Weak US jobs report isn’t weak enough: Financial markets plunge

The US Bureau of Labor Statistics (BLS) reported Friday morning that just 263,000 jobs were created in September, compared to 315,000 in August. Total new jobs match the previous low, in April 2021, for monthly job creation over the past 20 months.

President Joe Biden tours Volvo Group Powertrain Operations with Martin Weissburg, President of Volvo Group North America and President of Mack Trucks, in Hagerstown, Maryland, Friday, October 7, 2022 [AP Photo/Manuel Balce Ceneta]

Although the BLS reported that the unemployment rate fell to 3.5% in September from 3.7% in August, the labor force participation rate also fell, to 62.3% from 62.4 % the preceding month. The drop in the official unemployment rate was caused by an increase in the number of workers leaving the labor market, continuing a trend that began in 2020 with the onset of the coronavirus pandemic.

It dashed the hopes of the ruling class that the series of sharp interest rate hikes imposed by the Federal Reserve in recent months had begun to reduce the availability of jobs enough to force workers to accept low-paying positions in order to join. both ends. That meant more rate hikes of 0.75 percentage points or even more were in sight, putting further pressure on massively indebted banks, corporations and financial speculators and fueling further declines in stock prices.

Wage growth slowed in September, with hourly wage increases rising just 5% from 5.2% in August, the slowest annual rate since December 2021. With the latest inflation rate figures from August at 8.263%, September wage increases translate into continued reductions in workers’ real wages.

But that too has been a disappointment for the corporate elite, which is demanding faster and deeper pay cuts.

For the working class, the September BLS data means that overall economic conditions are deteriorating and that the Federal Reserve’s deliberate policy of raising interest rates to increase unemployment and attack worker wages is taking effect. For the ruling class, the carnage is still too little and too slow.

The class war policy was stated bluntly by Fed Chairman Jerome Powell on September 21 when he answered a question about how long Americans should endure the “economic pain” caused by the central bank. He replied that it depends on “how long it takes for wages… to go down”.

Stocks fell sharply on Friday, with the Dow Jones Industrial Average losing 630.15 points, or 2.1%, the S&P 500 index falling 2.8% and the NASDAQ plunging 3.8%.

Financial markets want to break the growing movement of workers for wage increases, under conditions of record corporate profits and decades of attacks on workers’ living standards, benefits and labor rights, by making increase unemployment.

The ruling establishment’s stance on the jobs report was summed up by Carl Tannenbaum, chief economist at Northern Trust, who told the New York Times“If I had just woken up from a very long nap and saw these numbers, I would conclude that we still have one of the strongest job markets we’ve ever seen.”

The Federal Reserve is due to meet on November 2 and is closely monitoring employment data. All indications are that rates will be raised another 75 basis points, an unprecedented fourth straight increase of 0.75 percentage points, eclipsing a similar recessionary attack led by Fed Chairman Paul Volker in the early 1980s.

Federal Reserve Governor Christopher Waller gave a speech on Thursday: “I imagine we’ll have a very thorough discussion about the pace of tightening at our next meeting.” He noted that little progress had been made on inflation, adding that “until such progress is both significant and persistent, I support continued rate hikes, as well as continued balance sheet reductions. of the Fed, to help limit aggregate demand”.

Sarah House, senior economist at Wells Fargo, the fourth-largest bank in the United States, who told the the wall street journal, “We are seeing a drop in the demand for labour. But we still have a long way to go to restore the balance between labor supply and demand.

Responding to September’s BLS wage data, which is more than 3% below inflation, House said: “It’s still too strong for a 2% inflation target, but it’s a step in the right way.”

The Log said many companies have slowed hiring or laid off workers in sectors sensitive to interest rate hikes, such as technology and real estate. Some businesses that saw a surge in demand earlier in the pandemic are cutting spending as consumer spending is impacted by rate increases.

The Log The report adds: “Peloton Interactive Inc. said Thursday it plans to cut about 500 jobs, or about 12% of its remaining workforce, in the exercise equipment company’s fourth round of layoffs this year. Other companies, from Facebook owner Meta Platforms Inc. to Snap Inc. and Stanley Black & Decker Inc., are cutting jobs, while others, including Amazon.com Inc. and Alphabet Inc.’s Google, have stated that they would freeze or pull back on hiring.

CNN Business said labor force participation was a concern for the Fed. “Having a larger share of people in the labor force can help reduce wage growth, one of many factors Fed officials fear is keeping inflation high,” he writes.

Speaking Friday afternoon at the Volvo Group Powertrain Operations Facility in Hagerstown, Maryland, President Biden tried to cover up the reality of what is happening and presented the September job creation data as a continuation of the “historic progress” of his administration in the “post”. “pandemic” of economic recovery.

Instead of discussing the Fed’s deliberate instigation of a recession, Biden referred to an “economic transition” from a “historically strong economic recovery to a more steady and stable recovery.”

Biden toured the plant with Volvo Group North America President and Mack Trucks President Martin Weissburg, as well as UAW Region 8 Director Mitchell Smith and U.S. Representative David Trone. In 2021, the UAW sold out a three-month struggle by Volvo Truck workers in Dublin, Va., that included two separate strikes and the grassroots rejection of three pro-company provisional contracts.

Biden continued to frame the escalating assault on workers as pro-worker policy, saying, “Worker wage growth remains solid, down from the historic high pace of months ago, but continues to grow for workers who deserve a raise. And that’s the progress we need to see.