Unemployment falls in the United States to the lowest in 50 years despite rate hikes

The US job market looks bomb-proof.

The monetary artillery in the form of rising interest rates that the Federal Reserve is firing has caused some damage, but the economy continues to create jobs at cruising speed and unemployment fell in September to its lowest in 50 years, 3.5 %.

That keeps the pressure on the Fed to continue to act to try to contain inflation.

Predictably, the price of money will increase again in the two meetings that remain before the end of the year.

The United States created 263,000 non-farm jobs in September, according to data released Friday by the Bureau of Labor Statistics.

The forecast pointed to some 250,000 jobs.

The unemployment rate, which is measured through a parallel survey, falls to 3.5%, equaling the lowest level of the last half century.

The president of the United States, Joe Biden, faces the legislative elections on November 8 with record employment and a robust labor market, an asset with which to somewhat offset the damage that price increases have done to his popularity and to the electoral expectations of the Democrats, who run the risk of losing the majority they have both in the Senate and in the House of Representatives, conditioning the second half of Biden's term.

The president is used to calling events or giving speeches with economic content on the days that the employment figures come out to try to show them off and this Friday will be no exception.

On his agenda is a speech on "building the economy from the bottom up and from the center out," his great economic motto that, because of how much he repeats, he must consider that it is understood and that it works.

Democrats feared that Federal Reserve rate hikes would further cool the economy on election eve and unemployment would begin to rise before inflation subsided, resulting in a deadly cocktail for the election.

On November 4, the latest employment data will still be known four days before the elections, but the damage seems controlled.

That labor market resilience, which is good news for workers and for Biden, is not so good news for Federal Reserve Chairman Jerome Powell.

His thesis is that it will be necessary to cause "some pain" to families and companies to subdue an inflation that has shot up this year to the maximum in four decades and tends to entrench itself, as the underlying inflation in August showed.

The Reserve has a double mandate: maximum possible employment with price stability.

Right now he approves in one and fails in another, which has become a priority even at the cost of a recession.

Powell considers that in a labor market where there are twice as many job offers available as there are unemployed, there is a greater risk of a spiral of prices and wages, in which employees demand and obtain salary increases that companies bear as a cost and affect prices, in a vicious circle in which the majority lose.

For this reason, it has decided to act tough with the most aggressive rate hikes since the 1980s. Official rates have increased three points so far this year, from 0%-0.25% to 3%-3, 25%, and the members of the Federal Reserve's monetary policy committee still expect two more increases in the remainder of the year that will leave them between 4% and 4.50%.

The outlook, on the other hand, is getting more complicated with the rise in gasoline prices.

After several months of decline, pump prices have picked up again.

One month before the legislative elections, this makes Biden very nervous, who has reacted sharply against the production cuts agreed by the cartel of oil-exporting countries.

Subscribe to continue reading

read without limits

Keep reading

I'm already a subscriber