America votes ignoring strong economy

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news still driven out of the United States.High and persistent inflation is the greatest near-term risk to the American economy and financial system, the US Federal Reserve said 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.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 focus on its culture wars.Also over the weekend US non-farm payrolls rose more than the conservative forecasts, up +261,000 s.a. in the headline result and well above the expected +200,000.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 come. That will also be adding to inflationary pressures, bolstering demand. They have a paid workforce +3.4% larger than this time last year.By any measure these are strong numbers. Their participation rate rose to a modest 62.2%. As might be expected, less than 20% of their jobless are 'long term unemployed' which is consistent with a very strong labour market.It is now a chicken-or-egg issue going forward. Will the new expanded employment drive an economic expansion? Or will a stuttering economic expansion make the higher employment unsustainable? Seemingly endless 'warnings' that the US economy is running out of steam have so far proven unfounded. But there is one cloud in today's US jobs numbers - the vast increase in paid workers were at hourly rates that rose slightly slower than inflation.North of the border, Canada also reported a strong and strengthening jobs market. They expected a +10,000 rise in paid jobs but actually reported +108,300 new jobs - and even more for full-time positions, and a reduction in part-time jobs. Their participation rate is 64.9%.Adding to the positive vibe, Japan's services sector is well on the mend, with it expanding at a faster rate in October. They reported faster growth in activity levels and employment and optimism in that sector is now at all-time highs.In China, they