US Hiring, Wages Strong — Care to Bet on Rate Hikes?

So the numbers are in — and by numbers, we mean the jobs numbers and wages data — and should we assume that a rake hike is about to transpire?

Will anyone care? Because, you know, the Street has been talking about this and baking that hike into estimates for about … ever.

In short order, the relevant stats as reported by the Labor Department: U.S. employers were able to keep up a strong pace of hiring last month. They also paid out more in wages (to the tune of 10 cents per hour). The all-important non-farm payrolls number came in at 161,000 jobs created, most of them in health care and other business services.

And guess what? September’s data was also revised upward, to show that 44,000 more jobs were created than had been originally estimated. The unemployment rate is now 4.9 percent (more people have dropped out of the workforce). This sets the stage for a rate hike in December, as the longer-term spectre of inflation looms (higher wages and more hiring eventually typically lead to higher prices for goods and services).

Let’s take a step back, though, for a minute. The Fed rate hike argument takes as its a priori statement that things continue apace, with wages steadily on the rise, and hiring, too (in other words, a continuation of the economic policies set in place over the past several years). What could throw a monkey wrench into all this?

Two words: President Trump. If he were to win (and no one should say never until the votes are counted), it is conceivable that so much uncertainty would be injected into a) domestic policy making, b) foreign relations and c) just about everything else.

Stocks would be volatile, to put it mildly. But the Fed, sensing a sea change on many fronts domestically, might hold off on a December hike, simply out of caution, setting the parlor game of Fed guessing back on its heels a bit and then instantly back into play.