The storms are over. The regions hit by the storms are recovering to various degrees. We all thought that the third quarter would see a pause because of the storms' devastation. However, with a preliminary reading of 3.0% economic growth, a lot of forecasters were surprised. What this number tells us is one of two things. First, the national economy could be a lot stronger than we were thinking and should sprint in the fourth quarter. Or, since the hurricanes hit during the second half of the quarter, we may see a downward revision of this preliminary number.
We do know that the storms negatively affected the jobs numbers for September. We felt that October's numbers would give us a better reading of the storms' damage -- with the revision of September's numbers just as telling as the October results. It is hard to accomplish accurate surveys when people are in shelters and the power is out. So, how did the report come out? Indeed, the numbers for October were as expected, with an upward revision to September's dismal numbers and a bounce back for October.
Looking at the two months together, we had approximately 140,000 jobs added each month, which is about 50,000 less than the previous year's average. Wage growth for the month was dismal but the unemployment rate dropped again. Again, we expect additional recovery as the year ends, which is important because the latest meeting of the Federal Reserve indicated that they are still on track to raise rates one more time this year, and that means December, which is the only remaining meeting date. Add that to a new Fed Chairman nomination and haggling over the tax plan -- especially the mortgage interest deduction -- and it should be a very, very busy end of the year.