The incoming data continues to remain robust. The US economy added 254,000 jobs in September versus a consensus expectation of 150,000 jobs, the unemployment rate fell from 4.2% to 4.1%, wage growth is solid and remains sticky, job openings are going up, and the ISM services reading is also strong.
Why is the economy still strong? Because of lower sensitivity to Fed hikes for consumers and firms with locked-in low interest rates. Because of strong AI spending. Because of strong fiscal and defense spending. These tailwinds are countering the long and variable lags of monetary policy. And now the Fed is cutting rates, which is boosting growth and inflation further. Combined with very easy financial conditions, the bottom line remains that rates will stay higher for longer.
Our chart book with daily and weekly data is available here.
Source: BLS, Haver Analytics, Apollo Chief EconomistNote: The Worker Adjustment and Retraining Notification (WARN) Act helps ensure 60 to 90 days advance notice in cases of qualified plant closings and mass layoffs. WARN factor is the Cleveland Fed estimate for WARN notices (https://www.clevelandfed.org/publications/working-paper/wp-2003r-advance-layoff-notices-and-aggregate-job-loss). Source: Department of Labor, Haver Analytics, Federal Reserve Bank of Cleveland, Apollo Chief EconomistSource: PitchBook LCD, Apollo Chief Economist
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