Slowing but steady job market expected in September jobs report
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(NEW YORK) — Concerns about inflation have increasingly turned to concerns about the job market. Last month’s weaker than expected jobs report led to turmoil in stocks.
Expectations are that Friday’s report will show 161,000 jobs added when it’s released at 8:30 a.m.
If jobs come in around expectations it would mean a slowing but steady job market. Some economists are expecting less, around 150,000, pointing out that August data can often come in worse than expected and can be revised later.
Still, a significantly worse-than-expected report could once again lead to concerns that the Fed’s rapid raising of interest rates has hurt the economy and job market more than previously known.
The Fed is on track to cut interest rates at its next meeting announcement on Sept. 18.
Fed Chair Jerome Powell last month said “the time has come” to lower interest rates.
Powell indicated the Fed would soon bring interest rates down from a 23-year high. The shift could lower borrowing costs for everything from credit cards to auto loans to mortgages.
While the unemployment rate remains historically low, it ticked up to 3.8% last month. A sharp downward revision of job growth estimates in June and July lowered those totals by a combined 110,000 jobs.
Former President of the United States Donald J. Trump and Vice President Harris’s first Presidential Debate is displayed on a TV screen in Foster City, California, United States on September 10, 2024. (Tayfun Coskun/Anadolu via Getty Images)
(PHILADELPHIA) — Vice President Kamala Harris and former President Donald Trump met for the first time Tuesday in their first presidential debate of the 2024 election, hosted by ABC News.
The high-stakes, 90-minute debate was held at Philadelphia’s National Constitution Center, with Trump and Harris arguing their cases for the White House.
As the Democratic and Republican nominees debated the most pressing topics facing the nation, ABC News live fact-checked their statements on the economy for answers that were exaggerated, needed more context or were false.
HARRIS CLAIM: 16 Nobel laureates say Trump’s plan would increase inflation and land us in a recession
FACT-CHECK: Mostly true
Harris correctly describes what the Nobel laureates said about inflation during Trump’s presidency: “There is rightly a worry that Donald Trump will reignite this inflation.” But while the group describes Harris’ agenda as “vastly superior” to Trump’s, their letter doesn’t specifically predict a recession by the middle of 2025. Rather, the group wrote: “We believe that a second Trump term would have a negative impact on the U.S.’s economic standing in the world and a destabilizing effect on the U.S.’s domestic economy.”
The 16 economists are George Akerlof, Angus Deaton, Claudia Goldin, Oliver Hart, Eric S. Maskin, Daniel L. McFadden, Paul R. Milgrom, Roger B. Myerson, Edmund S. Phelps, Paul M. Romer, Alvin E. Roth, William F. Sharp, Robert J. Shiller, Christopher A. Sims, Joseph Stiglitz and Robert B. Wilson.
HARRIS CLAIM: Trump wants a “20% tax on everyday goods” that would cost families “about $4,000 more a year.”
FACT-CHECK: True, but needs context
Trump has proposed a universal “10-20%” tariff on all U.S. imports, from cars and electronics to wine, food products and many other goods. He has also proposed a 60% tariff on imports from China. Vice President Harris called the plan “Trump’s sales tax,” though the former president has not explicitly proposed such a tax. Independent economists, however, say the proposed import tariffs would unquestionably result in higher prices for American consumers across the board.
The precise financial impact on families is hard to predict and estimates vary widely — from additional annual costs per household of $1,700 to nearly $4,000, depending on the study. Trump has not called for any tax hikes for American families.
He has proposed exempting Social Security benefits and tips from taxation, as well as extending individual tax cuts enacted in 2017.
TRUMP CLAIM: Trump said, “We have inflation like very few people have ever seen before. Probably the worst in our nation’s history.”
FACT-CHECK: False, but it was very high
It’s true that early in Joe Biden’s presidency the annual inflation rate peaked at roughly 9% (June of 2022), but that’s not the highest it’s ever been. There are several examples of the inflation rate being much higher than 9% in the U.S, including in the immediate aftermath of World War II and during the oil embargo and shortages of the late ’70s and early 1980s, when the inflation rate peaked at 14.5%.
