What a hot job market means for inflation

Oct 6, 2024, 7:44 AM

FILE - Ian Frank, a pit technician at Stop & Go on Putney Road in Brattleboro, Vt., changes the oil...

FILE - Ian Frank, a pit technician at Stop & Go on Putney Road in Brattleboro, Vt., changes the oil on a vehicle on July 15, 2024. (Kristopher Radder/The Brattleboro Reformer via AP, File)

(Kristopher Radder/The Brattleboro Reformer via AP, File)

New York (CNN)The US job market is still piping hot. That’s raising questions about how fast inflation will continue to cool.

The economy added a staggering 254,000 jobs in September, according to Friday data from the Bureau of Labor Statistics. That blew past expectations of 140,000 job gains from economists polled by FactSet, and marked a jump from August’s upwardly revised 159,000 tally. The unemployment rate edged lower to 4.1% from 4.2%.

That comes after the Federal Reserve last month cut interest rates by a jumbo half-point, signaling that it is turning its attention from tamping down inflation to keeping the job market steady. Following the strong labor report, traders raised their bets for a quarter-point cut in November, as opposed to a more drastic half-point cut, according to the CME FedWatch Tool.

Investors say the better-than-expected jobs report suggests that a soft landing, or a scenario in which inflation is tamed without a recession, is in reach. But some warn that a still-strong labor market could make it more difficult for inflation to continue cooling. That’s because a low unemployment rate and hot job market underline a strong American consumer, whose spending helps drive up the cost of goods and services.

“With Fed easing now underway, recession risk has collapsed. Markets will need to keep a closer eye on inflation as, now, there are policy risks on both sides of the economy,” wrote Seema Shah, chief global strategist at Principal Asset Management.

Investors will get their next look at inflation through two key reports on deck this week. The Bureau of Labor Statistics releases the September Consumer Price Index on Thursday, with wholesale inflation figures following a day later.

Inflation data in recent months has been encouraging. The Personal Consumption Expenditures price index, the Fed’s favorite inflation gauge, rose 2.2% for the 12 months ended August, down from July’s 2.5% annual rate. Consumer inflation eased to its slowest annual pace since February 2021 in August, continuing a trend of cooling down in recent months.

“The Fed may worry about inflation rearing its ugly head” following the strong September labor data, wrote Gina Bolvin, president of Bolvin Wealth Management Group, in a Friday note. “We may be back to them focusing on a 50/50 dual mandate.”

Stocks have edged higher to begin the fourth quarter after notching their best first nine months of the year since 1977. Markets were volatile to begin October, as escalating conflict between Israel and Iran sent stocks gyrating and crude prices higher. The strong jobs report helped all three major indexes notch a weekly gain.

While oil prices currently remain well below their highs from last year, or the $100 a barrel they breached when Russia invaded Ukraine in 2022, some analysts say that crude prices could drift higher if the conflict in the Middle East broadens even more. A rise in energy costs runs the risk of also pushing up inflation.

Still, investors are breathing a sigh of relief after the International Longshoremen’s Association, the union representing 50,000 members covered under the contract with the United States Maritime Alliance, went back to work on Friday. The two sides’ resolution alleviated concerns that the strike, which ended up lasting three days, could disrupt supply chains and cause shortages of consumer goods and supplies.

KSL 5 TV Live

FILE — Police lights shown in West Valley City on Sept. 24, 2024. (Nathanial Gillis, KSL TV)...

Carlysle Price

One person killed in two vehicle collision

One person was killed after two vehicles collided near State Route 179 Thursday.

7 minutes ago

Protesters in front of the Utah Capitol on Feb. 5, 2025 to protest President Donald Trump and Elon ...

Bridger Beal-Cvetko, KSL.com

‘We are the real patriots’: Utahns protest Donald Trump, Elon Musk outside Capitol

Hundreds of Utahns joined nationwide protests in opposition to President Donald Trump and billionaire Elon Musk, one of Trump's top benefactors who has sought to gut federal agencies as a "special government employee."

10 minutes ago

...

Mary Culbertson and Michael Houck, KSL TV

Man dies after barricading himself during ‘domestic situation’ in Layton

After a man barricaded himself in a Layton apartment complex, multiple schools were locked under "secure" protocol.

2 hours ago

Follow @kslsports...

KSL Sports

Former Ute Kyle Kuzma Has New Chance To Thrive In Milwaukee alongside Lillard, Giannis

SALT LAKE CITY- Mixed in with some of the blockbuster trades was a transaction has a player with local ties on the move as former Utah Ute Kyle Kuzma was traded from the Washington Wizards to the Milwaukee Bucks. Fans across the NBA landscape have been glued to social media this week as several moves prior […]

2 hours ago

Traffic halted on northbound I-15 in Draper after a fatal crash on Feb. 6, 2025....

Jacob Freeman

One dead after I-15 rollover near Point of the Mountain

One person is dead following a rollover accident on Interstate 15 near Point of the Mountain.

3 hours ago

The Utah State Capitol stands in Salt Lake City on the first day of the legislative session on Tues...

Daniel Woodruff

No compromise: Utah Senate gives final approval to original version of labor union bill

The Utah Senate voted 16-13 to pass a controversial bill that bans collective bargaining for public sector unions.

3 hours ago

Sponsored Articles

holiday gift basket with blue tissue paper and gingerbread cookies...

Kneaders Bakery & Cafe

Holiday hacks for a stress-free season

Get more out of your time with family and loved ones over the holidays by following these tips for a stress-free season.

2 computer techs in a computer shop holding up a computer server with the "hang loose" sign...

PC Laptops

A comprehensive guide to choosing the right computer

With these tips, choosing the right computer that fits your needs and your budget will be easier than ever.

crowds of people in a German style Christmas market...

This Is The Place Heritage Park

Celebrate Christkindlmarket at This Is The Place Heritage Park!

The Christkindlmarket is an annual holiday celebration influenced by German traditions and generous giving.

Image of pretty woman walking in snowy mountains. Portrait of female wearing warm winter earmuff, r...

Lighting Design

Brighten your mood this winter with these lighting tricks

Read our lighting tips on how to brighten your mood in the winter if you are experiencing seasonal affective disorder.

A kitchen with a washer and dryer and a refrigerator...

Appliance Man

Appliance Man: a trusted name in Utah’s home appliance industry

Despite many recent closures of local appliance stores, Appliance Man remains Utah's trusted home appliance business and is here to stay.

abstract vector digital social network technology background...

Les Olson

Protecting yourself against social engineering attacks

Learn more about the common types of social engineering to protect your online or offline assets from an attack.

What a hot job market means for inflation