US bond growth continues at a solid, albeit slowing pace, despite rising prices and higher borrowing costs weighing on the economy.
Employers added 261,000 jobs in October, while the unemployment rate rose slightly to 3.7%, the U.S. Department of Labor said Friday.
The news comes as the economy remains a concern for voters ahead of next week’s mid-term elections.
Democrats have argued that the US economy is healthy.
The number of jobs has remained stable and unemployment remains low, despite a 3.5% increase in September. But consumer prices are rising at a rate not seen since the early 1980s, rising 8.2% in the 12 months to September.
Although the rate has slowed since June with falling fuel prices, the cost of groceries, medical bills and many other items continue to rise.
“People are depressed and often vote with their wallets,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings. “Inflation is almost everywhere. People are rushed to register, they are rushed with their rent payments trying to buy a house.”
US interest rates hit new 14-year high
US economy holding up despite rising prices
Is the United States in a recession? So far, government figures indicate that there has been only a slight weakening in the labour market.
The 261,000 jobs added last month were much better than economists expected, with healthcare and manufacturing firms helping to boost hiring.
Wage gains have also been strong, although they have not kept pace with inflation, with average hourly wages rising 4.7% over the past year.
The White House has argued that some slowdown is to be expected — and healthy — as the economy returns to normal after activity jumped after lockdowns reopened.
However, with prices still soaring, analysts expect the US economy to enter a slowing period next year as consumers begin to rein in spending and the central bank raises interest rates. interest in curbing inflation.
Job losses ahead?
Since March, when interest rates were close to zero, the Federal Reserve has increased the cost of borrowing by six times, steps that have reached the public in the form of significantly higher rates on home, auto and corporate loans. businesses.
By making loans more expensive, the bank hopes to cool demand from businesses and households, thereby easing the pressure that pushes prices higher.
Some sectors, such as housing and technology, have already been hit hard, and anecdotal reports of job cuts and layoffs have increased as businesses prepare for a recession.
On Thursday, payment company Stripe said it was cutting 14% of its workforce, while Lyft, a taxi company that is Uber’s main rival, said it was cutting 700 jobs.
Elon Musk told Twitter employees that the company would cut widespread jobs, and Amazon also said it would stop hiring for corporate positions within the company.
“We think 2022 is the start of a different economic climate,” Stripe executives wrote in an email to staff. “Our business is fundamentally well positioned to withstand the rigours of the environment … we must, however, align the pace of our investments with the reality around us.”
But the continued strength of the labour market has raised hopes that the US can avoid an increase in job losses and a severe recession. Dane Brecher helps run Plastic Crafts, a 40-person family business in New York that his grandfather founded in 1934.
The company felt the impact of higher interest rates and opted to pay cash when buying new machinery rather than borrow as it would have done a few months ago.
But he doesn’t have big debts and sales have been steady. Although there may be signs of a slowdown, he said he was not worried about a severe recession.
“If interest rates were a little lower, we would definitely increase more,” he said. “We’re just going to stay the course…we’re in a good position. Unfortunately, I don’t know if the rest of the country is, but we’re doing well.”
