After years of the Powell-led Federal Open Market Committee (FOMC) focusing on bringing down price inflation, markets were growing concerned that unemployment might begin to rear its ugly head.

And a shaky jobs report in August was enough to change the narrative of even the more hawkish members of the FOMC, who said rates needed to come down to protect employment.

September’s jobs report will have done a great deal to steady that ship, adding 104,000 more jobs than anticipated.

Non-farm payrolls rose by 254,000 last month, the Bureau of Labor Statistics reported Friday, well above the 150,000 expected by forecasters. 

And the good news is prompting analysts to hope—if not become convinced—that the U.S. will escape a recession.

“The general direction of U.S. employment signals an economy very far from ‘recession,’” wrote UBS’s chief economist Paul Donovan in a note seen by Fortune this morning.

That being said, consumers may not be feeling as optimistic as their Wall Street peers.

“Voters do not think about abstract concepts like GDP, have a distorted view of price levels, and believe that pay increases are due to them working harder,” Donovan continued. “While the reality is people have a higher standard of living for the same amount of work, the perception is people are working harder to stand still.”

While remarkably robust consumers may not note the same green shoots some analysts see, it’s worth noting that many experts never thought they would have cause for such optimism.

Former Treasury Secretary Larry Summers, for example, said in October 2022 that a U.S. recession and unemployment hitting 6% would be necessary for the then-surging inflation to be brought under control.

While inflation hasn’t been wrestled back to its target of 2%—it’s not far off. The Bureau of Labor Statistics reported in early September that the CPI had increased 2.5% for all items over the past 12 months.

Goldman lowers to 15%

Goldman Sachs is equally buoyed by the economic data it is seeing, so much so that it has revised down the odds of a recession and a so-called hard landing as a result.

The financial institution’s 12-month recession indicator ticked five percentage points lower in a note published yesterday, down to 15%.

Jan Hatzius, Goldman’s chief economist, wrote in the note: “The most important reason is that the unemployment rate fell to 4.051% in September, marginally below both the June level and the threshold that activates the ‘Sahm rule.’”

The Sahm Rule looks at two factors: the current three-month moving average of U.S. unemployment and the lowest three-month moving average of U.S. unemployment over the past year.

If the current average is higher than the lowest average by more than half a percentage point, the American economy is headed for a recession.

The recession indicator, developed by macroeconomist Claudia Sahm, tipped over the 0.50 benchmark in August but as of September returned to exactly 0.50.

“The upshot is that the fundamental upward pressure on the unemployment rate may have ended via a combination of stronger labor demand growth and weaker labor supply growth (because of slowing immigration),” Hatzius adds.

A+ report

Bank of America is also awarding top marks for economic performance.

While the Brian Moynihan–led lender doesn’t specify its recession outlook, the bank did offer some optimism to those fearing a labor-led slowdown.

“It’s early in the school year, but the labor market already got an ‘A+,’” wrote Candace Browning, head of BofA global research, in a note Friday.

“Even prior to Friday’s job news, the U.S. Economics team suggested that investors should be less worried about a labor-driven slowdown because the latest data suggests stronger final demand, which can backstop the labor market,” the note adds, “Improved productivity could help explain how somewhat softer jobs can coexist with strong demand.”

Friday’s report motivated BofA to alter its November cut prediction from 50 basis points to 25 as the FOMC balances a continued squeezing of inflation with an apparently resilient labor market.