Given that the previous US government shutdown just recently ended, this seems pertinent. As a result, major economic data, most notably that relating to the job market, has been periodically delayed. The shutdown lasted more than a month and greatly restricted access to information and data. So the release of this vitally important data was delayed for almost seven weeks. And so, shortly after job growth returned with a vengeance, the most recent figures underscore what a puzzle the US economy has become.
In September, employers created just 119,000 jobs, well below what most experts were looking for. This modest increase continues a trend of stagnant job growth that has hardly moved since April. Changes to earlier months yield some surprising numbers. July job growth was a disappointment at only 72,000 jobs added, and August was revised down to a loss of 4,000 jobs. Together, these trends have fostered a palpable sense of confusion among economists and policymakers about the state of our labor market.
Indeed, the job market seems to be having a tough time getting its legs under itself. Last month, in September, the unemployment rate increased from 4.3% to 4.4%. This increase comes at a time when the central bank already is under intense pressure. They require a reduction in policy interest rates to stimulate the economy. The Federal Reserve’s inflation target is 2%. In September, price inflation jumped up to 3%, further complicating their decision-making as they head into their highly-anticipated December meeting.
Compounding these worries, October saw the most announced job cuts for that month since 2003. Now even major corporations like Amazon, Target, and UPS are laying off thousands. These cuts are a reflection of bigger issues affecting the retail and logistics industries. These layoffs appear to be the start of a challenging end of year for employers, as they face an unpredictable economic landscape.
With a government shutdown approaching and unemployment rising, the stakes could not be higher. Amid rising job cuts, this has created a rapidly tightening economic landscape for the US. Analysts across the world are watching these trends with bated breath as they try to determine what this means for future monetary policy and the health of our economy.