Update 816: September Unemployment Dips to 4.1%

Update 816 — Unemployment, Dipping to 4.1%,
VP Debate, ILA Strike, Helene/FEMA Top Week

This morning’s stronger-than-expected jobs report, showing 254,00 jobs added to the economy and unemployment ticking down to 4.1 percent in September, is an encouraging sign that the labor market remains strong after recent signs of cooling. In another encouraging development, dockworkers who went on strike earlier this week returned to work after their union successfully negotiated a tentative agreement with the port operators, heading off the risk of economic bottlenecks had the strike persisted.

On Tuesday, Vice Presidential nominees JD Vance and Tim Walz met for the last debate of the 2024 presidential election cycle. While many noted the relatively friendly and respectful exchanges between the candidates, their remarks on economic policy – the number one issue for voters this election cycle – opened up little new ground. In other economic policy news, the Biden-Harris administration announced new action to protect consumers from the burden of medical debt while the administration’s student debt relief hopes rose and then quickly fell in less than a day. We cover the aforementioned, as well as economic concerns and funding needs spurred by Hurricane Helene’s tragic impact, in the weekly roundup below. 

Good weekends all…

Best,

Dana


Headline

Higher-Than-Expected 254,000 Jobs Added in September 

Total nonfarm payroll employment rose by roughly 254,000 jobs, greatly surpassing expectations, and the unemployment rate ticked back down to 4.1 percent. The new data, included in the September jobs report released by the Bureau of Labor Statistics (BLS) this morning, shows that the labor market remains strong despite signs of cooling in recent months. 

Job growth in August was revised up by 17,000 jobs from 142,000 to 159,000 jobs, while the number for July was revised up by 55,000 jobs from 89,000 to 144,000 jobs. This brings the average monthly jobs gain over the past three months to a strong 186,000 jobs. 

Source: Council of Economic Advisers

In September, job gains increased for the forty-fifth consecutive month and by the largest gain since March. The largest gains came in:

  • food services and drinking places (69,000 jobs)
  • health care (45,000 jobs)
  • Government (31,000 jobs)
  • social assistance (27,000 jobs)
  • construction (25,000 jobs)

The unemployment rate fell to 4.1 percent, slightly down from 4.2 percent in August and from 4.3 percent in July. Though the unemployment rate has risen slightly above 4.0 percent over the past four months after remaining at or below 4.0 percent for the thirty consecutive months prior, unemployment remains at a historical low. 

Today’s report is an encouraging sign that the U.S. labor market remains strong following rising unemployment and slowing wage growth over recent months. The data analyzed in today’s report was collected before disruptions to the labor market, including Hurricane Helene and the ongoing Boeing strike. These disruptions are likely to skew October’s labor market data. 

The September labor market data is a key factor that the Federal Reserve’s interest-rate-setting committee, the Federal Open Market Committee, will be monitoring ahead of its next meeting on the two days after the general election. Last month, the Committee opted to cut interest rates from its extended elevated level to the 4.75 to 5.00 percent range and is expected to cut rates further in November. September inflation data and the October jobs report will give the Committee a clearer picture of labor market conditions and the rate path forward. 

Other Developments

VP Candidates Face Off on National Stage

On Tuesday night, over 43 million viewers tuned in to watch Minnesota Governor Tim Walz and Senator JD Vance (R-OH) face off in a vice presidential debate hosted by CBS News. 

On the economic policy front, both candidates were asked to explain and defend their respective campaigns’ plans, which moderators noted are projected to increase the national deficit by $1.2 trillion (Harris) and $5.8 trillion (Trump) according to the Wharton School at the University of Pennsylvania. 

Responding to the question, Walz focused on his ticket’s plan to invest in the middle class as outlined in “The New Way Forward,” an economic policy plan released by the Harris-Walz campaign last week. Walz specifically noted their plans to: 

  • address housing shortages and affordability,
  • lower prescription drug prices, 
  • expand refundable tax credits like the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), and
  • increase the tax credit for start-ups from $5,000 to $50,000. 

