Oh, Horrible News

At least that's what all the "Very Serious People" (VSPs) say when we have a good monthly jobs report, which is what happened in September:

In a sign of continued economic stamina, payrolls grew by 336,000 on a seasonally adjusted basis, the Labor Department said on Friday. The increase, almost double economists’ expectations, serves as a confirmation of the labor market’s vitality and the overall hardiness of an economy facing challenges from a variety of forces.

The unemployment rate was 3.8 percent, unchanged from August.

September was the 33rd consecutive month of job growth. Hiring figures for July and August were revised upward, with employers adding 119,000 more jobs to the labor market than previously recorded. But wage gains were cooler than expected, with average hourly earnings rising 0.2 percent from the previous month and 4.2 percent from September 2022.

Federal Reserve policymakers have tried to rein in both wages and prices by pulling up interest rates. Some financial analysts believe that continued resilience in wage gains and job growth could hasten a downturn by prompting the Fed to raise borrowing costs further during its next meeting in early November.

The Federal Reserve is not fighting inflation any more, it is fighting employment.

As I have noted before, its institutional incentives are f%$#ed up and sh%$. 

This time, the Fed might not raise rates, because it is screwing with Wall Street, which, as opposed to the fate of the ordinary worker, they give a damn about:

………

Markets fluctuated sharply on Friday after a fresh report on hiring pointed to a much stronger labor market than economists had expected, intensifying concerns among investors that the Federal Reserve would need to clamp down on the economy more forcefully to bring inflation under control, but also offering some comfort that any additional pressure would be set against a resilient backdrop.

Investors are trying to make sense of conflicting economic data. Wage growth has lagged inflation, despite the hot job growth. “We’re all struggling with what’s happening, so we’re falling back on, ‘Maybe yields are telling us more about the economy than what economic data is saying,’” said Drew Matus, chief market strategist at MetLife Investment Management.

Again, I do not know how the Fed will react to this, but if they continue to tighten, they will be wrong.