The Labor Department reported that the US economy added 336,000 jobs in September, but weekly wages are still falling behind the inflation rate, and the Federal Reserve has to decide how much more unaffordable things can get
On Friday morning, Wall Street went into conniptions over the newest jobs report. Last month, the economy added 336,000 new jobs — about double what analysts had expected — with the unemployment rate holding still at 3.8 percent, according to the latest numbers from the Labor Department. Also, hourly wages have risen faster than inflation. See, the economy is meant to be slowing down. The Federal Reserve has been hiking interest rates, and this is supposed to be weighing down the flow of money throughout the economy — exactly the kind of conditions that would be adverse to creating a third of a million new jobs in a month. The knee-jerk reaction from investors was to sell: The Dow Jones fell more than 200 points, and bond yields rose across the board. (Yields rise when the price of the bonds fall.)
This knee-jerk reaction missed the bleaker picture: The jobs that are getting added are low-paying, wages are stagnating, and hours are falling. Maybe this is a mind-numbingly basic point to make, but one important reason jobs matter in an economy is that they spread money around to people. (This is not the only reason, and I’ll get to that below.) So a big jobs gain and high wages are, on the face of it, a sign that businesses are having no problem doing that.
