On the September Jobs Report: Dear God, What Does Powell Want?

A slightly above-consensus 263,000 payrolls is the weakest this year, but still objectively strong, showing that the labor market is slack enough to grow well ahead of population growth, despite a drop in the unemployment rate. Powell says he is focused on job openings, which are now down 1.8 million from the March peak. Two thirds were filled, one third just went away. That’s probably not enough for Powell. But the sum of employment plus openings – the potential jobs market – is far below the pre-pandemic trend, indicating a substantial output gap. We need more openings, not fewer. This report shows that the economy is “weirdly resilient” in the face of what has already been a harsh tightening cycle. But it’s a death race between declining inflation, driven by declining money growth, and Powell pushing the economy into recession.