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CNN Business
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When the Bureau of Labor Statistics releases its October jobs report later on Friday morning, it will be the last major read of the economy before the midterm elections — and it will cap a week of new data signaling that the white-hot labor market is showing only tentative signs of cooling off.

The US economy is expected to have added 200,000 jobs last month, down from 263,000 in September but well above the pre-pandemic average. The unemployment rate is expected to edge up slightly, to 3.6% from 3.5% — still close to a half-century low.

But, good news is very often bad news, especially in this pandemic-era economy. (And it could be very bad news for Democrats.)

Take the latest monthly JOLTS survey on job vacancies, quits and layoffs. Tuesday’s report surprised economists, who had predicted that the number of job vacancies in the United States would fall amid measures by the Federal Reserve to slow business growth in order to tame inflation. But instead of dropping to 10 million, it surged to 10.7 million.

Private sector job growth and wages also went up last month, defying expectations, according to Wednesday’s ADP report.

All of this shows that the Fed’s most aggressive monetary tightening in modern history — while driving up mortgage rates above 7% for the first time in 20 years, slowing business growth and crimping household spending — has barely made a dent in the labor market.

A strong job market in normal times is the kind of news that might be celebrated, but in 2022 it’s cause for concern, as it suggests the economy is overheating. On Wednesday, the Fed announced its fourth-straight three-quarter-point hike, the latest in a series of aggressive moves that would have been unthinkable just a few months ago.

There are currently 1.9 jobs for every one person looking for work, a margin that the Fed worries is keeping inflation uncomfortably high. With plenty of options, workers are demanding higher wages; and with few applicants, managers are forking out higher pay, which bolsters demand for goods and services (and therefore drives up prices).

The central bank is charged with a dual mandate: maximize employment (check) and ensure price stability (uncheck). Ideally, the Fed would like everyone to keep their jobs while damping demand just enough to take the heat off consumer prices, which have been hovering at 40-year-highs and currently sit at 8.2%. Most economists say the likelihood of that so-called soft landing is now remote — although Powell still considers it possible.

Analysts across the board say the odds of a recession are high, if not guaranteed. But the Fed is wagering that the pain of a recession is preferable, in the long term, to the pain of runaway prices.

“Reducing inflation is likely to require a sustained period of below-trend growth and softening of labor market conditions,” Powell said Wednesday. “Restoring that price stability is essential to set the stage for achieving stable employment and stable prices in the longer run.”

Unfortunately for Democrats trying to hold on to power next week, the pain of inflation appears to be outweighing any positive sentiment about job security. According to a new CNN poll, three-quarters of likely voters already feel like the country is in a recession.