America votes ignoring strong economy

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news still driven out of the United States.</p><p>High and persistent inflation is the greatest near-term risk to the American economy and financial system, the US Federal Reserve <a href="https://www.federalreserve.gov/publications/files/financial-stability-report-20221104.pdf" target="_blank"><strong>said</strong></a> in its semi-annual Financial Stability Review. It also warned of rising instability in the trading of American government debt. An unexpected future shock could amplify existing vulnerabilities and shadow banks - leveraged financial firms other than regulated banks - are the main risk they see.</p><p>All this comes as the American prepare to vote in the mid-term elections. All the signs are that the Democrats will lose control of both houses of Congress, and making the Biden Administration's final two years very hard to govern effectively. Fortunately, they have used the first two years to install a very effective economic repair. The new Congress will <a href="https://www.nytimes.com/2022/11/05/opinion/election-republican-greene-vance.html" target="_blank"><strong>focus on its culture wars</strong></a>.</p><p>Also over the weekend <a href="https://www.bls.gov/news.release/empsit.nr0.htm" target="_blank"><strong>US non-farm payrolls</strong></a> rose more than the conservative forecasts, up +261,000 s.a. in the headline result and well above the expected +200,000.</p><p>But as regular readers will recall, we prefer to watch the 'actual' numbers and those rose +1,172,000 in October from September and taking their paid workforce to a massive 154.3 mln, and easily its largest ever. That is +1 mln more than the 'seasonally adjusted' numbers report. The pay for +1 mln extra people is likely to be highly stimulating and power American consumption for some time to com