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With the election now behind us, there is no shortage of opinions regarding what happened and what it may mean for the economy. Some of the more insightful analyses suggest that voters were casting ballots for or against individual candidates rather than strictly along party lines.
Markets themselves have reflected the uncertainty surrounding the post-election landscape. On the day after Election Day, equities moved higher amid reports of potential progress toward a resolution of the Iranian crisis. The following day, however, markets sold off sharply as concerns emerged that Democratic opposition to data center expansion could hinder AI-related investment and growth.
A Stronger-Than-Expected Jobs Report
Today, the first major economic report since Election Day was released. The October employment report showed an improving labor market and stronger-than-expected wage growth. Nonfarm payrolls increased by 165,000, well above the consensus estimate of 59,000, while average hourly earnings rose 0.4% in October. In addition, September wage growth was revised upward to 0.3% from the initially reported 0.1%. The unemployment rate remained low at 4.1%.
Some economists believe wage growth, currently running above 3%, could accelerate into the 3.5% to 4.5% range over time. Taken together, the stronger-than-expected gains in employment and wages underscore the underlying resilience of the U.S. economy. However, that same resilience may also suggest that there is little organic economic cooling occurring that would help ease inflationary pressures. If labor market conditions remain this firm, the Federal Reserve may have limited flexibility to provide additional rate relief.
Inside the Numbers
Another encouraging trend was the improvement in the recent pace of hiring. Average monthly job creation over the last three months increased to approximately 137,000, up from 79,000 in the prior period. The key question moving forward is whether this pace of job growth can be sustained.
The composition of job growth also deserves attention. During 2025, healthcare was the primary engine of job creation, with much of the hiring concentrated in lower-paying positions such as home health aids and related services. In the October report, the strongest gains occurred in professional and business services, healthcare, and transportation and warehousing, sectors that often provide a better indication of underlying business activity and economic demand.
The report was not without some areas of concern:
Workers employed part-time for economic reasons increased by 339,000 to 4.8 million.
Long-term unemployment remained elevated at 2.0 million people, representing 27.6% of all unemployed workers.
Labor force participation remained unchanged at 61.9%, indicating little improvement in labor supply.
These figures suggest a labor market that is healthy and resilient, but not one that is accelerating uncontrollably.
Looking Ahead
We continue to view the labor market as the most important driver of U.S. economic growth because consumer spending accounts for roughly 70% of economic activity. As long as consumers remain employed and confident, spending should continue to support economic growth. Conversely, any meaningful deterioration in employment conditions would likely have a significant impact on economic momentum.
One employment report does not establish a trend, but the October data provide encouraging evidence that the economy remains on solid footing. As the newly constituted Congress begins setting priorities and the policy agenda becomes clearer, investors will be watching closely to determine whether those policies reinforce or alter the current economic trajectory.
Bottom Line: The October employment report supports the view that the economy remains fundamentally healthy. While stronger job and wage growth reduce the urgency for Federal Reserve rate cuts, they also lessen immediate recession concerns. The challenge for investors will be balancing continued economic resilience against the possibility that inflation remains sticky and keeps interest rates higher for longer.
Disclaimer: Investment advisory services offered through Innovative Asset Advisors Group, LLC, (“IAAG”), a Registered Investment Advisor with the U.S. Securities and Exchange Commission. Registration does not imply any level of skill or training. The content provided is for informational purposes only and does not constitute investment, legal, or tax advice. Investments, including equities, bonds, commodities, real estate, and alternative assets, carry risks, including the potential loss of principal. Past performance is not indicative of future results. Before making any financial decisions, you should consult with your personal financial, legal, or tax advisor to evaluate your individual circumstances. IAAG does not guarantee the accuracy, completeness, or timeliness of the information presented, and it may be subject to change without notice. This material, or any portion thereof, may not be reprinted, sold, or redistributed without the written consent of Innovative Asset Advisors Group, LLC.
