MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: A strong jobs report for October. American employers added 128,000 new jobs, a solid number many labor economists didn’t expect, because they saw two big drags on the number: one was that GM strike that sidelined almost 50,000 workers and the other was the ending of about 20,000 temporary census jobs. So the six-figure increase in net jobs despite all that was a pleasant surprise, and those GM jobs will be back on the books this month.
The headline unemployment rate ticked up one-tenth, from 3.5 percent to 3.6 percent. But the reason for that is a positive one: The labor force participation rate grew to its biggest share in six years: 63.3 percent. What that means is the long-term jobless are actively now in the job market and they’re being counted, and it’s a sign of confidence that there’s work to be had.
Another happy note is that the Labor Department revised job gains in August and September, and that added another 95,000 jobs the government’s earlier reports didn’t count. All together, it means now that in 2019 we’re averaging almost 170,000 new jobs per month—good—but not as good as last year when employers added more than 220,000 per month.
REICHARD: That report lifted the stock market on Friday and set new all-time-highs for two major stock indexes: the Standard & Poor’s 500 and the Nasdaq. The S&P500 is now on a four-week winning streak, after picking up 1.5 percent in value. The Nasdaq gained 1.7. The Dow Jones Industrials gained 1.4 and that stock index sits just 12 points off its all-time-high set back in July. That’s 12 out of more than 27,000, so it’s all but guaranteed that any net rise next week is a record-setter for the Dow. Even the smaller-company index, the Russell 2000, rose 2 percentage points.
EICHER: The Commerce Department put out its first estimate of Gross Domestic Product growth for the 3rd quarter, that’s July, August, and September GDP. The economy grew at a modest annual rate just below 2 percent, at 1.9. Personal consumer expenditures, PCEs, grew 2.9 percent year on year during the quarter, and that accounts for 70 percent of the GDP figure. What dragged the overall number down was very tepid business investment. We see that in one snapshot of the economy, the manufacturing index. The private industry group, Institute for Supply Management, reported a third straight month of manufacturing contraction.
REICHARD: The Federal Reserve, as expected, took action to cut the federal-funds interest rate a quarter point, its third rate cut this year. Fed chairman Jay Powell is bullish on the American economy and he cited the strong job market, but also the truce in the trade war and the greater likelihood that Britain will leave the European Union with a deal in place. Those were two big dark clouds for the Fed. These interest rate cuts undo three of the four rate increases last year.
EICHER: Unless the Fed sees a significant downturn in the economic data, it’s very unlikely to cut rates a fourth time at its December meeting. The Fed’s policy statements all year have included the line that the central bank intends to, its words, “act as appropriate to sustain the [economic] expansion.” This latest one says the Fed intends to review data as it, quoting again, “assesses the appropriate path” for interest rates. Fed watchers take that as a sign the central bank plans to leave the rate right where it is for the remainder of the year. If it chooses to cut them again, you can take that as a sign that the Fed sees big trouble ahead.
And that is today’s Monday Moneybeat.