When talking about the jobs market, it’s definitely complicated

Trend watch

The Federal Aviation Administration (FAA) lifted its air traffic control restrictions on U.S. flights on Monday, November 17^th. That hasn’t yet translated into more travelers; however, this past week is traditionally weaker – the calm before the Thanksgiving travel storm. To wit, we anticipate that weekly passenger counts should jump from 15.7 million this past week to roughly 18 million in the final week of November.

Our take

The deluge of data catching up following the 43-day government shutdown has begun. As we anticipated, the key government data suppliers, such as the Bureau of Labor Statistics, Bureau of Economic Analysis, and Census Bureau, have started rescheduling the skipped data releases. Moreover, many reports originally slated for early October are being released this week and next week. For instance, the Department of Labor suddenly dumped seven weeks of weekly jobless claims figures yesterday.

Meanwhile, the Bureau of Labor Statistics released the long-awaited September jobs report. It was, in one word, lackluster. But that one word could’ve easily been mixed. (Again, we publish a separate commentary that does a deep dive into that report.)

Nonetheless, the jobs situation is definitely complicated, which we show in a few supplementary slides within this report. For instance, on slide 7, we illustrate some of the dynamics pushing up the unemployment rate (SPOILER ALERT: it’s more about people seeking jobs than job losses). We view more people believing there are available jobs as a sign of a healthy economy rather than something more sinister.

Then on slides 8 and 9, we highlight some of the industry-level trends that aren’t getting enough airtime and headlines broadly. Lastly, on slide 10, we show weekly jobless claims, which remain stable, and how continuing claims appear temporary distorted by the government shutdown. Thus, there is some strength in labor markets, but there are also pockets of softness.

Ultimately, the September jobs report doesn’t appear to substantially change the sloppy muddle through trend we’ve been in. Meanwhile, the government shutdown has delayed much of the key economic data that would support or refute a change in the economic trend. Alas, the lack of key economic data complicates the Fed’s December 10^th meeting.

Looking ahead, the Bureau of Labor Statistics already let the cat out of the proverbial bag – the October jobs data will be released together with the November data on December 16^th, which is the week after the Fed’s December meeting. If that didn’t make a December rate cut a long shot, the release of the October Fed meeting minutes did. According to the minutes, “Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year.”

The Fed will also end quantitative tightening on December 1^st, which reinforces that even if the Fed foregoes a rate cut at the December rate decision, their progress towards a more accommodative policy stance remains intact.

Given the data delays, especially for the inflation readings, it’s increasingly likely that the Fed will simply punt a rate decision to the January 28^th meeting. That’s been reinforced by a parade of Fed speakers essentially saying as much in the past couple weeks. Moreover, there’s the growing likelihood of another government shutdown on January 30^th. Waiting appears to be the likely outcome from our seat. 

Bottom line

The U.S. economy continues to navigate uncertainty from the government shutdown and limited economic data. In fact, we probably won't get a clean read on the economy until early 2026. As such, we expect the Fed to remain cautious, with a much higher hurdle for a December rate cut given missing inflation readings, recent Fed commentary, and the risk of another shutdown in late January.