The Kid v Bruce

It’s bad news for the orange guy. Great news for the woman he hates. It humbled the know-it-all economists. And it’s putting the brakes on more big rate drops. At least south of us.

America’s economy has throttled up again. The latest jobs report, released Friday morning, was steamy and unexpected. “Shocking strength and resilience. I am almost at a loss for words or adjectives to describe what we are seeing in today’s U.S. employment report,” says BMO economist Scott Anderson. “Nonfarm payroll growth came roaring back in September at 254k jobs, easily surpassing all analysts’ forecasts on Bloomberg and beating the consensus estimate by over 100k jobs.”

Yeah, it’s a big deal. And it will affect we little beavers, too.

The US unemployment rate has plopped back down to just 4.1%. Concerns about a rapidly cooling economy and a gentle landing turning into a hard one are, well, gone. Previous-month job stats were revised upwards. Over a quarter million new hires last month happened in the private sector, not government. Average wages have jumped by 4% annually – again beating inflation. “Combined with the latest real personal income revisions, it’s getting harder and harder to see a sharp slowdown in this economy,” says Anderson.

Mr. Market responded quickly.

Bond yields went up. Stock markets opened higher. The American dollar soared, and ours… did not.

“The September employment report is a potential game changer for the Fed and market expectations on the size and pace of future rate cuts,” adds BMO. And, right on cue, the market signalled a half-point Fed rate cut – matching the one last month – is now off the table. At best, we’ll get two quarter-point reductions, one later this month and the second in December.

Making this news more interesting is the American presidential election, now a scant month away.

During the Trump-Harris debate, this is what the former president told the country:

“Look, we’ve had a terrible economy, because inflation, which is really known as a country buster. People can’t go out and buy cereal or bacon or eggs or anything else. The people of our country are absolutely dying with what they’ve done. They’ve destroyed the economy.”

In reality, unemployment has been at, near or below the 4% mark for most of the Biden/Harris era. Economists consider that about as good as things ever get, with almost all people willing to work able to find a job. Inflation has steadily faded, to just above the Fed’s target of 2%. Meanwhile wages (as noted above) are now growing by an annual rate of 4%.

The US economy swelled a robust 2.8% annualized in the second quarter of the year – doubling the performance in the early months of 2024. Corporate profits have been on a roll. Stock markets have hit record high after record high all year. The S&P 500 is ahead in 2024 by 20%. The Dow is up 11%. Lowly Bay Street has added 15%.

Put it together. More jobs. Less unemployment. Higher incomes. Lower inflation. Expanding economy. Rising profitability. Record markets. It’s the fabled soft landing, ready to touch down.

Yeah, life isn’t perfect. The US owes $35 trillion – and both Trump and Harris would make that grow. Houses are unaffordable in America, too, but the situation is less dire and emotional than in Canada. And the US is deeply polarized, with 80 million people ready to vote for Trump, who lies to them daily, but feeds a sense of loss and decline while demonizing newcomers as ‘worse than animals’. Oh yeah, and they eat dogs.

Kanye West and Kid Rock want Trump in the White House. Springsteen and Taylor Swift endorse Kamala and demonize the other guy. Four weeks out, the polls look locked in a 50/50 split. A recent Newsweek survey found 46% of Americans think the economy sucks. Only a third feel it’s okay, or good.

Why are people pissy, ready to vote for entirely negative reasons?

Yes, expectations have not been met. People expect houses, income and security – in a changing, insecure world. But, mostly, they’re being lied to, misled, influenced and corrupted by grifters who would say anything in return for power. It has always been so. But never has if been so easy.

The death of reality-based, fact-checked professional media and the rise of peer-to-peer, unfettered and raw social media has changed everything. The people are being had.

And we’ve just begun.

About the picture: “Here is my brother’s dog Wolley,” writes Anne, “mostly Labrador, on Kitsilano Beach in Vancouver, having a few cherished moments off leash. Life is great here with endless walks and no worries with our B&D portfolio, that keeps climbing. Thank you Garth for educating the masses. Love your blog.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2024/10/04/the-kid-v-bruce/