Economic and jobs news thread

[weatheriscool]

US Jobless Claims Rise to Highest Since November in Holiday Week

ByMaria Paula Mijares Torres
July 14, 2022, 8:34 AM EDT * Updated on July 14, 2022, 8:57 AM EDT

-- Applications for unemployment led by a big jump in New York
-- Layoffs increasing from companies like Google, Microsoft

Applications for US state unemployment insurance rose to the highest level since November during the week that included the July 4th holiday, led by a big jump in New York.

Initial unemployment claims increased by 9,000 to 244,000 in the week ended July 9, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 235,000 applications.

{snip}

Read more: https://www.bloomberg.com/news/articles ... #xj4y7vzkg

[caltrek]

U.S. Venture Capitalists Have Never Had So Much Spare Cash
by Alex Wilhelm
July 14, 2022

Entire Article (for those who do not subscribe to Techcrunch+):

(Techcrunch) You might think given the chatter in the startup world that venture capitalists are short on funds — after all, we’re hearing about young tech companies finding themselves marooned between stages, hitting up investors with smaller capital pools than prior backers and turning to equity crowdfunding to keep their cash balances healthy.

And yet new data from PitchBook and the National Venture Capital Association indicate that while the pace of U.S. venture capital investment is slowing — more here on the global perspective — American venture capitalists are sitting atop more investable capital (dry powder) than ever before.

Even more, the pace at which venture investors are accreting funds is elevated compared to historical norms, meaning that private-market investors are in aggregate not struggling to raise, even if their portfolio companies may find themselves in a very different situation.

The question bouncing around our minds this morning is why — why are venture investments slowing when so much capital has been raised by VCs to invest?

Read more here: https://techcrunch.com/2022/07/14/us-v ... e-cash/

caltrek’s comment: My first thought is insufficient product demand. Why invest in a company that produces products and services that nobody is going to buy because they cannot afford said products and services?

[caltrek]

A Recession Would be Worse Than This
by Emily Peck
July 18, 2022

Introduction:

(Axios) A recession would be worse than the inflation the U.S. is seeing now, which is actually showing signs of easing up, some progressive economists are now arguing.

Why it matters: The Federal Reserve has been hiking interest rates to tamp down inflation, and is expected to continue — but this runs the risk of triggering a downturn. And at this point, that "cure" might be worse than the illness Dr. Powell is treating.

• "The data is saying we have time to be flexible," says Josh Bivens, who makes this point in a new column from the Economic Policy Institute.
Details: The high rate of inflation the government reported for June freaked a lot of people out, but energy prices mostly drove the surge. This month, gas prices have fallen at their fastest rate since the pandemic.

• Other commodity prices are down, too. Lumber, a leading indicator of the pandemic inflation, is well off its recent highs.

• Meanwhile, inflation expectations are receding, as Axios Macro reported last week.

Read more here: https://www.axios.com/2022/07/18/rece ... ts-argue

[weatheriscool]

The job market is beginning to show cracks

Job growth is slowing, vacancies are down and unemployment claims are ticking up

By Abha Bhattarai and Lauren Kaori Gurley
July 22, 2022 at 6:00 a.m. EDT

Matt Miller thought he was getting a promotion when he met with his boss on Tuesday. Instead, he got laid off. ... Business at the Pennsylvania art industry firm where he worked had been brisk until a few months ago. But lately, jitters about the crashing stock market and a possible recession had many regulars tapping the brakes on new purchases.

“Over the last three months, sales dropped 50 percent, then 50 percent again, until they were basically at zero,” said Miller, 32, who is worried about future job prospects. “Most of our clients were in real estate or tech, and they’ve just disappeared. They don’t want to spend $10,000 on a painting if they’re worried things are going to crash in a few months.”

The labor market, until now a pillar of economic resilience, is showing cracks. ... Job growth is slowing, unemployment claims are ticking up and several big companies, including Apple and Meta, are putting hiring plans on hold. There are signs that more firms are slashing jobs in industries as varied as tech, advertising, health care, finance and law.

https://www.washingtonpost.com/business ... xtra-jobs/

[weatheriscool]

U.S. consumer confidence slips further in July
Reuters

WASHINGTON, July 26 (Reuters) - U.S. consumer confidence fell for a third straight month in July amid persistent worries about higher inflation and rising interest rates, pointing to slower economic growth at the start of the third quarter.

The Conference Board said on Tuesday its consumer confidence index dropped 2.7 points to a reading of 95.7 this month.

The survey's present situation index, based on consumers' assessment of current business and labor market conditions, fell to 141.3 from 147.2 in June. Its expectations index, based on consumers' short-term outlook for income, business and labor market conditions, ticked down to 65.3 from 65.8 last month.

