Wall Street Swings as Workers’ Pay Loses Ground

Average hourly earnings rose 3.1 percent from a year earlier, less than overall inflation, Diane Swonk said. That gap cut into purchasing power for many people even as markets lurched over the midterm results. The figures make the divide plain: paychecks keep consumer spending moving, while investments can swing by trillions in a day.

Workers Carry the Uneven Recovery

Employers added 165,000 jobs in October, according to the jobs report. Revisions added a combined 84,000 jobs to August and September, bringing the average over the last three months to 137,000 new jobs a month. Swonk, chief economist for KPMG, told PBS NewsHour co-anchor Amna Nawaz that those gains meant more paychecks were helping sustain aggregate consumer spending, alongside wealth effects tied to AI.

The unemployment rate fell to 4.1 percent. But the underemployment rate—which includes discouraged workers, people unemployed for more than 27 weeks, and people who wanted full-time jobs but had to take part-time work—rose to 7.9 percent. That marked its highest level since July, above pre-pandemic levels.

The New York Fed updated the unemployment rate for new college graduates. Although that rate fell over the summer, underemployment among new graduates reached its highest level since 2020, during the pandemic. A lower headline unemployment rate doesn't erase those who can't find full-time work or whose earnings fail to keep pace with prices.

Markets Take the Shock

Wall Street swung sharply after the election results. Markets lost more than $2.5 trillion in value in one day, then rebounded the next day. Stocks moved violently over the following three days as Democratic victories intensified anxiety about the artificial-intelligence trade, concerns that had been building for weeks.

Ben Emons, whose firm provides investment research, said clients began calling at 9 p.m. Tuesday and kept calling until midnight. Some couldn't believe what was unfolding or fathom what the Democrats' landslide could mean for markets. “People were caught off guard,” Emons said. “This is a real shock event.” One client put it more bluntly: “I cannot see this working. At all.”

Swonk said the backlash to AI had grown since the beginning of the year and crossed age, income and party lines. She cited fears of job losses from AI, data centers in neighbourhoods, higher electricity costs and inflation. Market jitters had already appeared in October, she said. KPMG had modelled both a bear-market scenario and a base case in which the economy muddled through and wealth effects continued.

Votes Counted, Power Still Unsettled

Democrats led Senate races in Alaska and Mississippi by narrow margins as officials continued counting votes. Mary Peltola led Republican Sen. Dan Sullivan by 600 votes, while Democratic challenger Scott Colom led Republican Sen. Cindy Hyde-Smith by about 1,800 votes. Thirty House races remained uncalled. NBC News' Decision Desk estimated Democrats would control at least 259 House seats in the next Congress.

The election numbers describe a contest for seats, with votes still being counted in close races. The report also tracks the market's response, not any grassroots or mutual-aid response to economic strain. Swonk warned against treating AI-generated wealth as a sturdy foundation: “a one-legged stool,” she called it, “precarious at best” and able to “tip over fairly easily.”

On the possibility of an AI bubble, Swonk said technological innovation takes time to scale and produce productivity gains, while returns on investments lay far in the future. “Innovation requires technology. Productivity requires trust. There isn't trust out there,” she said. She added that people and their livelihoods had to sit at the center of innovation, so they could see their fortunes rise with it rather than recede.