By Alex Curran The U.S. Jobs Report was released on Friday and sent stocks soaring. The data surpassed expectations with the economy adding 128,000 jobs in October in comparison to analysts’ estimated gain of around 75,000. The unemployment rate rose slightly to 3.6%, but still remains historically low. Despite a major auto strike at General Motors, a slowing global economy, and trade fears, the figures suggest that the American job market remains robust. High consumer confidence has bolstered the market and further quelled fears that the U.S. economy is teetering towards recession. According to Ben Herzon, an economist at forecasting firm, IHS Markit, “As long as confidence remains pretty elevated, as long as job gains continue albeit a slower pace, and as long as those job gains continue to deliver wage growth, consumption should continue to drive the economy.” The S&P rose 0.7% in response to the news and is now poised to score its third record close of the week. There have already been three Fed rate cuts this year, the most recent being on Wednesday, that have helped boost the market’s rally. The cuts directly encourage businesses to borrow more and drive investors from low-yielding government bonds in favor of riskier assets. Bond yields jumped as investors sold U.S. government debt. The yield on the 10-year U.S. Treasury note increased from 1.694% on Thursday to 1.735% on Friday. As yields rise, bond prices fall, indicating a lessening demand. Despite this positive news, the economy still faces challenges. The jobs data and market response suggest that the U.S. may be in what is described as a “Goldilocks” economy, in that it is strong enough to ease fears of an imminent recession, but not strong enough to prompt the Fed to increase interest rates in an effort to reduce inflation. Additionally, job growth in the manufacturing sector was weak and overall economic growth has slowed this year, as businesses have cut back on investment. Only time will tell how long the U.S. economy can withstand these setbacks, as well as mounting global conflicts and pressures. Sources: https://www.nytimes.com/2019/11/01/business/economy/jobs-report.htmlhttps://www.cnbc.com/2019/11/01/jobs-report-october-2019.htmlhttps://www.wsj.com/articles/global-stocks-rise-ahead-of-jobs-report-11572600987?mod=article_inline
