Jobs and incomes expected to be lackluster

The final monthly jobs report before the election is expected to underscore that the current pace of economic growth is not strong enough to move the needle on the jobs situation. This year, the U.S. economy has added an average of 146,000 per month, which is certainly better than losing jobs, but not strong enough to get a decent share of the 12.1 million unemployed back to work, much less to keep up with the new entrants into the work force.

A weak labor market is not just bad for the unemployed who are looking for work; it also hurts those who are lucky enough to have jobs. A recent paper by The Resolution Foundation, a UK-based think-tank, found that while "higher paid workers are likely to continue to see a modest upward trend in real wage growth with flat unemployment," the news is not so good for low and middle earners. The global recession has "increased sensitivity of real wages to unemployment." In other words, the rotten jobs market has kept a lid on wages for lower to middle income wage earners.

In 2011, U.S. median household income fell 1.5 percent, adjusted for inflation, to $50,054. It was the fourth consecutive year of income erosion and median income now remains 9 percent below the 1999 peak of $54,932, according to the Census bureau. While many thought the Great Recession would punish all income levels, an examination of the past three decades tells a different story. The New York Times recently crunched the data to determine income gains by percentile from 1980 thru 2010.

-- 99.99% income percentile (earned $7.9 million in 2010): +199%

-- 99.9% income percentile (earned $1.5 million in 2010): +115%

-- 99% income percentile (earned $352K in 2010): +63%

-- 95% income percentile (earned $150K in 2010): +32%

-- 90% income percentile (earned $108K in 2010): +21%

-- 50% income percentile (earned $49K in 2010): +11%

Income inequality is not new to the U.S. It widened during the late 19th and early 20th centuries, as booms in railroads and the birth of electricity and autos gave birth to great fortunes. The gap between rich and poor diminished after the Great Depression and generally continued to narrow over the next four decades. Since 1979, however, income inequality has grown faster in the U.S. than in other developed economies, as shown by this chart from the liberal-leaning Economic Policy Institute. Note: this chart does not include the Great Recession and recovery, a period which has increased income inequality.

For more on income inequality, check out Bill Moyers' interview of Matt Taibbi and Chrystia Freeland.

Stock investors had a rough week, as all three indexes closed lower on the week on concerns over corporate earnings and slowing economic growth. With over half of S&P 500 companies posting quarterly results, nearly two-thirds have missed revenue estimates, according to data from Thomson Reuters. As "Frankenstorm" approaches the Eastern seaboard, investors will have plenty of economic data and earnings reports to occupy themselves.

-- DJIA: 13,107, down 1.8% on week, up 7.3% on year (down 4 of last 6 weeks)

-- S&P 500: 1411, down 1.5% on week, up 12.3% on year (down 3.7% since Sep high of 1465)

-- NASDAQ: 2987, down 0.6% on week, up 14.7% on year

-- December Crude Oil: $86.28, down 4.6% on week

-- December Gold: $1711.90, down 0.7% on week

-- AAA National Average Pricse for Gallon of Regular Gas: $3.55

THE WEEK AHEAD:

Mon 10/29:

8:30 Personal Income & Spending

10:30 Dallas Fed Manufacturing Survey

Tues 10/30:

BP, Ford, Pfizer, UBS, Sirius XM, U.S. Steel

9:00 S&P Case-Shiller Home Price Index

10:00 Consumer Confidence

Weds 10/31:

GM, GlaxoSmithKline, MasterCard, Clorox, Visa, Allstate, Barclays, MetLife

7:00 MBA mortgage purchase applications index

9:45 Chicago Purchasing Managers Index

Thurs 11/1:

ExxonMobil, AIG, Starbucks

Auto sales

7:30 Challenger Job Cut Report

8:15 ADP Employment Report

8:30 Weekly jobless claims

8:30 Q3 Productivity

10:00 ISM Manufacturing Index

10:00 Construction Spending

Fri 11/2:

Chevron

8:30 October Employment Report (Consensus: 120K jobs added; unemployment rate up to 7.9%)

10:00 Construction Spending