Key Takeaways
- White House Economic Advisor Hassett warned that the recent government shutdown inflicted "much bigger negative effects than anyone had expected," pushing recovery into December and potentially capping Q4 growth at 2%.
- Hassett suggested that current economic data support a Federal Reserve rate cut at the upcoming meeting, despite some positive indicators from September's jobs report.
- Concerns are mounting for the holiday travel season, as airline CEOs have reportedly told Hassett that Christmas bookings are not normal.
- September's jobs data were described by Hassett as "a hit out of the park," highlighting clear wage increases and a significant surge in construction workers.
- A Reuters poll indicates that the Reserve Bank of New Zealand (RBNZ) is expected to cut its cash rate by 25 basis points to 2.25% on November 26.
White House Economic Advisor Hassett delivered a mixed economic assessment today, highlighting the lingering impact of the recent government shutdown and expressing concerns over the upcoming holiday season, while also pointing to some underlying strengths in the labor market. Hassett stated that the shutdown caused "far deeper economic damage than expected," delaying any significant recovery until December. This prolonged impact could see Q4 growth limited to just 2%, a notable revision from prior expectations.
Adding to the cautious outlook, Hassett revealed that meetings with airline CEOs indicate a troubling trend for the holiday season, with companies "haven’t seen normal Christmas bookings". This suggests potential headwinds for the travel and leisure sectors, and broader consumer spending.
Despite these concerns, Hassett also pointed to some positive economic signals, particularly from September's jobs data. He lauded the September jobs report as "a hit out of the park," noting a "major surge in construction workers" and clear "wage increases" visible in the data. However, the economic advisor also suggested that the overall data support the need for a Federal Reserve rate cut at the next meeting. The October payroll numbers are expected soon, though household data and the unemployment rate will not be available due to the shutdown.
In other financial news, a Reuters poll of 36 economists revealed that 32 expect the Reserve Bank of New Zealand (RBNZ) to cut its cash rate by 25 basis points to 2.25% on November 26. This move would mark another easing of monetary policy by the RBNZ.
Separately, Marsh & McLennan Companies (MMC) announced that its board has authorized a $6 billion share repurchase program. Such programs typically aim to return value to shareholders and can signal management's confidence in the company's future earnings.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.