The U.S. election is approaching! Will the non-farm payrolls deliver a "fatal blow" to the Democratic Party?

The U.S. non-farm payroll data for October will be released tonight at 8:30 PM. The market is worried about this report, as two consecutive hurricanes and multiple strike events may lead to extreme distortions in the data. The statistical methods for non-farm payrolls further increase its uncertainty. With only 4 days left until the U.S. elections, the Democratic Party is anticipating that employment data may be weak, possibly preparing to respond to the Republican Party's "storm-like" criticisms.

Non-farm Statistical Methods Lead to Elusive Data

The monthly U.S. non-farm employment report is based on two surveys: one is a survey of businesses and institutions regarding employment, hours worked, and income; the other is a household survey to obtain individual labor participation and demographic details. These two surveys together constitute the two main data aspects in the monthly employment report, with non-farm and wage data coming from the business (establishment) survey, while the unemployment rate comes from the household survey.

October 12 is a key date for this employment report, as it anchors the "reference period" for these two surveys. However, the situation has become complicated.

In the business survey, the reference period includes the payroll period that encompasses the 12th of the month. If an employee worked and was paid at any point during this period, they are counted as employed (which could be one week or more, depending on the company's situation).

In the household survey, the reference period typically includes the calendar week that contains the 12th of the month; however, individuals absent due to weather conditions will still be considered employed (regardless of whether they were paid). The household survey will also include data on individuals unemployed due to severe weather.

Therefore, although the household survey typically exhibits greater volatility, the fluctuations in the unemployment rate can still reflect the true state of the labor market to some extent. Oliver Allen, a senior economist at Pantheon Macroeconomics, stated in an interview that from the perspective of the business survey and timing, the hurricanes may not have as significant an impact as some fear.

He noted that in the weeks following Hurricane Helena's landfall in late September, initial claims for unemployment benefits surged but fell back during the reference week. Additionally, Hurricane Milton struck late on October 9 (Wednesday), so individuals who worked from October 6 (Sunday) until the Wednesday before the storm will still be counted as employed. "But we may still be unexpectedly surprised," he said.

Pantheon currently estimates that the increase in non-farm employment will be 100,000, having already deducted 65,000 jobs lost due to strikes and hurricanes. If the impacts of strikes and hurricanes are completely excluded, October's non-farm payrolls would show a growth of 165,000, which is still at a historically high level.

Democrats Prepare for Republican Criticism

In an era where economic data is increasingly politicized, U.S. Democrats are preparing for a potentially weak non-farm employment report, as Republicans may use this data as campaign material, especially in the late stages of the campaign. Despite expectations of weak data, the White House and Vice President Harris's campaign team realize that Republicans may seize any opportunity presented by a decline in employment data, especially as Harris's advantage over Trump on economic issues has gradually narrowed in recent weeks. A poll conducted last week by The New York Times and Siena College showed that Harris's lead in handling the economy shrank from 13 percentage points in September to 6 percentage points. One-third of voters indicated that the economy or inflation remains their top concern.

Harris's advisors are optimistic that in the final days of the presidential campaign, voters are unlikely to change their stance based on a single piece of data, while the effectiveness of messaging is more critical. "With the election so close now," a Harris advisor told the media, "more exposure to economic issues and differences is beneficial for the Vice President."

The broader economic performance has shown remarkable resilience. The U.S. economy grew by 2.8% in the third quarter, driven by sustained strong consumer spending; consumer confidence has risen to its highest level since March 2021; and gas prices, which have troubled the Biden administration for years, have fallen below $3 per gallon in several states.

However, inflation that has significantly raised the prices of everyday goods over the past four years, soaring housing costs, and interest rates reaching a 23-year high continue to cast a shadow over voter sentiment. An Associated Press poll shows that 70% of respondents believe the economy is headed in the wrong direction.

Biden's chief economist Jared Bernstein stated, "For many people and families, the prices of many goods are still too high. People still remember past price levels."