The US job market just won’t shut down

Welcome to November and the home stretch of the midterm elections. Here’s what we’re looking at while we wait for the World Series to resume.

Social Security? Inflation? Dems still looking for a winning election message

With Election Day a week away, President Joe Biden traveled to South Florida on Tuesday to warn — yet again — that Social Security and Medicare are “under siege” from Republicans and the future of programs is on the ballot next week.

Biden and Democrats have frequently tried to score campaign points by targeting Republican Sen. Rick Scott of Florida and a plan he released earlier this year that proposed that all federal programs, including Social Security and health insurance, expire after five years or be renewed by Congress. Some Republicans rejected the Scott plan outright, but Biden on Tuesday lambasted it and other GOP proposals that could change or cut Social Security and Medicare, warning the GOP would target the programs.

“You paid into Social Security your whole life, you earned it, now these guys want to take it out,” Biden said, later adding, “They’re going to raise the retirement age for Social Security and lower benefits. That’s what they’re going to do.

Biden also touted the Cut Inflation Act, noting that all Republicans voted against the plan and its provisions to reduce prescription drug costs. “This year, we finally beat pharma. We finally beat the pharmaceutical industry,” he said. “Big Pharma lost and Americans won, again thanks to congressional Democrats.”

Why is it important: It’s no coincidence, of course, that Biden’s event focusing on Social Security, Medicare and prescription drug costs took place in South Florida, home to a huge elderly population. “Democratic strategists fear that Florida, a tightly contested political theater for decades, is starting to lean decidedly toward Republicans,” Nandita Bose and Trevor Hunnicutt of Reuters. report. “They hope they can push back against these trends by making a campaign issue of the alleged risks to popular Social Security and Medicare programs under Republican leadership.”

Still, Biden’s speech was “little followed”, Reuters notes, and the president’s low approval ratings are weighing on Democrats’ prospects in Congress. Some top Democratic lawmakers and strategists ‘openly doubt’ the party’s election strategy, according to the New York Times reports.

“For weeks, Democrats have presented their own scattered case, accusing their opponents of wanting to undermine abortion rights, shred the social safety net, and shake the foundations of American democracy,” Lisa Lerer said. , Katie Glueck and Reid J. Epstein of The Times. write. “Yet as the country grapples with high gas prices, record inflation and economic uncertainty, some Democrats are now acknowledging that their kitchen sink approach may be lacking. … Others say too much emphasis has been placed on abortion rights and too little on concerns about crime or the cost of living. And across the country, Democrats point to an inadequate economic message and an inability to effectively announce their legislative achievements.

The bottom line: While Biden has increasingly focused his campaign message on economic issues, Social Security and Medicare, other Democrats worry the party has said too little overall to address the concerns of voters. voters. The Times reports that “Democrats spent nearly $320 million on ads focused on abortion rights, more than 10 times more than the $31 million they spent on inflation spots. according to data from AdImpact, a media monitoring company.

With just a week to go, it may be too late for Democrats to move the needle on changing their message.

quote of the day

“The truth is, Democrats have done a poor job of communicating our approach to the economy. I have no idea if I’m going to win my election — it’s going to be a nail biter. But if you can’t talk straight from people’s wallets and talking about our view of the economy, you’re only half a conversation.

— Rep. Elissa Slotkin, a Democrat from Michigan who faces a tough race to retain her seat. Slotkin and other Democrats have criticized their party’s lack of a targeted message in the midterm elections, instead taking what Lerer, Glueck and Epstein from The Times call a “kitchen sink approach” to issues such as abortion rights, crime and inflation. “For months, Republicans have blasted their opponents with a much simpler message: the economy is hurting, crime and immigration concerns are rising, and the ruling party is to blame,” they wrote.

Labor market shows continued signs of strength as Fed kicks off meeting

Employers posted more job openings in September than expected, Labor Department says Data released on Tuesday, signaling that the labor market is still quite robust as the Federal Open Market Committee meets to determine the size of the central bank’s next interest rate hike.

