Even though prices and borrowing costs are rising, the economy is still adding new jobs at a steady, slow rate.
The US Labor Department said on Friday that employers added 261,000 new jobs in October, while the unemployment rate increased slightly to 3.7%.
The news comes as voters still worry most about the economy before the midterm elections next week.
Even though the job market is strong, rising prices have hurt the public’s confidence.
Prices are rising at a rate that hasn’t been seen since the early 1980s. Inflation is a way to measure how the cost of living changes over time. From September 2017 to September 2018, inflation increased by 8.2%.
Since June, the rate has slowed because gasoline prices have decreased. However, the prices of groceries, medical bills, and many other things are still rising.
The issue has made it harder for Democrats to keep their slim hold on Congress, which was already hard enough.
The White House had said that some slowing down is healthy and to be expected as the economy returns to normal after the rush of activity when it reopened after a lockdown.
According to the government numbers, the job market is a little bit worse than it used to be.
Even though the unemployment rate went up from 3.5% in September to 3.6% in October. Companies added 261,000 jobs to the economy last month, which is much more than economists predicted. Healthcare and manufacturing companies helped to drive the hiring.
Even though wages didn’t keep up with inflation, they went up by 4.7% on average per hour over the past year.
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Possible job loss ahead?
Analysts say that because prices are still going up quickly, more jobs will be lost next year as people spend less and the central bank raises interest rates to stop prices from increasing.
Since interest rates were close to zero in March, the Federal Reserve has raised borrowing costs six times. These changes have caused rates for home, car, and business loans to go up by a lot.
The bank wants to keep prices from increasing by making it more expensive for businesses and people to borrow money.
The US economy keeps creating a lot more jobs than the population growth can handle, which puts more pressure on wages and prices to go up.
The new economic realities have particularly hit industries, like housing and technology very hard. And reports of job cuts and freezes on hiring as companies prepare for a downturn.
On Thursday, payments company Stripe said it was getting rid of 14% of its staff. And Uber’s main competitor, Lyft, said it was getting rid of 700 jobs.
Elon Musk told Twitter employees that the company would cut many jobs. And Amazon said it would stop hiring for all corporate jobs.
But the fact that the job market is still strong has given people hope that the US can avoid a deep recession.
Dane Brecher helps run Plastic Crafts, a family-owned business in New York with 40 employees that his grandfather started in 1934.
Because of the higher interest rates, the business decided to pay cash for new equipment instead of taking out a loan like it might have done a few months ago.
But it doesn’t owe much money, and sales have been steady. So, even though there may be some signs of a slowdown, he doesn’t think it will be too bad.