On the eve of the storm, this week's U.S. non-farm payroll and inflation data are "very delicate"

The consecutive landfalls of two hurricanes in the United States and the Boeing strike may distort the inflation and non-farm payroll data to be released this week, adding more uncertainty to the upcoming U.S. election and the Federal Reserve interest rate decision that follows shortly.

On Thursday and Friday, the September PCE price index and the October non-farm payroll report will be released. Just four days later on November 5th is the U.S. election, followed by the Federal Reserve's interest rate decision two days after the election.

Analysis indicates that the impact of these events on economic data is temporary, and there may be a rebound in the coming months. However, due to the timing, these economic data may be politicized before the election, affecting voters' perceptions. The impact of the hurricanes on the data may also influence the Fed's interest rate decision.

Hurricanes and the Boeing strike are expected to significantly reduce the U.S. non-farm payroll data for October, but the impact on the unemployment rate may be limited. This means that the Trump team may seize on the weakness in job growth, while the Harris team may emphasize the stability of the unemployment rate.

Regarding the Fed's rate cut, the current market expectation is for a 25 basis point cut on November 7th. However, media analysis suggests that if the employment report is weak to the extent that it cannot be solely explained by the hurricane effect, it may raise expectations of a rate cut.

Hurricanes + Strikes, Employment Numbers Expected to Drop Significantly

In September, Hurricane "Heleni" swept through Florida, becoming the deadliest hurricane to hit the U.S. mainland since Hurricane Katrina. Just two weeks later, Hurricane "Milton" struck, the strongest storm Florida has faced in over a century.

The storms led to the closure of stores, factories, and construction sites, coupled with the Boeing strike that occurred during this period, will impact the labor market.

The U.S. Department of Labor surveys U.S. employers to determine non-farm payroll data by counting how many employees are on their payroll during the pay period, including the 12th of that month. Boeing's strike began on September 13th, "Heleni" made landfall on September 26th, and "Milton" made landfall on October 9th, meaning these events will all affect the October data.

The current market consensus expects a significant drop in October non-farm payroll additions to 110,000, down from 154,000 in September.

Fed Governor Waller stated in a mid-October speech that he expects hurricanes and the Boeing strike to reduce job growth by over 100,000 positions. Goldman Sachs estimates, based on unemployment claims, damage assessments, and past hurricane impact calculations, that hurricanes alone will reduce job growth by 40,000 to 50,000 positions. JPMorgan estimates around 50,000, while Barclays predicts 50,000 to 60,000.

The impact of hurricanes and the Boeing events on the unemployment rate is estimated to be limited, as respondents who have jobs but couldn't work due to severe weather are still considered employed, and striking workers are also counted as employed. Economists currently expect Friday's report to show the October unemployment rate remaining at 4.1%, unchanged from September.

Wages may be distorted upwards. This is because hourly workers are more likely to lose wages when storms hit, while salaried workers often have higher incomes, leading to higher average wagesAt the same time, due to shortages caused by hurricanes, inflation may rise slightly. The storm also destroyed many vehicles, with Moody's estimating insurance auto losses between $3 billion and $5 billion. States affected by the hurricane will also see an increase in auto insurance rates, which may deter the downward trend in prices of new and used cars over the past year