America's one-two punch of good economic news
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A blowout jobs report Friday suggests the labor market is thriving, bucking fears that a recession was ahead. And the port strike — feared to cause widespread economic damage — is over.
Why it matters: In less than 24 hours, two risks hanging over the economy look to be solved, at least for now. That paves the way for less economic turmoil with just weeks to go until the election, where economic sentiment is expected to sway voters.
- What they're saying: "Good news all around today for the frontline workforce," Edward Hearn, an economist at payroll processing firm UKG, wrote in a note.
The big picture: Last night, the dockworker union said it has reached a tentative deal with the United States Maritime Alliance.
- Reports suggest that the two parties agreed on a pay bump for workers of about 62% over the next six years. Economists had warned that a prolonged strike could weigh on GDP and the labor market—and result in emptier shelves ahead of the holiday season.
- This contract will be extended until January 15 — well after the election, but a possible issue for the next administration if a long-term agreement isn't reached.
Then came the rosy jobs report the following morning. For months, the labor market had been showing cracks. It turns out that was a statistical illusion.
- The new data confirmed the strength of the labor market. The economy added 254,000 jobs—the most since the start of 2024. The unemployment rate ticked down to 4.1% (unrounded: the rate is 4.051%).
- Adding to the upbeat report: Job gains in July and August were significantly revised higher, confirming the summer slowdown that worried economists didn't happen.
The bottom line: The economy is not perfect, but it is still an enviable backdrop that includes somewhat cheaper borrowing costs and falling inflation.
Editor's note: This story has been corrected to state that the unrounded unemployment rate is 4.051% (not 4.015%).
