US equities notched record gains in October amid the artificial intelligence-led bull run, interest rate cuts and easing trade tensions between Washington and Beijing. The S&P 500 hit the 6,900 mark on an intraday basis for the first time on Oct. 28, while the Dow Jones Industrial Average logged its sixth straight monthly advance for the first time since 2018.
However, some analysts believe these stock market gains are masking the troubles of US consumers, who continue to face rising prices and a weak labor market.
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Americans Are Being ‘Left Behind'
Americans are being "left behind" in the current economy and inflation is still rising, Christopher Rupkey, chief economist at financial-markets research firm FWDBONDS, recently told Reuters, referring to the Conference Board’s report showing that October consumer confidence fell to a six-month low.
“Consumers are weary and for good reason," Rupkey said. "The stock market records are not helping them get jobs or put food on the table, and with store-bought goods inflation still rising, many Americans are being left behind."
Labor Market ‘Clearly Softened'
Before the ongoing US government shutdown, which has delayed several key economic reports, official data had already shown cracks in the labor market. The most recent available jobs report, covering August, showed that the unemployment rate increased to nearly a four-year high of 4.3%.
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Federal Reserve Chair Jerome Powell told the press conference following last month's 25-basis-point rate cut that labor demand has "clearly softened" and downside risks to employment have increased.
Powell also discussed the impact of AI on the jobs market.
"You see a significant number of companies either announcing that they are not going to be doing much hiring, or actually doing layoffs, and much of the time they’re talking about AI and what it can do," he said. "So, we’re watching that very carefully. And yes, it could absolutely have implications for job creation."
Amazon.com Inc. (NASDAQ:AMZN) recently announced plans to reduce its corporate workforce by at least 14,000, while shipping giant United Parcel Service Inc. (NYSE:UPS) disclosed that it has cut 48,000 jobs so far this year. Also, Swedish fintech company Klarna Group PLC (NYSE:KLAR) CEO Sebastian Siemiatkowski told CNBC in May that his company cut about 40% of its staff in part due to AI.
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