The job market has things to say

Employment, Resignment, and Layoffs in the 219,000 Days of October 2018, according to a New Expedia Survey of Workforce Locations and Salaries

In the late 2020s and early 2021, resignations and job openings increased in tandem. Even as openings kept increasing, the number of people quitting began to level off. Americans are still changing jobs, but at a slightly slower rate than before.

Layoffs are historically low and the slowing of the economy and fears of a recession do not mean that this is going to change. Initial claims for unemployment insurance, an indicator highly correlated with layoffs, were 219,000 for the week ended October 1 – higher than the week prior, but still one of the lowest readings in recent decades. After years of increasingly traumatic labor shortages, many employers are reluctant to significantly reduce the number of workers even as their businesses are slowing. That’s because companies are worried that they will have trouble recruiting new workers when they start expanding again.

Eric Hart, the chief financial officer at Expedia, told investors on the company’s earnings that he thought there could be an opportunity for the company to ramp up hiring over the coming months.

Stagflation: What does it really matter if the economy isn’t slowing down? Analysis of Labor Market Dynamics and Inflationary Outlook

Stagflation is as unpleasant as it sounds when you think of the risks of wages going down too much. Stagflation – a portmanteau of stagnation and inflation – is when economic activity slows while prices continue rising.

But for employers — and for policymakers at the Federal Reserve — the calculation looks different. A modest cooling would be welcome after months in which employers struggled to find enough staff to meet strong demand, and in which rapid wage growth contributed to the fastest inflation in decades. Too pronounced a slowdown, however, could lead to a sharp rise in unemployment, which would almost certainly lead to a drop in consumer demand and create a new set of problems for employers.

Friday’s job report likely won’t sway the Fed from that plan, said Andrew Patterson, senior international economist with Vanguard. The findings of the inflation data next week will be what will move the needle.

The jobs gains for the US economy in October were the smallest in over a year. It’s also a big gain by historical standards. The economy added an average of 183,000 jobs a month over the course of the decade before the pandemic.

So, while things are slowing down, they’re still pretty robust relative to those pre-pandemic normal times. That is one of the factors keeping inflation elevated.

This tight labor market – and the rapid wage growth it has spurred – is causing inflation to become more entrenched. The Consumer Price index was up 8.3% in August from a year ago. That’s lower than the 40-year high of 9.1% in June, but still painfully high. To address it, the Federal Reserve is likely to drive the economy into a recession in 2023, crushing continued job growth.

The imbalance of labor demand and worker supply has been consistently highlighted by the Fed as a potential sticking point in its efforts to lower inflation. While wage increases don’t seem to be driving inflation, Fed officials worry about a low participation rate and the difficulty of finding enough workers that will cause pay to increase and cause prices to go up.

If it comes in below 250K you may see renewed optimism that the Feds policies are having their intended effect and might not need to keep hurting the economy.

Nightcap Jobs Report: Why the Fed is Hitting a New Low: How Ford and Belarus are raising their prices to make the F-150 Lightning

It is difficult to overstate how delicate the situation is. Kristalina Georgieva, who is the managing director of the International Monetary Fund, described the world as being in a period of “historic shocks” following a torrent of economic uncertainties in the last two years.

That’s why the Fed’s decisions are being so closely scrutinized. When the Fed raises rates as aggressively as it has in the past several months, it creates painful ripple effects around the globe, pushing the US dollar’s value up and forcing other central banks to raise their own rates as well. The UN said that the world’s biggest economies could betipped into a recession.

Ford is, once again, raising prices on its first electric pickup, the F-150 Lightning. The company said that the entry-level model would cost $52,000, compared to $40,000 when the truck went into production this spring.

(Reuters) Belarus’ President Alexander Lukashenko banned consumer price increases across the economy, according to state media. There is a ban on price increases from today. Prohibited!” the president is quoted as saying.

Source: https://www.cnn.com/2022/10/06/business/nightcap-jobs-report/index.html

Nightcap jobs report: Musk and Peloton aren’t talking about the end of the “Majorana robots” war

A source close to the negotiations told CNN that Musk and his lawyers have agreed to put off his deposition in the case. Musk was originally scheduled to give a deposition today, but he threw a curveball earlier in the week, offering to buy the company under the original terms of the deal in exchange for scrapping the litigation. The two sides are still haggling over various conditions.

