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US President Joe Biden grapples with inflation.

GZERO Media

Why job and wage growth in the US are freaking out investors

The jobs report for November came in hot Friday, revealing that wage and job growth in the world’s largest economy remain robust. Sounds like a good thing, right? Well, not when the US economy is reeling from decade-high inflation.

Markets cooled on Friday morning – and then recovered slightly – as investors got spooked by news that the US economy added 263,000 jobs in November while average hourly wages jumped 5.1% year-on-year, a key component of inflation. For context, between 2010-2019 average monthly job gains in the US came in at around 183,000. November’s unemployment rate, meanwhile, remained stubbornly low at 3.75% despite recent aggressive efforts by the US Federal Reserve to cool an economy set on fire by dual nightmares: the pandemic and war in Ukraine.

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Will Joe Manchin thwart Biden's spending? FDA credibility hit
Slowing Jobs Growth Means More Fiscal Space for Democrats | US Politics In :60 | GZERO Media

Will Joe Manchin thwart Biden's spending? FDA credibility hit

Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:

What does the disappointing jobs number mean for the Democrats' agenda?

Well, payroll employment in August came in well under expectations with under 300,000 jobs created. This is in contrast to the last several months, which really saw a torrid pace of job creation as the US started to recover from the pandemic and restrictions were lifted. With new mask mandates and the Delta variant spreading, Americans are slowing down their pace of activity and slowing down spending, which means you could see more economic volatility in the next couple of months. At the same time, Democrats are attempting to find consensus around a major new spending initiative, which would spend up to $3.5 half trillion over the next 10 years. This initiative isn't really about coronavirus pandemic recovery, or even stimulus, it's about expanding the size and scope of government for increased transfer payments and increased subsidies for education services and healthcare and also, of course, on infrastructure. The slowing jobs growth creates more fiscal space for Democrats to borrow more, and that's a real sticking point because you have moderates like Senator Joe Manchin from West Virginia, who says the US is already at their borrowing limit and shouldn't be borrowing more to spend money. This is going to be the major storyline in Washington for the next several months because it's also probably going to be the last big initiative of the Biden administration before the midterm elections next year.

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