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- The October jobs report shortened the labor market's recovery by 10 months, according to Insider calculations.
- The forecast puts a full rebound in July 2022, just as Democrats will gear up for critical midterm elections.
- Other economic challenges are expected to ease in 2022. That could save Democrats from a massive election-day defeat.
The labor market is set to recover much sooner than last expected. That's good news for Democrats looking ahead to a difficult midterm season.
The October payrolls report breathed new life into the recovery on Friday, as it showed the US adding 531,000 new jobs, beating the 450,000-payroll estimate in the strongest month of job growth since July. The unemployment rate fell more than expected, and wages continued to leap higher.
The report also revealed that job creation in August and September was less dismal than it first appeared. August gains were revised to 483,000 from 366,000, while September's disappointing count of 194,000 was updated to 312,000.
The October reading and the two revisions suggest the labor market will recover much earlier than previously forecasted. While the previous three-month hiring trend placed a full recovery in May 2023, the updated average sees the labor market fully healing 10 months earlier. The labor shortage is now set to end in July 2022, according to Insider calculations.
"The re-rebound is under way," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said. "Next month will be very different, and we think job gains of 1 million-plus are a good bet for both November and December."
The Democratic party is still reeling from Tuesday election results that painted a bleak picture for their midterm prospects. The outcomes give Republicans new hope for retaking the House and sound a handful of alarms for Democrats clutching to a historically slim majority in Congress.
It hasn't helped Democrats that the economy faces several challenges. Despite healthy progress toward recovery, the US is still struggling through decade-high inflation, a dire housing shortage, and a historic supply-chain crisis.
The headwinds have been enough for many to want a government shakeup. A recent NBC/Marist poll showed voters favoring Republicans' handling of the economy by an unprecedented 18-percentage-point margin. While Democratic lawmakers can only do so much to solve the economy's problems, they're being punished for them.
After the Friday jobs report, the hiring slowdown seen during the Delta wave suddenly doesn't look so bad. The labor market is projected to fully heal well before the midterm elections in November 2022.
The other economic problems plaguing the party are expected to improve. The US should see price growth easing "by the second or third quarter" of 2022, Federal Reserve Chair Jerome Powell said in a Wednesday press conference. Economists and companies both expect supply-chain issues to improve by the second half of the new year. And while home prices will keep climbing, experts see the market cooling off throughout 2022.
To be sure, the odds are still stacked against the Democrats. Parties with majorities in Congress, however slim, have historically lost big in midterm elections. President Joe Biden's approval rating has steadily worsened since early August. Even if the economy is in much better shape, the NBC/Marist poll shows voters also preferring Republicans on issues of crime and national security.
And a better shape for the economy could be so unevenly distributed that it doesn't feel like a recovery in many places at all. The Biden administration rolled out new vaccination requirements on Thursday that will cover roughly 101 million workers by January 4, yet several Republican-led states have already filed lawsuits to counter the mandates. Some states will also have a harder time vaccinating workers due to supply-chain problems and transportation delays. While the broad economy will likely be better off in 2022, rural areas could still be struggling through the pandemic.
Still, the latest jobs report offers Democrats a beacon of hope as midterm campaigns ramp up. The economy looks to be on much stronger footing than thought just days ago. Democrats might just have a full recovery to cheer come Election Day.