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Despite the October stock market rebound that gave the Dow its biggest monthly gain in more than 45 years, economists warn there is a real risk of a recession in the US. Mortgage rates are at their highest levels since 2002, consumer spending and business investment are down, and the Federal Reserve is battling persistent inflation with higher interest rates.

But somehow, US labor markets have bucked this trend. The unemployment rate is 3.5%, its lowest level in five decades. The demand for workers is strong. There are currently 1.7 vacancies for every unemployed American.

We have all the ingredients to fall back on, yet companies continue to hire.

What is happening: New data this week is likely to show that there were 10 million jobs at the end of September in the US. This is about the same as in August and still much larger than the 7 million slots before the pandemic.

Labor costs have also grown at a rapid pace as employers have increased their salaries and benefits to attract and retain employees. US employment costs rose 1.2% in the third quarter, according to Labor Department data released last week.

“While employment should continue to decline in the coming months, the fact that it remains well above normal levels should continue to support strong job growth, possibly into 2023,” said David Kelly, chief global strategist at JPMorgan Funds.

The labor market is good for workers but not good for inflation. The mismatch between hiring demand and the supply of workers is keeping wages high and protecting Americans from slowing just as the Federal Reserve cools the economy and curbs demand.

The Fed’s higher employment figures suggest that it must continue its aggressive rate-raising cycle to cool inflation. This increases borrowing costs and slows growth.

What is different: History shows us that when the Fed tightens, employment falls: During periods of high inflation in the 1970s and 1980s, tightening by the Fed led to unemployment rates of 9% in 1975 and 10.8% in 1982.

The Fed’s projections suggest unemployment should rise to 4.4% by the end of 2023, nearly a percentage point higher than it is now.

The problem is that the job market is different this time. Employers are less concerned about layoffs and more concerned about their ability to fill vacant positions. So they’re hoarding workers and putting off layoffs, just in case.

Federal Reserve Vice Chair Lyle Brainard said earlier this month that “companies that have faced significant challenges in finding and retaining qualified workers in the wake of the pandemic may be more inclined than in previous cycles to retain workers rather than lay off workers with weak demand.” .

Nobody is quite sure how the economy will fall in the next few months. If the Fed makes a soft landing, that means it could still be very difficult to hire qualified staff. If the economy stops working, expect more drastic moves in human resources.

What’s next: This week is filled with business statements and politics. JOLTs are expected to release September job opening data on Tuesday at 10 a.m. ET. The Federal Reserve meets this week and is expected to raise interest rates sharply again on Wednesday. This meeting comes two days before the October jobs report, which some experts fear will show more signs of inflation due to strong wage growth.

The Dow was down about 80 points in trading Monday, but still gained 14% in October — its best monthly gain since January 1976, my colleague Paul R La Monica reports.

Upward retracement is a kind of anomaly.

Blue chips have stayed down about 10% this year. Meanwhile, the S&P 500, which closed 0.8% down on Monday, is down about 20% in 2022. The tech-heavy Nasdaq finished 1% lower on Monday and is down 30% this year. But both indicators also had strong Octobers. The Nasdaq is up about 4% while the S&P 500 is up by 8%.

It is undeniable that the broader market has been struggling this year due to concerns about inflation and the fact that the Federal Reserve has raised interest rates dramatically to try to beat the scourge of high prices.

But there is a saying on Wall Street that there is always a bull market somewhere. This is proven by the Dow Index along with a long list aAnd shares of well-known brands are trading at record levels.

Oil and healthcare stocks lead the market, with Chevron (CVX), Merck (MRK) and Amgen (AMGN) topping the Dow leaderboard.

Even Chevron is trading near all-time highs. So does competitor (and former Dow component) ExxonMobil (XOM). Pharmaceutical majors Eli Lilly (LLY) and health insurers Cigna (CI) and Humana (HUM) also set record levels.

It’s not just energy and healthcare stocks that are making solid gains this year. And many consumer goods businesses — companies that sell food and beverages — are booming, too. McDonald’s (MCD), Pepsi (PEP), cereal makers General Mills (GIS) and Postage (POST) recently hit record levels.

There is a distinct gender bias in Congressional Federal Reserve hearings, according to new research by James Bisbee at New York University, Niccolo Fracaroli at Brown University, and Andreas Kern at Georgetown University.

Academics analyzed every congressional hearing attended by a Federal Reserve chairperson from 2001 to 2020 and found that lawmakers who interacted with both Yellen and at least one other Federal Reserve chair during this period boycotted Yellen more, interacting with her using more aggressive tones.

“Our findings point to the important role of societal biases bleeding into seemingly unrelated areas of policy,” they wrote.

daughter effect: Interestingly, the researchers found that the increase in hostility Yellen experienced was absent among those legislators who had daughters.

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