THE GOOD NEWS THAT AIN'T

For the most part, I’d say that the recent Jobs Report contains some pretty good news. The top line number is that the economy added 263,000 gigs during the month of September— and that the aggregate unemployment rate now stands at 3.5%, down from the 3.7% figure of the previous month.

That 263k jump in the number of jobs reflects an increase of 288,000 gigs in the private sector that’s partially offset by a 25,000 drop in public sector employment. Within the private sector, the categories of “Leisure and Hospitality” and “Food Services and Drinking Places” led the way, registering net job growth of 83,000 and 60,000, respectively.

And that 3.5% unemployment rate? Well, that’s back to where it was in July, which was a fifty year low.

And then there’s this: Average hourly earnings for private sector workers rose by .3% during the month of September. On an annual basis, average hourly earnings rose by 5%. That’s down from the 5.2% figure reported in August, and if you’ve been paying the least bit of attention to the news cycle, you probably know that that’s below the 8.3% annual rate of inflation.

So, yeah, it’s good—but not perfect—news. It’s far from perfect because, among other things, the data makes it clear that the economy is cooling down.

Consider this: For the months of July, August, and September, the number of jobs created in the private sector fell from 537K to 315k to the most figure of 263K.

Or consider this:

Even at the 50 year low unemployment rate, there’s still 5.8 million persons unemployed, and another 3.8 million folks working part-time because they cannot find a full-time gig. That’s almost 10 million people who are either unemployed or underemployed.

And then, of course, there’s that deal with the fact that private sector earnings are currently rising at a rate of 5.2%. That pales in comparison with an annual inflation rate of 8.3%. Workers’ real earnings (i.e., earnings adjusted for inflation) are falling, not rising.

Placed within this context, the most recent Jobs Report, as I mentioned from the get-go, is “pretty good.” Far from perfect but definitely not putrid.

What we’re seeing is an economy that’s slowing down but still showing signs of life.

And, in light of the Federal Reserve’s recent decisions to raise its benchmark interest rates, most commentators consider the economy’s most recent performance to be good.

But this brings us to a major problem. What’s “good” for some ain’t necessarily good for all.

WHEN THE GOOD NEWS AIN’T

Take, for instance, the Federal Reserve. The FED has made it abundantly clear that it’s laser focused on knocking some of the air out of the nation’s inflation rate. Running at 8.3%, this rate is at a forty year high and is prompting the FED to increase its benchmark interest rate in order to tamp down inflation back toward the long run goal of 2%.

To date, the FED has cranked up its benchmark interest five times this year: 25 basis points (1/4 of one percentage point) in March, 50 basis points in May (1/2 of one percentage point), and 75 basis points (3/4 of a percentage point) in the months of June, July, and September. They’ve got two more meetings this year: One in November and the other, of course, in December.

These increases in the FED’s benchmark interest rate are meant to cool the economy down, put a chokehold on consumer spending, and tamp down on inflation. The risk, of course, is that the FED will push us into a recession and that what we’ll end up seeing is an elevated level of joblessness.

Indeed, Jerome Powell, the chair of the FED, has taken to warning the public that economic “pain” may well be the price of its strategy to combat inflation via large increases in its benchmark interest rate. And make no mistake about it: Powell’s “pain” includes, among things, increased levels of joblessness. And this type of “pain” is particularly punishing to Black and Brown folk.

Whenever the economy goes into a tailspin, “the least” ends up getting slammed the most.

By the way, Powell has made it clear that the FED’s Federal Open Market Committee (FOMC) is committed to continued rate increases until “the job is done.” Or, more precisely, until there is clear evidence that the labor market has cooled off and that the rate of price increase is headed back toward the FED’s long run goal of 2% or so.

That “until the job is done” thingy is another reminder that, in its fight against inflation, the FED is “in it to win it” and openly accepts the possibility of pain.

All of which leads us back to that recent Jobs Report.

263,000K increase in private sector jobs may sound good to you—and it probably should.

A drop in the unemployment rate from 3.7% to 3.5% may sound good to you—and it probably should.

Rising earnings may sound good to you—and it probably should.

But you know who it’s not good news to?

It’s not good news to Jerome Powell.

It’s not good news to the FOMC.

It’s not, in short:

Good news to the FED.

And you know why it’s not good news to the FED?

It’s not good news because, as far as the FED is concerned, this is the wrong time for the unemployment rate to be going down. The wrong time for the number of private sector jobs to be increasing. And the wrong time for private sector workers to be experiencing earnings gains.

As far as the FED is concerned, these are signs that the economy is still running too hot—at the very time it needs to be cooling off to combat inflation.

As far as the FED is concerned, these data are all the more reason to keep slamming on the brakes and hoping that not many (if any) “passengers” get ejected from the vehicle.

So, barring some dramatic drop in the inflation rate, my bet is that the FED will keep increasing its benchmark interest rate and push us closer and closer to a recession.

My bet is that they’ll keep weaponizing joblessness as a device to slay the monster of inflation.

My bet is that the FED will see the recent Jobs Report as prima facie evidence of the need to chill out the labor market.

Because although that report might be (pretty) good news to the average person, nothing could be further from the truth for the FED. For the FED, the drop in unemployment, the rise in earnings, and the net job increase is yet another instance of:

The good news that ain’t.