What’s Up? (Oct. 30-Nov. 5)
A Jumbo Rate Increase
When the Federal Reserve raised interest rates another three-quarters of a point on Wednesday, the fourth-consecutive increase of that size, the central bank sent mixed messages about its path. The policy statement accompanying the rate decision emphasized that officials would soon slow down the increases. But Jerome H. Powell, the Fed chair, seemed to communicate the opposite, saying at a news conference that it was “premature to think about pausing” the Fed’s aggressive campaign to tame inflation. Investors liked one of these messages more than the other: The policy memo briefly pushed up stocks on Wall Street; Mr. Powell’s comments sent them falling. Fed officials have expressed concern about doing too little to fight inflation, but they are also acutely aware of the risks of doing too much. On Wednesday, Mr. Powell acknowledged that the window for a so-called soft landing that would avoid tipping the economy into a recession had “narrowed.”
Resilient Job Growth
Employers added 261,000 jobs in October, further evidence of the job market’s durability in the face of the Fed’s efforts to cool down the economy. Job growth remains unusually strong, but it is moderating — taking the market “from white hot to red hot,” as one economist put it. The unemployment rate, though still low, rose to 3.7 percent. Officials at the Fed may be looking for more definitive signs of slowing, but the latest jobs report provides President Biden with a hopeful message ahead of midterm elections because it lends credibility to the assertion that the country is not yet in a recession. But Republicans could seize on the same data to make their own pitch to voters that the economy has weakened under Mr. Biden.
Elon Musk Cleans House
Before Elon Musk took over Twitter, rumors abounded that he had plans to carry out mass layoffs. Leadership had sought to soothe worries about impending cuts, telling staff that there was no confirmation about Mr. Musk’s intentions. But now many of those executives are gone, and last week the billionaire began culling the site’s 7,500-person work force. Employees received the news in an email on Friday morning, and though it did not detail the number of jobs that would be cut, previous internal messages indicated that about half of Twitter’s workers were likely to lose their jobs. Under the agreement Mr. Musk struck with the social media service, he is required to maintain the employee compensation and benefits in place before he became owner, so, among other conditions, Mr. Musk may have to pay laid off Twitter workers at least two months’ salary. As for the remaining employees, the Friday email said Mr. Musk was “looking forward to communicating with everyone about his vision for the company soon.”
What’s Next? (Nov. 6-12)
A Referendum on the Economy
According to conventional wisdom, the first midterm elections of a president’s tenure are a referendum on him and his party. In this election, that means a referendum on the Democrats’ stewardship of the economy in particular. With inflation hitting a 40-year high, President Biden has trumpeted resilient job growth and tried to emphasize the bright spots in more troubling economic data. Gas prices — which have an outsize effect on people’s confidence in the direction of the country — have also come down in recent weeks, which could give Democrats a boost. But Americans voters have many factors to weigh at the polls this week, including the Supreme Court decision on abortion, the Jan. 6 hearings, a volatile stock market and soaring mortgage rates. At the same time, misinformation about voting machines and ballot boxes is swirling ahead of the elections, seeking to influence how, and if, people vote.
