As Americans get ready to head to the polls on Tuesday, Nov. 3 to vote in the midterm elections, employment and the state of the economy will be on plenty of voters’ minds. This week, BNP Paribas analysts gave their final preview of employment numbers ahead of the vote and the release of the official numbers later this month, and the firm sees a sharp increase in October jobs.
Despite AI adoption, dispersion, or uneven distribution, in job gains is low across industries, according to BNPP senior economist Andrew Husby, and remains in line with the limited displacement they’ve witnessed at the macro level.
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That doesn’t mean all is well with the economy, despite what the incumbents fighting for their political lives might say, but it does show that the U.S. economy is resilient. That resilience will come into play later this year when the Federal Reserve meets to decide whether to raise interest rates.
BNPP expects sharp October payroll increase
The U.S. economy is expected to add 70,000 jobs in October after adding just 29,000 in September, according to BNP Paribas analysts, including 67,000 in the private sector. Such an increase would put the three-month job growth average at 77,000, up from 51,000 prior. BNPP estimates that the breakeven pace for payrolls is about 20K in the second half of 2026.
But the growth hasn’t been even and they expect the impact of artificial intelligence to continue to be felt in the job market.
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“We think the data will continue to highlight the cross currents embedded in the AI rollout: job gains continuing in sectors tied to the buildout, including construction and manufacturing, but job losses in industries where AI might depress hiring, like the information and financial sectors. We expect buildout-related labor demand to outpace displacement over the next few years against a backdrop of anemic labor supply,” BNPP said in a note viewed by TheStreet.
Despite the weight of AI, BNPP still isn’t seeing the apocalyptic levels of job destruction that the industry has been promising for years.
“To us, this suggests: (1) that anecdotes about AI-driven job losses are not translating into historically abnormal churn; after all, finding efficiencies in existing workforces is not a new phenomenon; and (2) that we should continue to put more emphasis on the unemployment rate than on whether payrolls are accelerating or not,¨ Husby said.
Employment trends are still showing positive signs despite headwinds. Xavier Lorenzo / Getty Images
Unemployment rate expected to fall in October
BNP Paribas expects the unemployment rate for October to decline to 4.11% from 4.18% in September. The firm also expects average hourly earnings to increase slightly by 0.3% month-to-month, which would keep it 2.9% higher year over year, but down year over year from 3% in September.
“First, employers’ overall wage bills are rising steadily, but the mix has shifted and now reflects a higher number of hours, a slight pickup in employment after the pause in 2024–25, and an ongoing deceleration in average hourly earnings,” Husby said. “We see companies adding workers, having reached the limits of extracting more output from their current employees, and these additions have likely been at the lower end of the pay scale, pulling down the average.
Midterm voters have inflation, cost of living on their minds
Thanks to the war with Iran, inflation has outpaced wage gains for the last six months. When President Donald Trump swept into office in 2025, those trends were reversed, according to the Bureau of Labor Statistics. The consumer products index rose 3.7% year-over-year in September while average hourly earnings rose just 3.02%.
Rising gas prices have been a big part of the inflation story as the partial closure of the Strait of Hormuz has resulted in, perhaps, irreparable damage to the global oil supply chain as the cost of shipping remains elevated even as the supply of oil moving through the strait reportedly is back to above prewar levels.
Diesel prices have hit all-time highs, surging from $3.63 per gallon when Trump took office and $3.75 when the war to started to now being well above $6.
According to a Financial Times poll Monday, 70% of Americans are unhappy with how the President has handled inflation and affordability. Among independents, the number is as high as 77%.
That type of disenchantment is leading many pollsters to predict that the Republicans, who control the House, Senate, White House and Supreme Court, will suffer a major defeat on Tuesday.
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