October Jobs Report Was Not A Calamity; It Was An Anomaly

The Bureau of Labor Statistics issued, on Friday, its worst Jobs Report since March 2019.

Longest winning streak in history is interrupted.

After 45 consecutive months of record performance in all measurements – job creation, unemployment rate, workforce participation, hires rate (high), layoffs rate (low), voluntary quits rate(high) – we finally got the proverbial cold shower. October’s report was indeed poor, with only 12,000 jobs created and a downward revision of minus 818,000 for the year, (Note: revisions – in either direction – are standard operating procedure, although not usually so dramatic), which is why monthly reports carry a preliminary status for the first two months after release.

But it’s a long way from a calamity, a disaster, or a catastrophe, as some analysts have decided it was, or even doom. It is none of the above. It is one bad month, and until this happens over and over, that’s all it is. The fact that it happened the month (days) before the most toxic presidential election in history, just exaggerates the tension. Pay as little attention to that as you can. It’s hysteria, nothing else.

Natural functioning of the job market

Look at it this way. The job market is an organ of the economy, like your heart and lungs are in your body. To function well – indeed, to function at all – these organs must expand and contract non-stop as long as you live. They are involuntary.

Likewise with October’s job market performance. We were headed for this, whether we knew it or not. But are we headed for recession, as some analysts and pundits are suggesting? Not even close. Instead of listening to the Chicken Littles running all over the place, many of whom are political opportunists, a little cool-headedness is in order. A recession is not a recession until there are two consecutive quarters of economic shrinkage. We’ve just had small job growth (not loss), but still very impressive economic growth – the envy of the world, in fact. GDP growth is chugging along at a 3% growth rate, wages continue to rise at a 4% clip year over year, and inflation is at 2.5%, well below inflation. Recession? No. Weak job market? No. Calamity? No way.

For the record, we’ve had 57 recessions in our history, and we will continue to have them as a matter of course. In the long run, that’s a good and necessary thing.

But perception is reality, I suppose, so those who want to believe that things are bad, will do so, exhibiting the fatal “Don’t confuse me with the facts; my mind’s made up” stubbornness. Do not let that outlook color your thinking and decision making. War-time decisions are different from usual and are made in different ways, but one thing General Dwight Eisenhower always said – “Pessimism never won any battle” – holds true today, in a job market that is far from calamitous or war-time.

Causes of October’s poor performance

Nothing more than three factors caused last month’s dip. One, the natural contraction of the organ, as already discussed. Two, Hurricanes Helene and Milton had a devastating effect, not only on the East coast but across the nation. Three, labor strikes and other disruptions at Boeing and other non-automobile manufacturing cost the market 40,000 jobs or more. These were not just outliers; they were unusually big ones.

The conclusion is, simply, that the job market had a bad month, probably long overdue, but nothing more.