While many politicians, market analysts, and investors were hesitant in the early stages of President Trump’s term, whatever is in his secret sauce is working wonders for the U.S. economy. The United States Department of Labor released their official “employment situation report” for the month of October on Friday and the results are astounding. According to the Department of Labor, “total nonfarm payroll employment rose by 250,000 in October,” keeping the US unemployment rate “at 3.7%.”
October’s statistics indicate that 156.6 million Americans are willfully employed and the employment-to-population ratio sits at 60.6%, the highest its been since 2008, according to the survey. While these numbers are impressive and indicate an important shift in the potential quality of life for millions of Americans around the country, we need to talk about wage growth.
We can attribute the increase in US employment rates to a move by employers to increase their offered wages for employees. According to the Labor Department survey, average pay rose 3.1% over the course of the last year, the fastest year-over-year in a decade. Shifts in economic trends don’t manifest themselves out of thin air, they start with industry leaders making decisions and other companies naturally will follow.
In early October, Jeff Bezos, CEO of that company where you buy literally everything, even Q-tips, Amazon Inc. (AMZN), announced that online marketplace would raise its minimum wage to $15 per hour for all full-time, part-time, temporary and seasonal employees working in the United States. Politicians, like Sen. Bernie Sanders (I-Vt) who historically criticized the business practices of Amazon (AMZN), lauded Bezos’s wage hike decision:
“The wages [Bezos] was paying his employees were so low that many of them were forced to go on food stamps, Medicaid, subsidized housing and other governmental programs. Today, I want to give credit where credit is due and I want to congratulate Mr. Bezos for doing exactly the right thing.”
– Sen. Bernie Sanders (I-Vermont)
The unemployment rate is the lowest its been since the Department of Labor released a similar report in 1969. As with any major event that takes place during a President’s time in office, Americans are quick to attribute the success, or failure, to the current Administration. Naturally, these remarkable workforce number will pad Trump’s, and congressional Republicans’, stats as they head into the midterm elections next Tuesday.
While these increases for American employment and wages are beneficial for millions of citizens living in the country, investors and analysts are expressing concern that rising wages and “increasing inflationary pressures” will force the Federal Reserve to raise rates at an even faster pace than it has so far this year.
“Today’s stronger than expected October employment report was a mixed bag for stocks. On the positive side, strong job growth will allay fears of slowing economic growth. However, with wages up 3.1 percent over year…it will be more difficult for the Fed to slow its rate hiking campaign.”
–Alec Young, Managing Director of Global Market Research, FTSE Russell
The nation’s strong economic growth gives President Trump evidence to prove that his dealmaking skills and tactics have dramatically improved the U.S. economy. Considering the fact that wage increases are the largest they’ve been since the Obama administration, many
Democrats worry that they’ll lose their footing en route to the midterms next week. The left-wing base has argued on many occasions that Trump’s core focus is on “the 1%,” and all he wants to do is give tax cuts to the rich. The rhetoric is consistent. However, given that 250,000 Americans spread across a spectrum of socioeconomic backgrounds are now gainfully employed, it may seem as if Trump is making sound decisions.
President Trump, staying true to form, tweeted that he believes the market will continue to react positively, depending on the results of the midterms:
“If the election comes out good, I think the market is going to continue to go through a period like we’ve never seen before. We are literally the hottest country in the world economically, and its a great thing to see.”
–President Donald Trump
Over the course of the last week, Trump has received significant criticism over his plans for halting the journey of thousands of Central American migrants headed towards to U.S.-Mexican border, including amending the US constitution to revoke birthright citizenship. Trump has also been unrelenting in his trade war with China, causing the stock market to see record-breaking lows these last two weeks.
Hopefully, these new employment statistics will bolster the Trump administration as we head to the polls on Tuesday.