Walz wrapped up his response by calling out Trump’s tariff proposals as a “National Sales Tax” and noting his prior administration’s $8 trillion contribution to the national debt, a 39 percent increase over four years. 

In his rebuttal, Republican VP nominee JD Vance largely touted Trump’s economic record, noting that Trump “delivered the highest take-home pay for a generation in this country, 1.5 percent inflation, and to boot, peace and security all over the world.” He went as far as to say that the Tax Cuts and Jobs Act (TCJA), Trump’s landmark tax policy, created “an American boom unlike we’ve seen in a generation in this country” and asserted that “a lot of those resources went to giving more take-home pay to middle class and working-class Americans.” NPR fact-checked both of these statements following the debate, and argued that Trump’s tax policy actually created “a large hole in the federal budget” and pointed to distributional evidence from the Tax Policy Center stating that “more than half the savings from the 2017 tax cut went to the top 10 percent of earners, and more than a quarter went to the top 1 percent.” 

Vance also claimed that Vice President Harris was responsible for the recent spike in inflation and high prices of food and housing faced by Americans, ignoring the fact that inflation – which peaked in 2022 – was a global phenomenon largely driven up by exogenous factors including pandemic-induced supply chain constraints and corporate price gouging, and that only the Federal Reserve, not the President or Vice President, has the authority to implement monetary policy to address inflation.

The next administration will confront policy choices for large portions of the tax code during next year’s consideration of expiring TCJA provisions, giving it the opportunity to define our approach to fiscal policy — and thus, economic policy more broadly — for years to come. Despite what Vance said during the debate, there is significant doubt that Trump’s economic policy materially helped working-class Americans. Looking ahead, it is clear that Trump’s policy proposals for a second term would drive up inflation, increase unemployment, and add trillions to the national debt. If voters get past the false statements and rhetoric from Trump and the MAGA movement, Trump’s economic record could very well turn out to be an Achilles heel as opposed to a strength. 

ILA Strike Suspended; Union, Operators Work Out A Deal

Less than three days after the International Longshoremen’s Association (ILA) began a strike that effectively shut down shipping to ports on the East and Gulf coasts, the ILA and the US Maritime Alliance (USMX) have reached an agreement that will allow ports to reopen and longshoremen to go back to work. The strike is suspended as per a tentative deal where USMX agreed to a pay raise of 62 percent over six years. The current contract will be extended to January 15 to give the ILA and USMX time to work out the remaining details of the new master contract. The main issue that remains unresolved is the question of automation: port operators have a strong desire to automate America’s ports to make them more efficient and increase their international competitiveness, while longshoremen see automation as a job killer that puts their livelihoods at risk.

The deal comes as a major victory for the Biden-Harris Administration, postponing a strike that could have crippled the economy until after the election. President Biden had been adamant not to use his presidential powers to force an end to the strike in the face of pressure from Republicans and business groups, instead insisting on pushing both sides back to the negotiating table. According to sources knowledgeable of the situation, administration officials such as acting Labor Secretary Julie Su kept both sides in communication even as they refused to speak directly. Apparently, the Biden Administration impressed both sides with the need to reopen ports to ensure that the recovery for areas hit by Hurricane Helene was not impeded. President Biden celebrated the deal, stating that “collective bargaining works and it is critical to building a stronger economy from the middle out and the bottom up.” The strike represents another major win for organized labor to add to a string of victories over the past few years, such as the UAW strike and the Hollywood writers and actors strike in 2023.

Disaster Relief Post-Hurricane Helene 

Late last week, Hurricane Helene blanketed much of the Southeast and Southern Appalachians with historic flooding. With hundreds still unaccounted for, hundreds of thousands without power, and over 200 deaths reported, the devastation is still being assessed but will surely have long-lasting effects on local economies and infrastructure. 

Well before the devastation of Hurricane Helene, members of Congress and the Biden Administration were advocating for additional FEMA disaster relief funding given the steep increase in the frequency and intensity of natural disasters the agency is tasked with responding to. While last week’s CR keeping the government open was ultimately left clean without the specific $10 billion in funding for FEMA’s disaster relief fund requested by the Biden administration, it did include a commonly used provision to allow FEMA to spend down its funding however it sees fit. Essentially, while no supplemental funding was offered for the Emergency Response Fund, the agency is able to spend the $20 billion received in temporary appropriations through December 20. 

