Job growth blows away expectations, in boost for Harris

US employers added 254,000 jobs in September, the Labor Department reported Friday — more than 100,000 above forecasts, signaling that the economy is still powering ahead despite fears of a slowdown.

The report — released just a month before Election Day — showed that the jobless rate fell to 4.1 percent, while hourly wages grew at an annual pace of 4 percent. While the report far exceeded expectations, it's in keeping with a so-called soft landing, where the economy avoids a recession, which everyone — especially Vice President Kamala Harris — had hoped the Federal Reserve could achieve after it undertook one of the most aggressive series of rate hikes in its history in 2022 and 2023.

The report comes as Harris is closing the gap with former President Donald Trump in voters’ perception of who would be the best steward of the economy. Trump still holds a 5-point lead, beating Harris on the issue 50-45 percent, according to a Cook Political Report survey of swing-state voters. But the former president’s 6-point edge in August on “getting inflation under control” has disappeared, and they're now even.

The surprisingly solid jobs number puts Fed Chair Jerome Powell on course to cut interest rates by a modest quarter of a point when the central bank holds its next meeting on Nov. 6-7. The Fed slashed rates by a half-point at its last meeting out of concern for a weakening labor market.

The Fed can now "breathe a sigh of relief," economist Justin Wolfers posted on X . "It came in for strong criticism for being ‘behind the curve’ when it looked like the economy might need a bit more help. Today's news plus the revisions suggest that the economy may not have needed that much help.”

Not only was the September jobs number surpassed, but the Labor Department also revised up the total for July and August by 72,000.

With only one more jobs report before Election Day and another reading on inflation in the Consumer Price Index next week, there are few indicators left that could potentially undo the perception that the economy has escaped the worst after the highest inflation in four decades prompted the steep Fed rate hikes.

Voter sentiment still lags, however. Just 22 percent of Americans said the economy is in “excellent” or “good" shape in the latest Gallup poll , compared with 77 percent reporting it to be “only fair” or “poor.”

Democrats are seizing on the strong jobs report as a sign that President Joe Biden’s economic policies — which many economists had warned were inflationary — helped preserve the labor market in the face of both rising prices and interest rates. The rate of inflation has been falling steadily for months – it’s now close to the Fed’s annual target of 2 percent – and Powell's reduction of interest rates could soon yield more hiring and investment.

“Under President Biden and Vice President Harris, inflation is falling, interest rates are coming down, and over 16 million jobs have been created,” said Rep. Brendan Boyle , a Pennsylvania Democrat and the ranking member on the House Budget Committee. That, coupled with last week's report that GDP is growing at a healthy pace, is “ yet another reminder that our economy is defying predictions, growing by a world-leading 3 percent over the last four quarters.”

The Trump campaign slammed the report, saying the Biden-Harris administration created employment for foreign-born workers while losing jobs for native-born Americans.

“Kamala Harris and Joe Biden have built back broke, losing 34,000 manufacturing jobs in just the past two months as foreign countries benefit from Harris’ weak economic policies,” said campaign press secretary Karoline Leavitt.

Harris’ policies have “destroyed the livelihoods of working-class Americans who are paying 20 percent more for everything thanks to her tax-and-spend policies, but President Trump has a plan to make America the manufacturing superpower of the world and protect American jobs here at home,” Leavitt added.

Economists had predicted that non-farm payrolls grew by a solid, but unspectacular, 150,000 jobs in September with the unemployment rate projected to hold steady at 4.2 percent.

“Overall, the economy is in solid shape,” Powell said during an appearance at the National Association for Business Economics conference in Nashville earlier this week. He later added that the Fed is not “in a hurry to cut rates quickly.”

To be sure, Friday’s jobs report provides a snapshot of how the labor market had fared before any shocks related to a strike by Boeing machinists, the brief shutdown of East Coast and Gulf Coast ports by the International Longshoremen’s Association and the devastation wrought by Hurricane Helene.

Indeed, the labor market data released earlier this week has been mixed. The weekly initial unemployment claims data reported on Thursday morning was within normal ranges. The Labor Department on Tuesday reported that the number of available jobs rose in August while layoffs and discharges fell. Still, fewer workers are quitting their jobs — which usually means that they’re less optimistic about finding new work — and the Institute for Supply Management’s widely cited employment indexes for the services and manufacturing sectors both contracted.

The Fed cut rates by or 50 basis points last month to preserve the labor market. So far, rising unemployment has largely been linked to an expansion of the labor pool, mostly due to immigration.

But Mike Skordeles, head of US economics and a senior vice president at Truist Advisory services, cautioned that despite the “blowout headline jobs growth, the overall cooling trend still is there, it’s still intact.”

“The six-month average dipped a little bit,” he said, and “also hours worked and hourly earnings both ticked down a little bit on a month-over-month basis. Again, not something that you say, ‘Oh boy, there's something wrong,’ just the continued cooling trend that has been in place for the better part of a year.”