(Axios) Boston Dynamics, the company behind those viral videos of its creepily agile four-legged robots, is pledging not to weaponize their products and encouraging others in the industry to do the same. According to a letter Axios reviewed, the company suggests it’s worried that customers don’t, like, believe them when they say they’re not building an army that’ll destroy humanity. Thankfully, they now say they are not doing that. Oh my!

The company has had four rounds of cuts this year as the new CEO tries to shore up the bottom line. Or, as the company spokesperson put it in a statement: Peloton is on a “transformation journey” in which it is “optimizing efficiencies” to “achieve break-even cash flow.” I would love to make it stop, even if I don’t know who writes it.

Source: https://www.cnn.com/2022/10/06/business/nightcap-jobs-report/index.html

CNN Business: Amazon, ADP and other manufacturing sectors have seen growth but not declined in hiring by the December 1st Fireworkers Strike

CNN Business. Amazon suspended around 50 employees at its only union warehouse after they staged a work strike following a fire. A fire broke out Monday at the Staten Island facility, known as JFK8, and workers reported that parts of the building still smelled of smoke and that it was difficult to breathe. An estimated 100 workers walked off the job.

Nela Richardson, chief economist of the payroll processing firm, said that it was good news for the Federal Reserve. “You are seeing some softening in early-stage demand [for workers] but still continuation in hiring.”

It’s hard to hire someone in this month and four months from now. So people are being a lot more cautious,” said Tim Fiore, who conducts the survey for the Institute for Supply Management.

Manufacturing represents a small slice of the overall workforce, however. In a similar ISM survey service-sector businesses did not see a decline in hiring.

ADP, which handles payroll for more than 25 million workers across the country, reported solid job gains in restaurants, retail and professional services last month.

Employment is surging back in a few industries that were hit hard by the P.O., but many other industries that are more sensitive to interest rates are showing declines.

“The more people who come back to the labor market, the more likely we’ll see some loosening in hiring conditions and a continuation of these steady gains,” said Richardson.

August saw a big influx of new and returning workers, as nearly 800,000 people joined or rejoined the labor force. The Fed is keeping an eye on the inflation trend in September.

There are currently 1.9 jobs for every one person looking for work, a margin that the Fed worries is keeping inflation uncomfortably high. With plenty of options, workers are demanding higher wages; and with few applicants, managers are forking out higher pay, which bolsters demand for goods and services (and therefore drives up prices).

Cook and her colleagues on the Fed’s governing board have made it clear that the interest rates are going to stay high until there is a certain amount of evidence that the prices are leveling off.

“Inflation is too high, it must come down, and we will keep at it until the job is done,” Cook said Thursday, in her first public speech as a central bank policymaker.

Gad Levanon: The Economy of the US and the Post-Precession Imbalances Supply-Density Mixture Between Labor and Employment

The chief economist at the Burning Glass Institute is a man, by the name of Gad Levanon. He’s the former head of The Conference Board’s Labor Market Institute. The opinions are of his own.

The economy of the US has been a bit of a contradiction this year. On the other hand, GDP growth has slowed and may even have entered a recession. The employment growth has been much stronger than normal.

During the pandemic, corporate investment in software and R&D reached unprecedented levels and drove a rapid increase in new jobs in science, technology, engineering and math. Because these workers are especially well paid, they have had plenty of disposable income to spend on goods and services, which has supported job growth throughout the economy.

Next year, however, will look very different. Many of the industries that are still recovering will have reached their pre-pandemic employment levels. With demand saturated, those industries may revert to slower hiring. This alone is unlikely to cause job growth to go into negative territory. Monetary policy will do that.

There are two ways to rein in the labor market: Either reduce demand for workers or increase the labor supply. But it’s hard to engineer a boost in labor supply. That takes the kind of legislative action needed to increase immigration, drive people into the labor force or grow investment in workforce training. This is likely to prove elusive in today’s polarized political environment.

Fed Chair Jerome Powell did not mince words last week when he said that the strong job market is exceedingly responsible for inflation and will have to weaken before rate hikes end. “There’s an imbalance in the labor market between supply and demand,” he said, adding that it will take a “substantial period” to fix that imbalance.

