While the unemployment rate is expected to decrease to 7.7%, the private sector is expected to create 700 thousand new job positions. While hiring in the private sector continues, it is seen that the artificial employment in the public sector before the elections will decrease in October.
Although the labor market continued to increase in September, the rate of increase in employment slowed down significantly. The nearly 661.000-person employment growth was the smallest non-farm payrolls increase ever seen in the recovery, leaving the number of workers around 10.7 million below the pre-epidemic peak. The unemployment rate also remained at 7.9%, but given the strong PMI data, it is likely to continue its decline from August’s 8.4% in October. Despite this, the employment market is still weak and people need unemployment benefits. If the private sector employment comes in line with the ADP announced yesterday and we see that public employment has declined as expected, we will be faced with a very weak data. If the support package is delayed, we will see further weakening in the employment market.
As Biden prepares for the presidency, there will be no massive financial support, as we will probably see a Republican Senate. Unemployment and lack of income are a very important problems, and the level of demand in the economy will suffer even more. Biden will take the seat in January, if the win is secured. The package cannot wait that long. The way that the Fed, which will announce its decisions tonight, can apply the average inflation targeting is through the demand creating some inflation. If the relationship between QE and inflation cannot be established, it means that monetary incentives cannot function.
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