Friday morning’s employment report was really, really encouraging. It allayed the concerns of many economists, myself included, that the Federal Reserve might have waited too long to cut interest rates and that we may be sliding into a gratuitous recession. And it showed that the U.S. economy continues to be in a very good place.
Before the latest report, there were a number of indications from surveys and other data that U.S. job creation may be slowing, perhaps to a worrying extent. One good report doesn’t completely negate those indications. But at least we can say that the feared slowdown hasn’t yet shown up in the jobs report, which is usually the gold standard.
Just look at where we are right now. In late September, the Fed’s preferred measure of annual inflation came in at 2.2%, within a whisker of the target rate of 2%. Now we have unemployment of 4.051% (that 4.1 number you’re hearing is rounded up), slightly below the rate the Fed considers sustainable in the long run. If this isn’t a soft landing, I don’t know what is.
Since everyone is focused on the election, I guess I also have to observe that this report is good news for Kamala Harris. There will be one more jobs report a few days before the election, but it seems clear that she’ll be able to point to a very good economic record for the administration in which she’s serving. She has already eliminated Donald Trump’s advantage over who would be better at controlling inflation; now she can point to continuing vigorous job creation.
Oh, and one potential nasty October surprise has been neutralized with the suspension of the dockworkers’ strike.
All considered, a pretty good morning on the economic front, but a not-so-good one for people looking for bad news.
Paul Krugman is a New York Times columnist.