| Political coverage of the government’s monthly jobs report is dictated by the following rule: Strong increases in non-farm payrolls and wages favor the incumbent (i.e. Vice President Kamala Harris) and weak numbers favor the challenger (former President Donald Trump). Conversely, rising unemployment rates hurt Harris’s case that the economy is improving and help Trump’s argument that it’s, in his words, “a total disaster.” This dictum should be ignored when the Labor Department releases its October report at 8:30 this morning. Weekly claims for unemployment spiked early last month as two hurricanes caused tens of billions of dollars in damage to communities across the Southeast. The effects of Hurricane Milton and Hurricane Helene could trim as many as 50,000 positions from payrolls in October, according to Goldman Sachs analysts. Federal Reserve Gov. Christopher Waller said it could knock 100,000 positions off monthly growth totals. Either estimate represents a major haircut to the 200,000-plus jobs the economy gained on average each month over the preceding year. In other words, the headline numbers in today’s jobs report could tell a negative, but very incomplete, story about the state of the labor market days before an election that’s been defined by how voters perceive the economy. New and continuing unemployment claims fell last week, a sign that certain affected regions are starting to rebound, and if the storms hampered the Labor Department’s survey of employers, we may see sizable revisions to the October report in the coming months. A major reason why consumer confidence surged last month is because Americans are feeling more bullish about their ability to find jobs . And though the economic pessimism that defined the Biden era hasn’t gone away, it has faded as unemployment, inflation and growth began to normalize. (And there’s a non-zero chance we get a surprise on the upside. ADP, whose monthly data on private sector job growth, totaled 233,000 this month). A dismal jobs report could blunt that momentum. The Biden administration is already playing defense. One White House official warned reporters earlier this week that the hurricanes, along with last month’s labor disruptions, could make October a “a noisy report” but that they “don't anticipate that this will in any way affect” the labor market’s underlying resilience. “Economists from across the political spectrum have been out there saying this report is going to be weird, and I don't think anyone who follows these numbers at all seriously is going to think twice about a low number,” said former Biden administration economist Martha Gimbel, now the executive director of the Budget Lab at Yale. “Obviously, there are people who are going to want to take a low number and spin it for their own political ends.” Remember: The unexpectedly weak July report sent markets and political leaders into a tizzy. Labor market anxiety fed into a stock market sell-off that Trump dubbed the “Kamala crash” — though share prices quickly recovered — and Trump sought to capitalize again in August when the Labor Department revised down a year’s worth of jobs reports by 818,000 positions. Those lines of attack faded after September’s blockbuster jobs report. The data released later today could provide Trump the opportunity to revive them in the final days of the campaign. Key caveat: Voter perceptions of the economy and each candidate’s approach have likely already crystalized, one top Trump ally told MM. His “campaign might try to make something out of it, but [for] the newspapers and economists? It’ll be a hard sell,” they said. HAPPY FRIDAY — Your host is off today to mentally and physically prepare for next week’s batch of newsletters. If you’ve got transition tips or last-minute insights into how Wall Street or the corporate world is preparing for Election Day, I’d love to hear them. Email me at ssutton@politico.com. And if you’re hearing anything on Basel III or the bank reg world, be sure to reach out to Michael Stratford at mstratford@politico.com.
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