This week in Bidenomics: Sick of good news

No more jobs, please! They’re wrecking the economy!

This is not exactly what economists are saying, but there was palpable disappointment when the October job numbers came out and turned out to be surprisingly good. This is not supposed to be happening, see, because the Federal Reserve is trying mightily to depress job growth.

So far, it’s not working. Employers created 261,000 new jobs in October, about 70,00 more than forecasters expected. The average this year is 407,000 new jobs per month. Economists think monthly job gains of around 100,000 are enough to generate consistent growth, with 200,000 new jobs per months representing boomtime gains. We’re doing better than the boomtime threshold, even as many economists think a recession is looming.

This is supposedly bad news because the Fed needs job growth to cool so there are fewer people earning money than would otherwise be the case, which is supposed to bring down demand for goods and services, and prices. With inflation uncomfortably high at 8.2%, the Fed thinks depressing job growth and pushing up the unemployment rate, to get inflation down, is the lesser of two evils.

Businesses simply aren’t complying, however, and that means the Fed will probably keep on tightening. Here’s a sampling of the good-bad news, or maybe it’s bad-good news:

The Conference Board: “Wage growth remains elevated and this will make the Fed’s task of bringing inflation under control harder.”

S&P Global: “The jobs market remains defiant, refusing to cool down despite Fed actions.”

Oxford Economics: “This labor market is still too hot for the Fed.”

Capital Economics: “The labor market has held up better than expected this year, and with wage growth still too hot for the Fed, there is little to suggest that officials will drop their hawkish bias any time soon.”

What is President Biden supposed to do? Apologize for the hot job market? Tell voters to keep hope alive and pray for layoffs? Beseech businesses to stop hiring?

Maybe Biden should just stop talking about the economy. Unless there are massive polling errors (hmmmm…), Biden’s Democrats are likely to lose control of Congress in the Nov. 8 midterm elections, largely because of inflation. Voters overwhelmingly say high prices are their biggest electoral concern, and with necessities such as food and rent rising by more than wages, people are right to be pissed. Biden has been talking up the good parts of the economy while acknowledging the curse of inflation, which is about all he can do. No president can talk voters into feeling they’re better off than they really are.

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Biden can stop spinning after Nov. 8, for at least a year or so, until the next election cycle starts to heat up. It might be a pause that refreshes. The Fed is going to tame inflation sooner or later, with the main question being how much economic pain it will take to get there. Fed Chair Jerome Powell tried to diminish expectations on November 2, after the Fed delivered its fourth consecutive 75-basis-point rate hike, as expected. “We still have some ways to go,” Powell said. “The ultimate level of interest rates will be higher than previously expected.”

The October employment numbers validate Powell’s hawkish views, since strong job growth typically pushes wages up, raising production costs, which producers try to pass on to consumers. But the good news is that some bad news may be emerging. The unemployment rate rose from 3.5% to 3.7% during the last month because of a slight decline in the size of the labor force. In a separate report from placement firm Challenger, Gray & Christmas, layoffs hit the highest level in 20 months, though they’re still relatively low. Those could be the first signs of the weakening job market everybody seems to be wishing for. Maybe we can look forward to gloomier numbers next month.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman

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