Biden initially suggested that Congress may need to return from its pre-election recess in order to tackle supplemental funding for the disaster, an action that Senator Chris Van Hollen (D-MD) indicated his support for this week. While this is very unlikely due to the flexibility provided to FEMA in spending down their resources, it does indicate an important policy measure that Congress will need to tackle during the lame-duck session at the very least. 

On Again and Off: Student Loan Forgiveness

On Wednesday, US District Judge J. Randall Hall in Georgia dismissed a case challenging the legality of President Biden’s student debt relief plan. The ruling concerns a lawsuit filed in September by seven Republican-led states to halt President Biden’s new student loan forgiveness rule. Judge Hall took issue with a specific argument that President Biden’s program would deny the state of Georgia of income-tax revenue, finding that Georgia failed to show sufficient harm and dismissed the state from the lawsuit. Judge Hall ruled that the case should be transferred to the Eastern District of Missouri, as Missouri has made the harm President Biden’s plan would supposedly do to MOHELA – the Missouri Higher Education Loan Authority – the primary basis for its standing in the case.

Just one day later, the Biden Administration’s student loan forgiveness plan was temporarily blocked again by US District Judge Matthew Schelp in Missouri via a preliminary injunction. As a result, the Department of Education is once again barred from providing student debt relief until Schelp rules on the case. At this point, it is doubtful that President Biden’s student loan forgiveness plan will move forward before the election.

CFPB: Specified Medical Debt Collection Practices Illegal

On Tuesday, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion clarifying that they are violating federal law when they collect on inaccurate or legally invalid medical debt and reminding debt collectors of their obligation under the Fair Debt Collection Practices Act. The guidance outlines how debt collectors violate existing federal law when they engage in practices including:

  • Double billing in which companies attempt to collect on medical bills they have already been paid.
  • Exceeding legal limits in which companies attempt to collect payments in excess of federal or state caps.
  • Falsified or fake charges in which companies attempt to collect medical bills that include “upcoded” or exaggerated services or charges customers did not receive.
  • Collecting unsubstantiated medical bills in which companies attempt to collect on unsubstantiated medical debt.
  • Misrepresenting consumers’ rights to contest bills in which companies misrepresent the status of medical debt owed by consumers. 

The guidance will help protect families from being targeted by illegal medical debt collection tactics. Roughly 100 million Americans currently owe over $220 billion in medical debt. 

The CFPB’s advisory opinion was one of a series of actions announced by the Biden-Harris Administration on Tuesday to provide debt relief to Americans faced with medical debt and deter and address illegal medical debt collection. Additionally, the White House announced that the Department of Defense proposed a rule to implement fee reductions for civilians receiving medical care at military medical treatment facilities and that the Department of Health and Human Services’s Center for Medicare and Medicaid Services is adding new questions on medical debt to their Medicare Current Beneficiary Survey to collect data on medical debt. This data will inform future action to the burden of medical debt faced by consumers. 

SBA Rule Eases Small Businesses Refinancing 

On Monday, the Small Business Administration (SBA) finalized a rule to allow small business owners to refinance debt using the SBA 503 Loan Program. The rule change will: 

  • Streamline 503 debt refinancing for both small business borrowers and lenders by simplifying program rules, providing greater flexibility, and expanding access to more affordable capital.
  • Make it easier for small businesses to refinance physical property, including land, facilities, and machinery.
  • Broaden the ways small businesses may use debt refinance loan funds.
  • Remove the requirement that borrowers demonstrate a minimum reduction in their loan payment from refinancing.

The rule change comes as the Biden-Harris Administration attempts to shore up its economic credentials. Vice President Kamala Harris touted the rule change, stating “Today’s final rule and announcement build on our work to support entrepreneurs by cutting red tape and ensuring small businesses can access capital, refinance SBA loans, and continue to hire workers in their local communities.”


Look Ahead

Thursday, October 10

  • September Consumer Price Index (CPI) report