Soaring Through September
Authors & Contributors
After years of inflation concerns, will the recent boost in consumption lead us in the right direction?
Real Earnings are Solid
The closely watched headline numbers in the September jobs report surpassed expectations. The 254,000 net jobs were created faster than anticipated along with upward revisions to July and August jobs reports. The unemployment rate also ticked down for the second month to 4.1%.
An interesting thread was the increase in average hourly earnings growth, with the annual pace accelerating to 4%. This is positive news for the US economy as wages drive consumption, which makes up over two-thirds of US economic output. With inflation cooling to 2.4% in the latest reading, real income growth is back in positive territory, boosting purchasing power. This is welcomed after a challenging period in 2022 and 2023 when inflation eroded at income gains.
Between this month’s strong data, Jay Powell’s hints at a gradual pace of easing, and recent rise in oil prices you would think another jumbo 50 basis point (bps) cut is unlikely anytime soon. After the employment data, rates markets dialed back expectations for Fed easing. However, fed fund futures now price back-to-back 25 bps cuts in November and December. Is anyone talking about a pause yet?
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