Economy still in 'good shape' despite dismal jobs reading: US Bank

Stocks and bonds have both climbed following the latest update from the Department of Labor, despite a dismal reading on job creation in October and sharp downward revisions to figures for the two previous months.

However, the optimistic reaction in markets suggests that investors don’t see the report as an alarming harbinger of recession.

Instead, it’s simply evidence that the Federal Reserve had it right about the trajectory of the U.S. economy and labor market. Both are cooling, but not so much that investors should be alarmed.

“It tells the story that the economy is in good shape, the job market is slowing down closer to neutral, and therefore Fed policy looks to be slowing closer to neutral,” said Thomas Hainlin, national investment strategist at US Bank Asset Management, during an interview with MarketWatch.

The volatility in employment data this year has simply been a result of lingering “post-COVID weirdness” in the economy and data, Hainlin said.

Delving into the details of the report, he noted that wage growth looked relatively tame, which he said should help keep a lid on inflationary pressures.