In her October 13 remarks at the National Association for Business Economics (NABE) Annual Meeting, Philadelphia Fed President Anna Paulson said the U.S. economy remains strong despite slower job growth and persistent inflation.
Highlights from Paulson's comments:
Real GDP grew 3.8% in Q2 and is expected to stay above trend in Q3.
August Personal Consumption Expenditures (PCE) inflation was 2.7%, with core at 2.9%, which Paulson noted is “still too high.”
Paulson noted that unemployment has risen to 4.3%, up from 4.1% in June, suggesting "momentum in the labor market is to the downside."
Job gains "have slowed markedly but labor supply and demand appear to be slowing more or less in tandem, leaving overall conditions in a rough balance."
Paulson noted that "virtually all of the net job growth we’ve seen this year has been confined to health care and social assistance," while "employment in most other sectors has been flat to down on the year."
Employers are in a "low-hire, low-fire stance," she said.
Read more via Philadelphia Fed
Workers are staying put in their current roles, a trend that is likely to continue over the next six months, according to Eagle Hill Consulting's latest Employee Retention Index.
Eagle Hill's Employee Retention Index has increased to 105.8, an "all-time high," suggesting employees are more likely than ever to stay put (“job hug”) over the next six months.
The Employee Retention Index relies on a number of indicators, each of which posted gains:
The Compensation Indicator jumped 6.5 points to 109.9 (a historic high), suggesting employees are increasingly satisfied with "compensation, benefits, and perceived ability to grow their earnings at their organization."
Organizational Confidence rose 3.2 points to 104.7, while the Culture Indicator increased 2.4 points to 103.1 and the Job Market Opportunity Indicator increased 5.8 points to 101.
Millennials and women saw the biggest gains (8.9 and 6.9 points, respectively), while Gen X and men showed declines, suggesting more attrition risk in those segments.
Employees are more inclined to job hug than at any point since we began tracking this data. The data indicate that workers are staying because they feel increasingly satisfied with their organizational culture and compensation."
Read more via Eagle Hill Consulting
October's Beige Book suggests employment levels remained "largely stable in recent weeks," with labor demand "generally muted" across both districts and sectors.
Most districts saw employers "lowering head counts through layoffs and attrition, with contacts citing weaker demand, elevated economic uncertainty, and, in some cases, increased investment in artificial intelligence technologies."
Labor availability improved, and some employers are now leaning toward "hiring temporary and part-time workers over offering full-time employment opportunities."
Wages increased across all districts at a "modest to moderate pace, and labor cost pressures intensified in recent weeks due to outsized increases in employer-sponsored health insurance expenses."
Highlights, by District:
Boston: Employment was flat overall as modest hiring and layoffs balanced out. Manufacturers held staffing steady amid uncertainty and tariffs, while IT services added workers and education and health care saw grant-related cuts. Wages rose modestly, with muted pressures and limited hiring plans despite no major layoffs expected soon.
New York: Employment was steady, with small gains in finance and business services offset by declines in education, retail, and construction. Labor supply exceeded demand, making it easier to hire, though immigration policy changes constrained some sectors. Wage growth remained modest overall, with strong increases in construction and hospitality and slower gains in finance.
Philadelphia: Employment ticked up slightly, mainly in manufacturing, though most firms reported no staffing change. Demand for workers was flat amid historically low turnover, with more temporary hiring than permanent. Wage inflation eased, and most firms said pay increases were modest and typical of long-run averages.
Cleveland: Employment rose slightly, driven by hiring for open positions and anticipated growth, though some firms made layoffs due to weak activity. Retailers held staff steady, and manufacturers postponed cuts until production recovers. Wage pressures were modest overall, with some raises in competitive sectors but stagnant pay elsewhere.
Richmond: Employment was unchanged as expansions and acquisitions offset layoffs tied to slower demand. Skilled trades remained hard to fill, prompting new recruitment efforts. Wage growth was moderate, and some firms anticipated near-term cuts amid economic uncertainty.
Atlanta: Employment was mostly flat as firms adopted a “hiring chill” and welcomed attrition, though layoffs rose slightly. Labor supply was generally strong except in technical roles, and immigration shifts hit agriculture and hospitality hardest. Wage growth remained modest at 1–3 percent, continuing to ease.
Chicago: Employment was flat, with softening demand and low turnover across industries. Manufacturing and retail hiring slowed, and immigration enforcement concerns reduced labor availability. Wages and benefit costs rose modestly, including higher health insurance premiums.
St. Louis: Employment was steady, with most firms neither hiring nor laying off and some delaying new hires until 2026. Labor shortages persisted in manufacturing and construction due to deportation fears. Wage growth was moderate, with some organizations implementing cost-of-living increases after years of stagnation.
Minneapolis: Employment declined slightly as labor demand softened and firms relied more on temp-to-hire work. Uncertainty curbed new hiring, and most employers filled vacancies rather than expanding. Wage pressures remained limited, and AI adoption was expected to further dampen future labor needs.
Kansas City: Employment edged down slightly due to softer demand and AI-driven efficiency gains. Layoffs were modest overall, though some professional service firms cut more deeply after automation investments. Wage growth stayed subdued, but most businesses still expected to expand head counts next year.
Dallas: Employment fell modestly as staffing and energy firms reduced head counts and hiring remained cautious. Workers were reluctant to change jobs, and efficiency gains reduced labor needs in energy and construction. Wage growth was modest and expected to slow further in the year ahead.
San Francisco: Employment was little changed, with most firms hiring only to replace departures. Staff reductions through attrition and early retirements were offset by hiring in finance and insurance. Wage growth was slight and softening overall, except for specialized tech and unionized health care roles.