Implications for the Future of the Fed’s Core-collapse Rates and for the Construction and Job Creation in the 21st Century

Pollak told CNN business that there was hope that the reopening of schools would have been a great opportunity for people to return to work. “We may not see some of the people who left come back.”

The unemployment rate for September fell back to its half-century low of 3.5% from 3.7%, a result of the decline in the number of people looking for work.

“That appears to be a certainty for the upcoming meeting in early November. As we near the final two policy making meetings of the year he said, the magnitude of future rate hikes will become clearer.

The Fed meets November 1-2 to discuss monetary policy and is widely expected to raise its benchmark interest rate by three-quarters of a percentage point for an unprecedented fourth time in a row.

The pace is unsustainable according to Dean Baker, senior economist at the Center for Economic and Policy Research. If the job gains get closer to 200,000, it would be better for the Fed.

Customers became more comfortable with using online ordering, pick-up and delivery services due to the Pandemic, he said. While hotels haven’t bounced back, neither has business travel, as the rise of competitors like Airbnb could lead to more muted demand for hotel stays.

In addition, while private sector employment returned to pre-pandemic levels earlier this year, public sector employment remains nearly 600,000 jobs, or 2.6%, below levels seen in February 2020, BLS data shows.

The recovery remains uneven, and it’s growing more complex as the labor market starts to feel the influence of the Fed’s series of supersized rate hikes, Pollak said.

The First Three Months of the Trump Recession: The State of the Labor Market, the Employment Rate, and the Job Creation Rate in the United States

From August to September, local public education jobs fell by 22,000; day care services employment fell by 2,000 jobs; and truck transportation fell by 11,000 jobs, according to BLS data. The declines are small, but moving in the opposite direction at an important time.

Weaver pointed out the need for people to have a reliable supply chain and the ability for them to return to the workforce, as well as the effects of sectors like those. “That can certainly impact [parents’] long-term and future economic and work prospects.”

Dionne Nelson, the chief executive officer of Laurel Street, said they were not anticipating a recession at this time. We are still busy. We are still hiring. Our markets are still very active.”

Job growth was slightly less robust in September, but it was still robust, indicating that the economy was still growing despite higher interest rates. But the strong showing left many investors unhappy because they saw signs that the fight against inflation may become tougher and more prolonged.

The labor market has avoided the deep scars of the last recession, for the most part. Long-term unemployment has not gone up in 20 years. The unemployment rate has not been lower since 1960s. Defying claims that “no one wants to work anymore,” 80.2 percent of Americans in their prime working years had jobs in September, above the rate in the year before the pandemic.

The recession left a long lasting mark on the US economy. More people are working in warehouses today than in February 2020, and fewer in restaurants. A disproportionate amount of women are forced to work part-time or not at all because of the shortage of child care. Some people are out of work due to the effects of “Long Covid” and researchers have different estimates of how many are.

Getting there has been bumpy. Businesses reopened last year and employers suddenly had more jobs to fill than people were willing to apply for. That was good news for workers, who were able to jump between jobs and negotiate for higher pay. Businesses raised prices to cover higher labor costs in order to keep inflation under control.

But the job market is hardly nose-diving. Despite the fact that the 263,000 jobs added in September were the lowest in more than a year, it was still a good gain. Layoffs remain extremely low; fewer people are getting jobs, but we haven’t seen any meaningful increase in the number of people losing them.

The logic behind Powell’s attention on job openings is simple. They are a direct measure of demand, since employers typically don’t try to hire when no one is buying their products. And they have a clear connection to wage growth — and therefore inflation — because when lots of companies are hiring, they have to pay more to compete for workers.

Economists argue that quitting is a sign of confidence in the economy, because people are not worried about the economy. And since people typically don’t jump employers without a bump in pay, job-switching contributes to wage growth. According to data from the payroll processor, people who switched jobs in October saw their pay rise twice as fast as people who stayed put.

Powell said deflation is likely to require a sustained period of below-trend growth and softer labor market conditions. It’s important to set the stage for stable prices and employment in the long run by restoring price stability.

