Hiring again, still squeezed: the pay cheque grew and the bills grew faster

The jobs report, read twice

October's jobs report looks good on the first read and less good on the second. Employers added 165,000 jobs in October 2026, Origin Financial notes, and the unemployment rate fell from 4.2% to 4.1%. Professional and business services added 70,000 positions. Average hourly earnings increased 0.4% in October. But consumer prices rose 0.4% in October as well, which means the average pay rise bought nothing extra. A labour market that adds jobs and raises pay is still a squeeze if prices rise at the same speed, and that is what October delivered. m:…9685

The deeper numbers explain why the squeeze persists. Nonfarm labour productivity surged 3.6% annualised in the third quarter of 2026, and unit labour costs declined 0.7%, which means businesses produced more per worker while paying less per unit of output. Workers' share of nonfarm business output fell to 53% in the third quarter, the lowest since 1947. Put plainly, the economy got more productive, employers kept more of the gain, and workers got a smaller slice of a bigger pie. One caveat belongs in the open: the Bureau of Labor Statistics could not calculate October annual comparisons due to a government shutdown in October 2025, so the year-on-year picture is thinner than usual. m:…9685

The debt pile grows

Households are bridging the gap with borrowing. Total household debt reached 19.1 trillion dollars at the end of the third quarter of 2026, the New York Fed reports, expanding by 334 billion dollars in the quarter. Mortgage balances rose by 257 billion dollars, and home equity credit line balances rose by 23 billion dollars, the largest increase since 2005. Credit card balances rose by 22 billion dollars to 1.29 trillion dollars, and auto loan balances increased by 21 billion dollars to 1.73 trillion dollars. Mortgage originations totaled 595 billion dollars in the quarter. The home equity line number is the one to watch: households are tapping the value in their homes at the fastest pace in twenty years, which is what people do when pay does not stretch far enough. m:…9935

Delinquency is rising, but not yet alarming. Aggregate delinquency rates rose to 5.0% in the third quarter, up 0.3 percentage points, and transition into early delinquency increased for auto loans and mortgages. Transition rates into serious delinquency improved for credit cards and student loans, and Donghoon Lee of the New York Fed states that overall credit quality for housing debt remains strong despite rising delinquency transition rates. Student loan balances edged up by 5 billion dollars to 1.66 trillion dollars. The picture is a household sector that is still paying its bills, but with less room to spare than a year ago. m:…9935

The squeeze is not shared equally

The New York Fed's closer look at credit card delinquency shows who is feeling it most. Credit card delinquency rose sharply between 2022 and 2024, and the increase in delinquency was steepest among borrowers in lower-income neighbourhoods. An increasing share of new credit cards during the pandemic went to borrowers with lower incomes and credit scores, and newly opened unseasoned debts are historically the most likely to fall past due. Delinquency rates for all groups converged during the pandemic, the bank's researchers note, but recent delinquency rates are higher than pre-pandemic levels for all groups, and the gap between higher-income and lower-income neighbourhoods has expanded since 2022. m:…1018

There are two small offsets. Median credit scores for new cards for recent vintages have surpassed pre-pandemic levels, which suggests lenders have tightened who gets new credit, and transition rates into serious delinquency were largely unchanged across non-housing debt types in the third quarter. Delinquency rates for mortgages worsened slightly in the quarter, and total nominal household debt balances increased by 334 billion dollars, or 1.8 percent from the second quarter. The story of the American household this autumn is not a crisis. It is a slow tightening: pay that matches prices rather than beating them, debt that keeps growing, and a delinquency gap that widens along income lines. m:…1018