Read more via Federal Reserve
A federal judge has temporarily blocked the administration from firing federal workers during the government shutdown.
On October 15, U.S. District Court Judge Susan Ilston issued a ruling that temporarily blocked the Trump administration from "carrying out its latest round of federal employee layoffs at most agencies."
Judge Ilston's ruling called the reduction-in-force notices sent to thousands of federal workers "both illegal and in excess of authority."
The ruling put in place a "temporary restraining order blocking most agencies from proceeding with those layoffs."
On October 17, Judge Ilston moved to expand the initial restraining order to cover workers represented by various unions, including the National Federation of Federal Employees, the Service Employees International Union, and the National Association of Government Employees.
It's unclear what impact the restraining order will have. According to the Federal News Network, officials at the Department of the Interior have explained in court filings that the restraining order does not cover RIFs issued by the agency given "officials had been contemplating" those firings “for months before the shutdown.”
Read more via The Wall Street Journal, Federal News Network, U.S. District Court
The expiration of ACA tax credits would impact consumers -- and potentially employers as well. Members of Congress are still debating whether to extend the subsidies. If the ACA tax credits aren't extended, consumers utilizing ACA health care plans could see steep increases in premiums. The expiration of ACA tax credits could have a sizable impact on employers, with employer health plan enrollment increasing significantly.
What are the ACA tax credits?
Millions of Americans currently rely on the Affordable Care Act marketplace for their healthcare coverage.
Certain ACA tax credits are “set to expire at the end of the year.” The tax credits in question were first "introduced in 2021 and later extended through the end of 2025 by the Inflation Reduction Act." The credits offered additional financial assistance to "already eligible ACA Marketplace enrollees" and "made middle-income enrollees with income above 400% of federal poverty guidelines newly eligible for premium tax credits."
After the tax credits were introduced, ACA Marketplace enrollment "more than doubled from about 11 to over 24 million people, the vast majority of whom receive an enhanced premium tax credit."
What happens if the ACA tax credits expire?
If the ACA tax credits are not extended, the cost of subsidized ACA plans will increase dramatically, according to a recent KFF analysis.
Low-income earners "could see prices go up by as much as $82 a month," while higher-income earners are likely to see price increases of "more than $1,000 a month for older customers in the most expensive markets."
While the Healthcare.gov website "has not yet published information about next year’s plans, health insurance prices for ACA plans became available across a number of states, offering a first glimpse at the "sharp increases many will pay for coverage if Congress does not extend subsidies that have made some plans more affordable."
A "family of four making $130,000 in Maine" will see their health care premiums increase by $16,100 next year, according to an expert quoted by The New York Times.
A "60-year-old couple making $85,000" in Kentucky would "face an increase of $23,700 in annual premiums," according to the same expert.
If tax credits are not extended, how will employers be impacted?
The expiration of ACA Premium Tax Credits may have "significant downstream consequences" for employers.
If the tax credits aren't extended, the number of people covered by individual major medical coverage could be cut by 7.7 million, or 29%.
Employer health plan enrollment could increase by 3.2 million next year, or 2.2%.
Enrollment in so-called "noncompliant nongroup" plans (farm bureau plans, mini medical plans) "could climb by 119,000, or 5.2%, to 2.3 million."
The number of uninsured “could rise by 4.8 million, or 21%, to 28 million.”
By one estimate, ACA tax credit expiration could lead to more than 300,000 U.S. jobs lost:
Letting the ACA tax credits expire could lead to "nearly 340,000 jobs lost across the U.S." next year, according to a new report published by researchers at George Washington University and the Commonwealth Fund.
The report estimates that "state economies would shrink by $40.7 billion in 2026, roughly 339,000 jobs would be lost, and state and local tax revenues would be reduced by $2.5 billion."
New Report: ACA Tax Credit Expiration Will Lead to Job Loss, via George Washington University
Expiring ACA Premium Tax Credits Could Lead to Nearly 340,000 Jobs Lost Across the U.S. in 2026, via Commonwealth Fund
As the shutdown drags on, these people will lose if health care subsidies expire, via Associated Press
ACA Marketplace Premium Payments Would More than Double on Average Next Year if Enhanced Premium Tax Credits Expire, via Kaiser Family Foundation
Higher Obamacare Prices Become Public in a Dozen States, via The New York Times
ACA health subsidy cut could add 3.2M lives to employer plans, via Benefits Pro
4.8 Million People Will Lose Coverage in 2026 If Enhanced Premium Tax Credits Expire, via Urban Institute
Canada: Postal workers resumed mail delivery after a labor strike "halted mail services nationwide." The Canadian Union of Postal Workers is shifting to "rotating strikes," which "will allow mail and parcels to move again while maintaining pressure" to reach a "fair collective agreement." Postal workers first went on strike September 25. (Reuters)
Germany: Exports from Germany to the United States declined to a "4-year low in August," the "fifth straight month of decline" and down 20% from a year earlier. The decline in exports is being attributed to tariffs imposed by the Trump administration. Meanwhile, imports to Germany from the United States increased 3.4% in August over the prior month, and were up 8% over August 2024. (Euronews)
Switzerland: The government has "cut its 2026 economic forecast … citing the Trump administration’s punitive tariffs as a “heavy burden” on its industries." For 2026, the Swiss government is forecasting that GDP growth will "slow to 0.9% – down from a previous 2026 forecast of 1.2% growth." (CNBC)
United Kingdom: The UK's unemployment rate increased "slightly to 4.8%" in August, up from 4.7% in July. However, ONS Director of Economic Statistics Liz McKeown said that "after a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off." The ONS data has been "widely criticized" as a result of "collapsing response rates" that experts say mean policymakers are making "decisions … based on flawed data." (The Guardian)
