US Job Growth Surged in October, Unemployment Rate Fell

00:00 Claudia Sahm

The labor market has had this really uncomfortable, curious balance of the the low hiring but the low firing, right? So it it really still is a difficult environment if you are looking for a job or a better job to to get that. But people are holding on to their jobs, which is a good thing, right? The layoff rate is low. It’s very unusual. So I think it does give this this view of like there’s two two Americas in the labor market and and there’s some truth to that. Uh but but we do like to

00:39 Claudia Sahm

see, I mean, the payroll numbers surprised to the upside. Uh you know, as I said before, we’ve seen some some big surprises like this earlier in the year and then they ebb away. You know, so I I’ve got to see some some months of this before I’m really convinced we’re seeing an acceleration of the labor market. But you know, good news is good news. and the unemployment rate, the overall unemployment rate did tick down with participation going up. So like, that’s a that’s a good setup. So we’re going to take the good where we have it. But but but we have been head faked by this labor market in terms of acceleration several times this year.

01:21 Speaker B

Paul, am I right? Kevin Hassett of the White House will be with Bloomberg nine-ish?

01:24 Paul Sweeney

Yes. Yes. Yes. We’re going to have him and we’ll get his thoughts here.

01:28 Speaker B

Paul Sweeney with Claudia Sahm.

01:32 Paul Sweeney

Average hourly earnings on a year-over-year basis, Claudia Sahm, came in a little bit better than expected at 3.1%. Are you surprised that number’s not even higher given how tight the labor market is? Why can’t I walk into my boss and say, I need 10% increase if you want to keep me?

01:50 Claudia Sahm

Well, I think the boss would be like, good luck, go find that job.

01:54 Claudia Sahm

I mean, that’s the thing right now and I watch really carefully the the quit rate. So we did get an update on JOLTS this week and there was, you know, a little tick up, but it’s still pretty low. and that’s that’s a good sign of the bargaining power. If workers are out there quitting to get better jobs, that’s when they have the leverage for the higher wages. It just does it’s it’s just not there right now. If you don’t have hiring being strong, the workers just don’t have that ability to bargain.

02:22 Speaker B

Can we can we like to like, there’s no recession talk, but can we do like Claudia Sahm wheelhouse here?

02:28 Paul Sweeney

Sure.

02:29 Speaker B

Claudia Sahm wheelhouse, folks. She’s famed for looking at how an economy slows. Let’s go to the opposite way, Claudia Sahm. When you studied at Michigan, you never, never thought about a sustained 6% or more nominal GDP. How do you presume with our new politics that we will bring in this boom economy constructively?

03:07 Claudia Sahm

Uh so, you know, there there’s a lot of a lot of pieces to that. I do think going back to the the question about immigration policy, labor force policy. Like I’m less looking at, you know, the downturn in the labor market, but I am worried about some of the structural pieces of the labor market. And I think without a growing labor force, it’s going to be hard to really consistently have those GDP gains. I mean, I am optimistic about some of our technology improvements on the horizon, but that it’s really tough to string together quarter after quarter, year after year improvements in productivity growth, right? And so I think you’ve got to have a multi-pronged approach in terms of the policy. Hanging our hats on AI is not the way to go in terms of really like wanting to keep those those strong growth numbers. So I think there are some structural pieces on the labor market that deserve attention and and may very well get some attention uh given the election results this week.

04:10 Paul Sweeney

Labor force participation rate, again, a little bit better, 61.9%. Where’s a healthy number? Like, what should we be looking for? Is that a good number, 61.9? Should it be higher, lower?

04:26 Claudia Sahm

Yeah, I mean, it is hard, you know, work work is onerous, right? We don’t want 100 people should have a choice as to what they do. I think because given the fact that the we have so much aging of the workforce, probably keeping a focus on the prime age. So, yeah, I know I say, well, you know, people should get to retire at some point if they want to. But I think I lot the looking at the prime age uh statistics which have been really pretty solid. Um but there are there’s always, um, you know, there’s the separation of like we look month to month, quarter to quarter at the labor market. And then there’s the big picture. I mean, we’ve had some demographic groups that for decades have been puzzling, like men, prime age working, used to all work, and there’s been declines over many decades. So then there’s questions about why is that happening? And but that’s not a that’s not this near-term discussion. So, so I don’t have a ready answer of what’s what’s the right number because it depends on people and their lives.