Analysts across the board say the odds of a recession are high, if not guaranteed. The Fed says the pain of a recession is better than the pain of runaway prices for the long term.

Unfortunately for Democrats trying to hold on to power next week, the pain of inflation appears to be outweighing any positive sentiment about job security. According to a new CNN poll, many voters think the country is in a recession.

A little over a decade ago, the dominant narrative about the housing market was that Millennials simply weren’t buying. They were either too cheap, lazy, or itinerant to commit to something as weighty as a mortgage.

(It also didn’t hurt that dizzying stock surges meant Baby Boomer parents with large investment portfolios were happy to pass on some of those gains to their darling Millennial kids.)

Nightcap Housing Crisis: How the Boomer is Unprepared to Deal with the Economic and Socioeconomic Challenges in the 21st Century

Those who were able to get a home closed on should be very lucky as the housing boom goes bust.

For a historical comparison, the share of first-time buyers over the past decade has been between 30% and 40%. In 2009, in the middle of the Great Recession, it was high as 50%.

“They have to save while paying more for rent, as well as student debt, child care and other expenses,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “And this year were facing increasing home prices while mortgage rates are also climbing.”

Oh yeah, one other thing: In addition to mortgage rates going up, home prices also shot up, with the median peaking at $413,800 in June. (Imagine your starter home clocking in at 400 grand!)

It is broken. I don’t purport to have a silver bullet, but it’s clear that inventory constraints and outdated zoning restrictions are a big part of the problem.

Rather than rebuilding within existing neighborhoods, housing supply has expanded through “sprawling single-family subdivisions at the urban fringe.” There are more people and homes in vulnerable areas such as the West.

As affordability reaches crisis levels, now is a good time for federal and local governments to rethink the way we frame the American Dream. If they are better represented in elected office, that will happen. Schuetz argues that the upper-middle class Boomer in power are unwilling to change the system that has made them where they are.

Source: https://www.cnn.com/2022/11/03/business/nightcap-housing-crisis/index.html

Why the UK Fed is raising its key interest rate and the European Central Bank twice as much as the Bank of England: Its first sharp hike in 33 years and the narrow path to Goldilocks

The Bank of England raised its key interest rate by the same percentage as the Fed on Thursday, the largest rate hike in 33 years. Last week the European Central Bank did the same thing.

(Side note: “Basis points” are how central bankers talk about rate moves, which usually happen in tiny increments. A tenth of a percentage point is one basis point.

That is the sort of news that is worth celebrating in normal times. It is cause for concern as it shows that the economy is overheating. That’s why the Fed hiked again, the latest in a series of aggressive moves that would have been unthinkable just a few months ago.

“Today’s stronger than expected report illustrates the difficult task that still lies ahead for the Fed wrestling a resilient labor market and sticky inflation,” said Mike Loewengart, head of model portfolio construction for Morgan Stanley Global Investment Office. “While the number may be disappointing for investors hoping for a dovish Fed sooner rather than later, keep in mind it was the lowest reading in nearly two years.”

Economists had expected a smaller rise in the unemployment rate, to only 3.6%. The unemployment rate is calculated using a separate survey from the employer survey.

The Fed is hoping for a Goldilocks situation, where unemployment falls just enough to convince it that the labor market is still strong, but not so strong that it cripples the economy. That’s a very narrow path to land on.

The pace of rate hikes could be slowed to a half-percentage point, rather than the three-quarters of a point increases it has recently approved, according to several economists.

What have we learned in the last few months? A tale of two disappointments for investors and financial analysts — after the first week of the month of November

The people are still feeling the struggle at the kitchen table, even though I can show you how we’ve added and improved, and how great they are. The Biden administration is working to address rising prices with its Inflation Reduction Act, he added.

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

The November jobs report was a key factor in the plunge of the stock market this month. They fell again on Thursday when weekly numbers showed the number of Americans filing for unemployment benefits fell, indicating a still-tight labor market.

Jon Stewart, former host of The Daily Show, said that the Fed is really committed to this and that it could put us in a high unemployment recession.

It is possible that he is correct, but economists think there is hope that a Fed pivot might occur quickly if employment weakens in the first half of the year.

