The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in September on a seasonally adjusted basis after rising 0.1% in August, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index increased 8.2% before seasonal adjustment – with a core inflation index increasing at the fastest rate in 40 years.
Important Takeaways, Courtesy of the U.S. Bureau of Labor Statistics:
- Shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and operations, as well as education were among the indexes which increased month-over-month.
- The food index continued to climb – increasing 0.8% since last month, with the food-at-home index rising 0.7%. The energy index fell 2.1% over the month as the gasoline index declined, but the natural gas and electricity indexes increased.
- Used cars and trucks, apparel and communication decreased month-over-month.
- The all-items index increased 8.2% for the 12 months ending September. The all items less food and energy index rose 6.6%, while the energy and food indexes increased 19.8% and 11.2%, respectively, during the same timeframe.
Employment
In September, the unemployment rate edged down to 3.5% and the number of unemployed persons decreased to 5.8 million, according to the U.S. Bureau of Labor Statistics. While the labor market remains strong, expert opinions about the overall economy range from a pending deep recession to a projected soft landing.
“If I had just woken up from a really long nap and seen these numbers, I would conclude that we still have one of the strongest job markets that we’ve ever enjoyed,” says Carl Tannenbaum, chief economist at Northern Trust.
Meanwhile, the S&P and Nasdaq Composite index remain highly volatile. Markets ran wild in response to the report, with stocks initially falling sharply then swelling as investors struggled to synthesize the impact of the data. Jeffrey Roach, chief economist at LPL Financial, says the current economic situation all but guarantees another 75-basis point increase by the FED. In fact, traders assigned an 82% chance of a three-quarter point move following the jobs numbers. They expect another half-point increase in December, taking the federal funds rate between 4.25% – 4.5%.
Important Takeaways, Courtesy of the Bureau of Labor Statistics:
- The number of persons on temporary layoff was virtually unchanged at 758,000.
- Among the unemployed, the number of permanent job losers decreased by 173,000 to 1.2 million.
- The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.1 million. The long-term unemployed accounted for 18.5% of all unemployed persons.
Adding fuel to the fire, Pew Research indicates seven-in-ten Americans view inflation as “a very big problem for the country,” followed by the affordability of health care and violent crime. As such, President Joe Biden’s economic approval rating fell to a dismal 30% in recent months, according to the CNBC All-America Survey. The latest Ipsos Core Political poll still shows just 24% of Americans believe the country is headed in the right direction, while a majority 63% say otherwise.
A recent Gallup poll further supports the assessment, with approximately 56% of U.S. households reporting economic stress due to inflation – up from 49% in January and 45% in November. The findings, according to CNBC, indicate runaway inflation is eating into the bedrock of the American economy – the middle-class – and even eroding the financial stability of more well-heeled households. Gallup says one-in-four consumers noted cutbacks on spending to cope with inflation, while almost 20%^ point to paring costs by canceling vacations and driving less.
Moreover, new surveys indicate 40% of holiday shoppers feel inflation will impact their upcoming purchases, with many choosing to buy fewer gifts – and at a discount. For perspective, toys cost nearly 3% more compared to last year, while clothes are 5% more expensive and household items are up more than 10%. Approximately half of this year’s gift-givers say they plan to start shopping by the end of October to ease the financial burden.
The Conference Board Employment Trends Index™ (ETI) increased in August to 119.06, up from an upwardly revised 118.20 in July 2022.
By Demographic
Unemployment rates among the major worker groups: adult women – 3.1%; adult men – 3.3%; teenagers – 11.4%; Asian – 2.5%; White – 3.1%; Hispanic – 3.8%; and Black – 5.8%.
By Industry
Total nonfarm payroll employment increased by 263,000 in September, compared with a Dow Jones estimate of 275,000. The current payroll figure marked a deceleration from the 315,000-gain in August and tied for the lowest monthly increase since April 2021. Notable job gains occurred in leisure and hospitality and in health care.
“August’s increase in the Employment Trends Index indicates the labor market is currently still adding jobs at a robust pace,” says Frank Steemers, senior economist at The Conference Board. “But with headwinds in the rest of the economy already evident, expect job growth to decelerate for the remainder of the year.”
Important Takeaways, Courtesy of the U.S. Bureau of Labor Statistics:
- Employment in manufacturing continued to trend up in September (+22,000). Job gains occurred in motor vehicles and parts (+8,000), fabricated metal products (+6,000) and electrical equipment and appliances (+3,000). Printing and related support activities lost 4,000 jobs over the month. Manufacturing added an average of 36,000 jobs per month thus far in 2022.
- Employment in wholesale trade edged up (+11,000). Wholesale trade added an average of 18,000 jobs per month thus far in 2022.
- Employment in transportation and warehousing was relatively unchanged (-8,000). A job loss of 11,000 in truck transportation was partially offset by a gain of 3,000 jobs in air transportation.
- Employment in construction continued to trend up (+19,000), which is in line with average monthly job growth in the first eight months of this year. Specialty trade contractors added 18,000 jobs.
“In 2023, the labor market may look very different from today. With the U.S. increasingly likely to fall into recession before the end of 2022, the pace of hiring will probably slow and the number of jobs openings will decrease,” Steemers says. “On the other hand, attracting and retaining workers may continue to be difficult. Labor shortages may continue to be a challenge for businesses, and even if they ease during a coming recession, they could soon reappear after economic activity picks up again. Therefore, employers may try to hold onto their workers.”
Review all employment statistics here.
