Key Points

  • Friday’s jobs report was gangbusters, and finally included a wage growth jump to above 3% for the first time this cycle.

  • Is the tightness in the labor market and higher nominal growth enough to resurrect the Phillips Curve?

  • This year’s second market correction may be reinforcing that this year may have Main Street more joyous than Wall Street.

Friday brought another strong employment report, along with an end to a very volatile week for stocks. October’s non-farm payroll employment rose by 250k, well above expectations for 188k; albeit with at least 30k of that increase attributable to the recovery from Hurricane Florence. The U.S. economy has had positive payroll growth for a record 97 months, as you can see in the chart below.

Record String of Job Gains


Source: Charles Schwab, Department of Labor, FactSet, as of October 31, 2018.

Household employment (the survey from which the unemployment rate is calculated) jumped 600k, following 420k in September. In spite of the surge in household employment, the unemployment rate remained steady at 3.7%, matching the lowest reading since the end of 1969. But that was for a good reason—the labor force participation rate (LFPR) rose 0.2% (+711k) to 62.9%. In addition, the broadest (U-6) did dip to 7.4% from 7.5%; while the teenage unemployment rate fell below 12%, for the first time since 1969.

Unemployment Rate(s) Remain Extremely Low


Source: Charles Schwab, Department of Labor, FactSet, as of October 31, 2018.