Jeremy Siegel, a finance professor at the University of Pennsylvania said in his weekly commentary that he thinks the jobs data is likely to improve quickly.

On Wednesday Powell said that a soft landing was still possible and the labor market was tight enough to absorb an increase in unemployment. Investors, meanwhile, will be watching jobs numbers very closely.

Source: https://www.cnn.com/2022/12/19/investing/premarket-stocks-trading/index.html

How long will Bankman-Fried appear before a US court? An investigation of bankman-fried’s premarket stock trading

It’s not clear what time Bankman-Fried will appear in court. If he waives his extradition, he would likely return to the United States quickly. Once in the states, he will face a US judge for an scurvy hearing.

Last Tuesday, federal prosecutors from the Southern District of New York charged Bankman-Fried with eight counts of fraud and conspiracy. Bankman- Fried could face up to 115 years in prison if he is found guilty of all eight counts, but he wouldn’t get the maximum sentence.

On top of that, US market regulators filed civil lawsuits accusing Bankman-Fried of defrauding investors and customers, saying he “built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.”

The Saturday before Christmas is known as the busiest day of the year for gift-buying. This year Christmas Day and Christmas Eve both fall on a Sunday, so Super Saturday is on December 17th. The National Retail Federation estimates that more than 158 million consumers will shop that day.

Shoppers have only completed half their gift purchasing so far, the NRF estimates. There are a lot more purchases to be made with less than a week remaining before Christmas Day.

Source: https://www.cnn.com/2022/12/19/investing/premarket-stocks-trading/index.html

Using the Holiday Season to Explain and Prevent Superstocking: Evidence from the Labor Market for a Strong Labor Market and a Growing Employment Gap

Retailers wait too long on an oversupply of merchandise and it is costly. Retailers who store merchandise in their own warehouse and distribution centers have a finite amount of space to work with, with some wiggle room to accommodate excess inventory. But costs add up if more space is needed for a protracted glut that they can’t quickly clear out.

Unused products lose value over time. That’s especially true with fashion clothing as savvy shoppers won’t buy last year’s style if the trend has passed. Stores are then forced to heavily discount, which impacts profitability.

Well ahead of the final full weekend before Christmas, stores this year were already offering discounts of 50% to 60% off, and tacking on free shipping for online orders.

“I’ve studied the holiday season for 20 years and haven’t seen discounting so dramatic,” said Ross Steinman, professor of consumer behavior at Widener University in Chester, Pennsylvania.

“Retailers are very nervous,” he said. “The clock is ticking and they know they have to maximize every opportunity now to get consumers to make purchases.”

The labor market remained a key source of strength for households and the overall economy ahead of the holiday season, even as hiring struggles remained a headache for employers, the latest government data indicates.

Wednesday’s labor turnover data showed that the gap grew in December. There were 11.01 million job openings, or 1.9 available jobs for every unemployed person that month.

The Fed Expansion Does Not Imply a Strong Inflationary Process, but It is Proof that the Labor Market is Growing Stronger

If employees seek wage increases because of rising prices, they’ll cause a cycle of fast inflation that will last for years.

The response rate to the monthly Job Openings and Labor Turnover Survey has fallen sharply since the outbreak of the swine flu.

“I would say it is a good thing the disinflation we have seen so far has not come at the expense of a weaker labor market,” Powell said in a news conference following the Fed’s first monetary policymaking meeting of the year. The inflationary process is still at an early stage, I would say.

Julia Pollak, senior economist with ZipRecruiter, said that this could mean we’re headed towards a healthy labor market or a more worrying stall.

Beyond the key headline indicators of payroll gains, unemployment and average hourly earnings, here are some other areas of the jobs report that Pollak and other economists will scrutinize when the January jobs report is released Friday morning.

“Typically, in good times, the workweek tends to be somewhere between 34.3 and 34.6 hours on average, and somehow it’s slowed all the way down to the bottom end of that range,” she said. “If it continues to deteriorate, that would suggest weakening demand for labor.”

A healthy recovery in full-time, in-house hiring is the reason for the recent decline in temp staffing. “But if it falls much below 3 million, I think that would be a warning sign as well.”

Temporary and contract hiring can show where businesses expand and reduce their workforce at the margins, said Sarah House, senior economist at Wells Fargo.

