On Friday, the U.S. government will release its official report on unemployment for September. It might be the most important employment report in years. Its results will likely have fiscal and monetary policy ramifications for years to come. So how will it look?
But first, why is Friday's report so important? For starters, it's the last measure of unemployment that Americans will see before the midterm elections, which are largely expected to significantly shift the makeup of Congress to the right. The report is also the last one the Federal Reserve will see before it meets again in November, where many expect it will further loosen monetary policy. Finally, the report could play a significant role in how businesses and consumers feel about holiday hiring and spending. More improvement will encourage retailers to ramp up hiring in the expectation of stronger spending, while labor market deterioration will have the opposite effect.
At this point, the measures of September unemployment we've seen don't paint a very clear picture. This morning, the Labor Department reported that initial unemployment claims fell to 445,000 during the week ending October 2nd. During the five weeks of September, they averaged 456,000, which is a decline from the prior four weeks of August when they averaged 487,000. The averages of continuing claims, however, rose slightly by 1,500 to 4,512,250 in September. Extended benefits grew during the month.