to see if their aggressive efforts to curb inflation are working.

The Federal Reserve raised interest rates by 0.75 percentage point on Wednesday — the fourth such rise in a row — to curb rampant inflation.

While inflation could ease on the back of the hikes, the cost of borrowing for Americans is expected to rise, with mortgage rates hitting 7.16 percent last week, well above rates before the 2008 economic crisis.

Following the hike, the Fed said that while an increase is still planned for the end of the year, it remains unclear whether it will be smaller than recent increases.

“No decision has been made yet,” Fed Chair Jerome Powell said on Wednesday.

“My colleagues and I are strongly committed to bringing inflation back to our 2 percent target… We will stay on track until the job is done.”

The country’s central bank is in a delicate dance of attempts to contain raging prices without sending the economy into recession.

The Fed will then meet on December 13 and 14.

Other numbers are coming out for them to look at as part of their assessment: another monthly employment report on Dec. 2, and two more releases of the Consumer Price Index.

Fed Chair Jerome Powell, pictured on Wednesday, said it remains unclear how much the expected rate hike in December will be, noting that the central bank will do everything it can to bring inflation down to 2 percent.

The Federal Reserve raised interest rates by another 0.75 percentage point on Wednesday, the fourth time in a row this year

The consumer price index rose by 8.2 percent in September compared to a year ago.

In the third quarter, which just ended in September, real salaries rose 0.8 percent, the first quarterly increase after two consecutive years of decline or stagnation.

And real gross domestic product, the measure of all economic output in the country, returned to growth in the quarter after half a year of contraction, rising 2.6 percent year-on-year in a preliminary estimate.

It followed two consecutive quarters of shrinking GDP, which is an informal definition of a recession, although Biden denied that a recession had begun. Most economists agreed, but many believe a real recession is inevitable next year.

During the pandemic, the Fed cut interest rates to near zero to help businesses and Americans take advantage of low lending rates.

But in March, the Federal Reserve began raising interest rates at historic levels to 3.25 percent in just seven months.