It seems like the demand backdrop is starting to weaken and maybe they aren’t seeing the need to add more employees as much.

In December, the labor force participation rate was up two-tenths of a percentage point. Although that came following three consecutive months of declines, the percentage of people working or actively looking for work hovered between 62.1% and 62.4% throughout 2022.

Beyond that and the ongoing demographic shifts of Baby Boomers aging out of the workforce, there’s also possibly some “information asymmetry” that’s occurring, he said.

He said there were people not in the labor market who didn’t know how badly they needed to work. Being a little removed I believe that is the reason for that. The world has changed pretty dramatically over the last two to three years, and it’s going to be difficult to show people that the skills they possess are needed right now.”

What is the impact of declining responses to surveys? Apollo Global Management Chief Economist Julia Coronado says: “The economy is in crisis”

The survey was referred to asbasura, the Spanish term for trash, after Julia Coronado said the decline in responses made the survey abasura.

The chief economist at Apollo Global Management spoke to CNN. The interview was edited to make sure it was clear.

With the growth of spam and a decline in the number of telephone landlines there has been a structural decline in response rates and there is no easy solution to this problem, which is getting gradually worse and worse.

To what extent are declining response rates to surveys actually impacting the data we use? Are we talking about major gaps in our reading of the economy?

It is absolutely critical for the Fed and markets that the incoming data is as reliable as possible. The strong data we have seen in January for employment and retail sales, is it a true description of what is happening? It could be due to seasonal adjustments, or there are issues with consumer spending in the economic surveys.

When the macro data becomes unreliable there is a higher tendency to put weight on anecdotal evidence, which for example can be seen at the moment where the announced tech layoffs seem like a big deal — but they are basically irrelevant when compared with the recent data in the latest employment report for January, where the economy created 517,000 jobs.

More than any other tech sector layoffs combined, the leisure and Hospitality sector added 128,000 jobs in January. Is this an accurate description of what’s happening or is it just a matter of measurement problems with the data?

Source: https://www.cnn.com/2023/02/27/investing/premarket-stocks-trading/index.html

Premarket Stocks Trading: Warren Buffett’s Oracle of Omaha, a Food Conglomerate, and Save Local Restaurants

On Saturday, the conglomerate reported big losses. It lost around $22.8 billion in the year 2022, with losses of about $53.6 billion on its investments.

The company’s operating earnings are considered to be a better measure of profitability than its stock holdings according to an annual letter written by Warren Buffet to investors. Those earnings reached what Buffett called a “record” — $30.8 billion in 2022, topping the $27.5 billion in the prior year.

The 92-year-old “Oracle of Omaha” wrote that “when you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”

Goldman will host an investor day on February 28. This will be a big one for the company’s leaders as they hope to reset after a 2022 that saw the bank’s profits slump by nearly half.

It’s only the second annual investor meeting in 154 years, and comes just weeks after the company said its consumer lending arm has lost almost $3 billion since 2020. The bank has recently undergone a series of layoffs and CEO David Solomon has faced criticism, and a pay cut, from shareholders.

In the United States, there were about 631,000 restaurants in the year 2015, according to a restaurant research firm. That’s roughly 72,000 fewer than in 2019, when there were 703,000 restaurants.

Chipotle, Starbucks, Chick-fil-A, McDonald’s and KFC-owner Yum Brands, meanwhile, have each donated $1 million to Save Local Restaurants, a coalition opposing a California law that could set the minimum wage at up to $22 an hour and codify working conditions for fast-food employees in the state.

Source: https://www.cnn.com/2023/02/27/investing/premarket-stocks-trading/index.html

The US Economy at the End of the 2023 Cycle: Recent Data and Views from the National Association for Business Economics (NBA) Survey

In a time when the economic data has delivered mixed messages or flat out busted expectations, economists’ predictions for the year ahead are growing increasingly opaque, reports CNN’s Alicia Wallace.

The National Association for Business Economics’ latest survey, released Monday, shows a “significant divergence” among respondents about where they think the US economy is heading in 2023, the organization’s president said.

Estimates for GDP, inflation, labor market Indicators, interest rates and more are all widely differing, likely reflecting a variety of opinions on the fate of the economy.