Analysts had expected to see another monthly drop in job postings, continuing the August trend. Instead, employers posted 437,000 new jobs in September, bringing the number of available positions to 10.7 million. Job postings in the healthcare industry have reached an all-time high, as has the number of job postings from major corporations.

“The surprise upturn in job vacancies highlights a relentless demand for workers despite mounting economic headwinds,” Bloomberg’s Reade Pickert said. said. “The persistent imbalance between labor supply and demand continues to support solid wage growth, adding to widespread price pressures.”

Yet despite the most important job numbers, the report provides evidence that the Fed’s anti-inflationary tightening campaign is starting to work, as the number of new hires and job quits has fallen. “Make no mistake about it: the labor market is cooling,” said Julia Pollak, chief economist at ZipRecruiter. “The number of job offers may be volatile, but the number of less volatile hires has increased from 6.3 million to 6.1 million, and the number of resignations has increased from 4.2 million to 4.1 million .”

Pollak also noted that job postings in finance and insurance have fallen for two consecutive months, with high interest rates “clearly hurting hiring in the sector.”

The Fed is considering its next move: As it continues to wage its war on inflation, the FOMC is expected to announce a fourth consecutive 75 basis point increase in its benchmark interest rate following its November meeting on Wednesday, raising its target rate between 3.75% and 4%. . Nothing in the latest jobs data suggests he will hesitate to do so. The biggest problem is what comes next.

Some analysts said the September report makes it more likely that the Fed will continue pushing rates hard next year. But others have argued that the Fed will take a less aggressive stance at the final FOMC meeting of the year in December, with expectations of a 50-point rate hike followed by a pause as officials Fed officials are waiting to see how their tightening campaign unfolds. out. Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note on Monday that he expects the December rate hike to be the Fed’s last. “We see enough chaff in the wind now to think the economy is at a real inflection point,” he wrote, citing falling home sales, slowing wage growth and the decline in business investment.

The September jobs data, however, tempered expectations of a Fed pivot, with the odds of a larger rate hike in December passing slightly better than even in financial markets on Tuesday. “The good news of more job openings for everyone will be bad news for everyone if Fed officials are convinced they need to push interest rates even higher and faster than before, said Christopher Rupkey, chief economist at FWDBONDS in New York.

A plea to slow down: Fearing the Fed would push rates so hard it could cause a recession, a group of Democratic lawmakers sent a letter to Fed Chairman Jay Powell this week, expressing concern about the central bank’s plans.

The authors – which include Sens. Elizabeth Warren (MA), Sheldon Whitehouse (RI), Jeff Merkley (OR) and Bernie Sanders (I-VT), as well as representatives Katie Porter (CA), Stephen Lynch (MA), Rashida Tlaib (MI) and Jamaal Bowman (NY) – write that the Fed’s warning that it will act “aggressively” and that people should expect to feel “pain” in the coming months following the bank’s tightening campaign “reflect an apparent disregard for the livelihoods of millions of working Americans, and we are deeply concerned that your interest rate hikes may slow the economy while not slowing the rising prices that continue to hurt families.

It’s not at all clear that lawmakers have leverage over the Fed on interest rate policy, no matter how much that policy costs ordinary Americans. At the same time, many inflation hawks are pushing the Fed forward. Former Treasury Secretary Larry Summers said Tuesday that those pushing the Fed to suspend its tightening campaign are “misguided.”

“History suggests that once generated, high inflation is very difficult to stop,” Summers warned. “The vast majority of efforts to stop inflation have failed in industrialized countries. … If the @federalreserve fails to deliver on the current market expectation that rates will approach 5%, markets and others will see that as easing.

In an interview with Bloomberg on Monday, Summers put his position succinctly: “I hope the Fed will be clear that it is staying the course on what is needed until we see very clear signs of lower inflation.”

The question now is whether policymakers at Powell and the Fed are still of the same mind as they decide where interest rates will go over the next few months.

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