The inflation rate as of July 2024 is at 2.9% annual inflation, the lowest it has been in three years. It should also be noted that President Biden has falsely claimed that he inherited a high rate from his predecessor. In fact, inflation was at 1.4% when he took office.
*Data for this fact check was gathered from Federal Reserve Bank of St. Louis, or St. Louis Fed
HARRIS CLAIM: Harris said, “Trump left us the worst unemployment since the Great Depression.”
FACT-CHECK: Needs context
The unemployment rate peaked at 14.8% in April 2020 when Trump was in office — that was indeed the highest level since the Great Depression, according to the Bureau of Labor Statistics. But unemployment rapidly declined to 6.4% in January 2021 by the time Trump left office, as the economy started to rebalance. And that 6.4% unemployment rate is still better than the 10% peak during the Great Recession in October 2009.
If you eliminate pandemic statistics, the lowest unemployment rate under Trump was just slightly higher than the lowest point under Biden. Both were good: 3.5% under Trump and 3.4% under Biden at their lowest respectively, according to data provided by the Federal Reserve Bank of St. Louis and Bureau of Labor Statistics.
(NEW YORK) — The U.S. economy grew at a robust pace over three months ending in September, slowing slightly from the previous quarter but continuing to dispel any concern about a possible slowdown. The fresh report marks one of the last major pieces of economic data before the presidential election.
U.S. GDP grew at a 2.8% annualized rate over three months ending in September. That figure fell slightly below economists’ expectations.
Economic growth was fueled by surge in consume spending, an uptick in exports and strong federal government spending, the U.S. Bureau of Economic Analysis said.
The new data arrived weeks after the Federal Reserve cut its benchmark interest rate a half of a percentage point. The landmark decision dialed back a years-long fight against inflation and offered relief for borrowers saddled with high costs.
Inflation has slowed dramatically from a peak of about 9% in 2022, though it remains slightly higher than the Fed’s target of 2%.
Meanwhile, the labor market has proven resilient. Employers hired 254,000 workers in September, far exceeding economist expectations of 150,000 jobs added, U.S. Bureau of Labor Statistics data showed. The unemployment rate ticked down to 4.1%, hovering near a 50-year low.
This is a developing story. Please check back for updates.
Doug Mills/The New York Times/Bloomberg via Getty Images
(NEW YORK) — The debate between Vice President Kamala Harris and former President Donald Trump on Tuesday opened with a fiery exchange about the economy, an issue that often ranks as the top priority for voters.
The two candidates exchanged sharp barbs over the nation’s recent bout of inflation, Trump’s plan for an escalation of tariffs, and the economic proposals put forward by Harris.
Economists who spoke to ABC News offered an assessment of the attacks leveled by the two candidates, fact-checking major claims and providing context for a full evaluation of their implications.
Here’s what to know about what economists thought of key claims made during the debate:
Harris: “My opponent has a plan that I call the Trump sales tax, which would be a 20% tax on everyday goods that you rely on to get through the month.”
Harris deploys the phrase “Trump sales tax” in reference to Trump’s plan for additional tariffs in a potential second term.
Trump told Fox Business last year that a tax on all imported goods could land at 10%. In April, he proposed a higher tariff of at least 60% on Chinese goods.
Economists who spoke to ABC News confirmed that tariffs are widely thought to raise prices for consumers in the importing country. That’s because foreign producers typically pass along some or all of the tax burden to consumers in the form of higher prices, they said.
“This is generally accepted in economics,” said Stephan Weiler, a professor of economics at Colorado State University and a former Fed research officer.
Economists couldn’t verify the estimate put forward by Harris of a 20% increase on the prices of goods, in part because it’s difficult to predict exactly how foreign manufacturers might respond to tariffs.
In theory, foreign producers that control a given market could offset higher taxes by pushing the costs onto consumers with price increases, Yeva Nersisyan, a professor of economics at Franklin & Marshall College, told ABC News. However, Nersisyan added, companies in competitive industries may face more difficulty doing so.
“It’s hard to say whether that 20% number is accurate,” Nersisyan said.
Trump: “We have inflation like very few people have ever seen before. Probably the worst in our nation’s history.”
Economists who spoke to ABC News rejected the assertion that the nation’s bout of inflation marks its worst ever, noting that the U.S. endured higher price increases as recently as the 1980s.
