Big September jobs report shows Bidenomics still rolling along

Throughout the summer, we'd seen evidence of a slowing US job market, with 7 straight months of job growth of 281,000 or less. And September's jobs report was expected to show the same. It did not.

Wow. What a jobs report!

JUST IN: The US economy added 336,000 jobs in September – that’s another strong month of hiring that blows away the 170,000 forecast.

Unemployment rate: 3.8% (same as August)

Wage growth: 4.2% y/y (above 3.7% inflation)

— Heather Long (@byHeatherLong) October 6, 2023

And after months of downward revisions to data, this report said that job growth in late summer was stronger than we first knew.

Hiring reaccelerates:

The economy added 336,000 jobs in September, and revisions added another 119,000 jobs for August and July.

The unemployment rate was unchanged at 3.8% https://t.co/jjubC4KBVF pic.twitter.com/pHO16R9tdM

— Nick Timiraos (@NickTimiraos) October 6, 2023

In fact, we've added more jobs than the Congressional Budget Office thought we would have before COVID was a widespread thing in this country.

Overall we're about 1.6 to 2.0 million jobs above CBO's pre-pandemic forecasts (depending on which survey you use). pic.twitter.com/Aejyaq6HZP

— Jason Furman (@jasonfurman) October 6, 2023

And sizable increases in the entertainment sector and in bars/restaurants meant that both of these sectors have finally climbed above their pre-COVID job levels after 44 months.

In addition, average hourly wage growth was decent but not overheated at 0.2%, and 4.2% over the last 12 months. Non-supervisory workers (aka everyday line workers) also had a 0.2% increase in wages in September, and are growing at an even faster 4.34% over the last year. And the key blue-collar sectors are seeing pay grow even faster than that.

Average hourly wage growth, non-supervisory workers, Sep 2022-Sep 2023
Construction +5.50%
Manfuacturing +5.42%
Mining/Logging +4.73%

The stock market initially panicked on the strong jobs news, on fears that this may drive the Federal Reserve to raise rates even higher than their current 22-year peaks when they meet next month. But then Wall Streeters decided to recognize reality.

U.S. stocks rallied on Friday, led by technology shares to a sharply higher close as investors assessed a jobs report that showed U.S. hiring rose broadly in September with slowing wage growth.

The S&P 500 and Nasdaq registered their biggest daily percentage gains since late August, and the S&P 500 rose for the week, snapping a four-week losing streak.

Information technology was up the most of any S&P 500 sector, followed by communication services.

Stocks initially fell after the jobs data, which showed U.S. employment increased by the most in eight months in September, but began to rebound by late morning.

So we've got strong job growth, inflation and unemployment below 4%, and wage growth above 4%. Seems pretty darn good to me, and both policymakers and the Fed shouldn't mess around too much in trying to slow down a still-strong US economy. In fact, we should be more concerned with keeping this going instead of continuing to chase an inflation ghost that is not an economic problem these days.