ShareJob additions in October were light, with only a 12,000 net gain, but this could partly be attributed to a special one-time factor — the impact of recent hurricanes. However, the fact that job figures were revised lower in the prior two months, by 112,000 in sum, clearly hints at a slowdown in the economy. At the same time, the unemployment rate remains low at 4.1%. The tight labor market is pushing wage growth to 4%, now outpacing one-year consumer price inflation and home price rises.
The number of Americans out of the labor force and uncounted by statistics remains high at 101 million. Many are retirees and students. However, the fact that 5 million quickly left the labor force when COVID-19 arrived, and the number hasn’t come down since then is why there are so many “help wanted” signs across America.
Today’s job report means that the Fed will make a rate cut at least one more time before the end of the year. Several more cuts are also likely in 2025. That does not mean mortgage rates will fall in lockstep. The large issuance of Treasury bonds to fund the swelling budget deficit has prevented mortgage rates from falling deeper. The deficit problem is not just in the U.S. but worldwide. That is why the dollar can remain strong. However, the rise in gold prices reflects investors’ unease about government finances across the globe.