In addition, economists said Trump overstated the extent to which the Biden administration caused the rapid rise in prices, though they acknowledged that a stimulus measure enacted by Biden may have contributed to some of the inflation.
Like many economic problems, inflation emerged due to an imbalance between supply and demand, economists said.
Hundreds of millions of people across the globe who endured pandemic-era lockdowns replaced restaurant expenditures with online orders of couches and exercise bikes. But the demand for goods and labor far outpaced supply, as COVID-19-related bottlenecks slowed delivery times and infection fears kept production workers on the sidelines.
“The number-one cause of the inflation was a supply adjustment to the COVID shock, particularly coming out of isolation,” Jeffrey Frankel, an economist at Harvard University, told ABC News.
Pandemic-era spending measures enacted by Trump and Biden may also have contributed to the price spike, economists said.
Jason Furman, a professor at Harvard University and former economic adviser to President Barack Obama, estimated that Biden’s American Rescue Plan added between 1 and 4 percentage points to the inflation rate in 2021, Roll Call reported. Michael Strain, of the conservative-leaning American Enterprise Institute, estimated that the legislation added 3 percentage points to inflation.
“One could argue that the COVID-related policies helped heat and possibly overheat the economy,” Weiler said.
Harris: “Donald Trump left us the worst unemployment since the Great Depression … what we have done is clean up Donald Trump’s mess.”
The economy had already emerged from the pandemic-induced recession and begun to recover by the time Biden took office, economists said.
However, the U.S. remained well below pre-pandemic levels in some key measures of economic health, including employment. In turn, economists said, Biden inherited an economy in need of significant rejuvenation.
The unemployment rate peaked at 14.8% in April 2020 when Trump was in office – which was indeed the highest level since the Great Depression, according to the Bureau of Labor Statistics. But unemployment rapidly declined to 6.4% in January 2021 by the time Trump left office, as the economy started to rebalance.
The effort to blame Trump for the spike in unemployment is misleading, since it resulted from a once-in-a-century pandemic, economists said.
“COVID is the tidal wave that overwhelmed the whole story,” Weiler said. “The politics of this is hyperbole.”
The COVID-induced recession lasted two months in the spring of 2020, the shortest U.S. recession ever recorded, according to the National Bureau of Economic Research, a non-profit organization that serves as the recognized authority on economic downturns. The speedy recovery was owed in part to trillions in economic stimulus enacted by Trump that March.
“It was very quick and very, very big,” Nersisyan said.
Still, the economy suffered a dearth of jobs and persistent supply blockages when Biden took office, economists said. Over the course of the Biden administration, the labor market expanded at a rapid pace while economic growth quickened. By 2022, the economy had recovered all of the jobs that were lost during the pandemic.
“The recovery from the recession had already begun when Biden took office, but it hadn’t gotten that far,” Frankel said.
Trump: “She doesn’t have a plan. She copied Biden’s plan. And it’s, like, four sentences, like, run-Spot-run. Four sentences that are just, oh, we’ll try and lower taxes.”
Trump sharply criticized Harris for a perceived lack of detailed economic proposals.
Some economists who spoke to ABC News agreed that there was an absence of a complete economic plans from Harris. However, they added, Trump has also failed to provide a detailed set of policy proposals on economic issues.
“I would like to see more detailed policy proposals from both candidates,” Anne Villamil, a professor of economics at the University of Iowa, told ABC News.
“For Harris, I would like to know how her policies would differ from current policies,” Villamil added. “For Trump, I would like to know how his policies would differ from the policies of his previous administration.”
Last month, Harris unveiled economic plans intended to ease inflation, fix the housing market, and slash taxes for middle-income families. The plans include eye-catching proposals such as a $25,000 subsidy for first-time homebuyers and a ban on grocery price gouging, the latter of which had not been put forward by Biden.
Harris has also proposed a 28% tax on long-term capital gains, which clocks in well below the 39.6% tax rate for such income put forward by Biden.
Trump has said he would renew his signature tax-cut measure, which eased taxes for individuals and corporations, while vowing to do away with taxes on tips and Social Security benefits.
“Trump is not one who has a lot of detailed policies himself,” Nersisyan said. “This is not a policy election.”
