The unemployment rate fell to 4.2% from 4.6%.
Throughout the fall, the economy’s path has been characterized by clashing signals.
The “quits rate” — a measurement of workers leaving jobs as a share of overall employment — has been at or near record highs, which suggests that workers are confident they can navigate the labor market to find something better. But the University of Michigan’s survey of consumer sentiment dropped to levels not seen since the sluggish recovery from the recession of 2007-09.
The report noted “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.” Shoppers are facing the steepest inflation in 31 years. In October, prices increased 6.2% from a year earlier.
Nonetheless, markets remain relatively calm. The major stock indexes are up by impressive levels this year. And bond yields, which tend to move higher in inflationary environments, remain near record lows, indicating that investors do not see inflation as a longer-term threat to the economy or financial stability.
In recent days, Federal Reserve Chair Jerome Powell has faced pressure from different political camps to focus more tightly on price increases.
Critics of the Fed say the central bank’s “accommodative” bond-buying policies — which have kept borrowing costs low and led to a large and continued increase in the money supply — went on too long and were irresponsible in light of an already aggressive emergency response from Congress. With inflation proving more stubborn than many experts expected, that suite of stimulative monetary policies is now, in the view of Fed detractors, a prime culprit.
Fed officials, including Powell, still maintain that the price increases mainly reflect pandemic aberrations that will dissipate. But in congressional testimony Tuesday, Powell signaled a pivot from revitalizing the economy to keeping a lid on prices.
“The economy is very strong and inflationary pressures are high,” he said. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases.”
Economists are divided over the potential impact of a winter coronavirus surge. Some say it could cool off the economy, easing inflation, because it could inhibit in-person activities. Others say a new wave could raise prices further by complicating the logistics of supply chains.
John Williams, president of the Federal Reserve Bank of New York, told The New York Times on Wednesday that the new variant could “mean a somewhat slower rebound overall,” yet “increase those inflationary pressures, in those areas that are in high demand.”
For consumers, one potentially positive effect of renewed virus fears is the recent pullback in energy prices, which have risen substantially this year. The spikes have been particularly intense for fuel oil — which is used for industrial and domestic heating — and for crude oil, which directly translates to gasoline prices at the pump.This article originally appeared in The New York Times.