On The Money — Job growth remains strong as economy slows
The U.S. keeps adding new jobs at a stellar, if slower, pace but it may not be like this for long. We’ll also look at why the GOP’s plan to shrink the IRS may not work and where down payments on homes are rising the fastest.
🗳️ But first, it seems like the Rock is not cooking up a presidential bid.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
Economy adds 263K jobs in September
The U.S. added 263,000 jobs in September and the unemployment rate fell to
3.5 percent, according to data released Friday by the Labor Department.
The September employment report showed job growth continuing to slow from a torrid pace earlier in the year, but remaining strong as the economy powers through high inflation and rising interest rates.
The jobless rate also dropped by 0.2 percentage points and returned to pre-pandemic level in February 2020, which was the lowest unemployment rate in nearly 50 years.
The background: Economists expected the U.S. to have added roughly
250,000 jobs last month and the unemployment rate to remain at 3.7 percent, according to consensus estimates.
- The decline in the jobless rate last month came as labor force participation fell slightly — a sign of ample demand for workers even amid recession fears.
- The Federal Reserve has been rapidly raising interest rates to restrain the job market.
- The U.S. had added an average of 420,000 jobs each month in 2022 after gaining roughly 561,000 jobs each month last year, all while wage growth remained above 5 percent annually.
- Average hourly earnings rose 0.3 percent in September when adjusted for inflation and rose 5 percent over the past 12 months, down from an annual rate of 5.2 percent last month.
“The US labor market continues to decelerate, but there are no signs that it’s stalling out,” wrote Nick Bunker, head of economic research at Indeed Hiring Lab, in a Friday analysis.
“There might be some turbulence ahead, but the labor market continues to cruise.”
Sylvan breaks it down here.
What it all means:
- A slowdown in wage growth may be tough news for Americans seeking better pay amid rising consumer prices.
- Economists are hopeful that a decline in wage growth will help businesses bring prices down and take a bite out of inflation.
- But the slight slowdown will likely keep the Fed on track to keep jacking up interest rates until the labor market shows serious signs of crumbling. As the Fed keeps hiking rates, the strain of higher borrowing costs and slower sales will likely force businesses to cut back hiring and eventually cut jobs.
AUDITS AND ENDS
Why defunding IRS auditors won’t be easy GOP promise to keep
Republicans heading into November’s midterm elections are talking a big game on the IRS, promising to take back the $80 billion in agency funding provided by Democrats and scuttle plans to hire what the GOP has characterized as an army of new auditors.
The strategy could pay political dividends at the polls in November if the GOP is correct that the calls will motivate their base, but it will also raise expectations that Republicans will follow through on their vows.
- House GOP Leader Kevin McCarthy (Calif.) says the first bill a new GOP majority will pass if it wins control of the House will be one repealing the new IRS agents.
- Yet with President Biden still in office and Republicans at best having a slim majority in the Senate, such a House bill is unlikely to become law.
- Democrats already are promising to go to the mat to protect the hard-won funding, which was included in the sweeping tax, health and climate change bill signed into law in August.
Tobias Burns and Mike Lillis explain here.
WITH FRIENDS LIKE THESE
Schumer rebukes Saudi Arabia for ‘cynical’ move to cut oil supplies
Senate Majority Leader Charles Schumer (D-N.Y.) says Saudi Arabia will wind up paying the price for what he called its “deeply cynical action” of supporting a
2 million-barrel cut in oil supplies, which will put more pressure on the American economy.
- OPEC+, which is led by Saudi Arabia and Russia, announced this week it would cut oil production to prop up falling prices.
- The move offsets President Biden’s decision earlier this year to tap the Strategic Petroleum Reserve to lower gas prices amid reduced supply because of the war in Ukraine.
“What Saudi Arabia did to help [Russian President Vladimir] Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans. We are looking at all the legislative tools to best deal with this appalling and deeply cynical action, including the NOPEC bill,” Schumer said in a statement.
- The NOPEC bill, which passed out of the Senate Judiciary Committee in May, would change U.S. antitrust law to expose OPEC+ member countries and their oil companies to lawsuits.
- It would also allow the attorney general to sue companies such as Saudi Aramco and Russia’s Lukoil in federal court.
The Hill’s Alexander Bolton has more here.
DOWN PAYMENTS GOING UP
Homebuyers’ down payments increased the most in these cities
The average down payment for a home nearly doubled from pre-pandemic levels this summer due to skyrocketing prices in intense competition, according to a new analysis.
- A report from the real estate company Redfin analyzing county data from the
40 most populous U.S. cities shows a typical homebuyer who took out a mortgage in July made a down payment of $62,500 — up from a median down payment of $32,917 in July 2019.
- Median down payments surged during the pandemic as low interest rates and remote work pushed buyers into a market where prices were already high. Although prices are falling, median home prices are up 6.7 percent year-over-year at more than 406,000.
Adam Barnes walks us through the hotspots here.
Good to Know
President Biden on Thursday announced mass pardons for federal marijuana possession, a step long sought by advocates and the most significant action on marijuana his administration has taken to date. He also directed federal agencies to conduct a review of whether marijuana should remain a Schedule I substance.
Advocates, lawmakers and experts cheered the moves, but acknowledged there are limitations. Here’s what Biden’s marijuana order does, and does not do.
Other items we’re keeping an eye on:
- Senate Republicans on Friday introduced a bill that would roll back the drug pricing reforms included in the sweeping Inflation Reduction Act, including the measures allowing Medicare to negotiate drug prices and capping annual drug expenses for many seniors.
- Holiday travelers are planning to be more frugal this year due to inflation, according to a recent Bankrate survey.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.