"Concerns about inflation, rising gas and food prices, in particular, continued to weigh on consumers," said Lynn Franco, senior director of economic indicators at the Conference Board in Washington. "Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months."

https://www.thomsonreuters.com/en/about ... iples.html

Read more: https://www.reuters.com/markets/us/us-c ... 022-07-26/

[weatheriscool]

US economy shrinks for a 2nd quarter, raising recession fear
Source: AP

WASHINGTON (AP) — The U.S. economy shrank from April through June for a second straight quarter, contracting at a 0.9% annual pace and raising fears that the nation may be approaching a recession.

The decline that the Commerce Department reported Thursday in the gross domestic product — the broadest gauge of the economy — followed a 1.6% annual drop from January through March. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.

The GDP report for last quarter pointed to weakness across the economy. Consumer spending slowed as Americans bought fewer goods. Business investment fell. Inventories tumbled as businesses slowed their restocking of shelves, shaving 2 percentage points from GDP.

Higher borrowing rates, a consequence of the Federal Reserve’s series of rate hikes, clobbered home construction, which shrank at a 14% annual rate. Government spending dropped, too.

Read more: https://apnews.com/article/us-economy-s ... 23dad5825f

[Ken_J]

why are they playing games with calling a recession a recession. it's a stupid game that will quickly make it so that people won't trust anything they say afterward.

[caltrek]

Fed Raises Rates Another 0.75 Point, Sees Economy Softening
by Neil Irwin
July 27, 2022

Introduction:

(Axios) The Federal Reserve continued its campaign of aggressive interest rate increases Wednesday, hiking its rate target another 0.75 percentage point, while acknowledging for the first time that "recent indicators of spending and production have softened."

Why it matters: The Fed's tightening of monetary policy, the most rapid in decades, is intended to bring down inflation. It has also sent financial markets reeling and increased the risk the United States will fall into a recession.

Driving the news: At the end of a two-day policy meeting, the Federal Open Market Committee raised its target for short-term interest interest rates to 2.25% to 2.5% range, the highest since 2019. It is the fourth rate hike this year.

• Fed officials have signaled more rate increases are on the way, with the policy committee stating again that it "anticipates that ongoing increases in the target range will be appropriate."
• But they elected not to raise rates by a full percentage point at this meeting, as some analysts thought they might in the aftermath of a very high reading on the June inflation two weeks ago.

Read more here: https://www.axios.com/2022/07/27/fed-r ... est-rates

[weatheriscool]

U.S. inflation surges again and stays near 40-year high, key price gauge shows

Last Updated: July 29, 2022 at 8:35 a.m. ET
First Published: July 29, 2022 at 8:13 a.m. ET
By Jeffry Bartash

PCE inflation index rises 1% in June, core up 0.6%

{snip}

Read more: https://www.marketwatch.com/story/comin ... 1659096833


Ahead of the release:

https://www.marketwatch.com/story/comin ... 1659096833

Economic Report

Coming up: PCE inflation and consumer spending

Published: July 29, 2022 at 8:13 a.m. ET
By Jeffry Bartash

A key measure of U.S. inflation known as the PCE index is forecast to rise a sharp 0.9% in June. The core PCE, which excludes food and energy, is seen advancing 0.5%. The yearly increase in the PCE is expected to move up to a nearly 41-year high of 6.9% and the core rate is expected to stay flat at 4.7%.Consumer spending is forecast to climb 0.9% in June. The report on consumer spending and inflation will be released at 8:30 a.m. Eastern by the Bureau of Economic Analysis.

-- -- -- -- -- --

From the source:

https://www.bea.gov/news/2022/personal- ... -june-2022

[caltrek]

One Percent Swing report for August 3, 2022


Introduction:

(Morgan Stanley) What Happened in the Markets?

• US equity markets closed Wednesday higher: the S&P 500 Index rose 1.6%, while the Nasdaq 100 gained 2.7% and the Russell 2000 improved 1.4%. Meanwhile, 10-year yields remained below 2-year yields, and commodity prices moved lower.

• Equity markets seemed to make a sigh of relief as earnings season is more than 71% complete without much evidence of greater than anticipated margin pressures or changes to earnings forecasts for future quarters. Additionally, today's ISM services PMI report came in better than expected.
Investors continue to look for evidence that inflation is easing for guidance on the pace of future rate increases. CPI will be reported next week.

• Ten of the 11 S&P 500 sectors ended the day higher. IT (+2.7%) and Consumer Discretionary (+2.5%) and were the largest relative outperformers while Materials (+0.1%) and Energy (-3.0%) lagged.

• As of the 4pm equity market close, the 10-year Treasury yield decreased to 2.71% and 2-year yields improved to 3.08%. WTI oil moved lower to just above $91 per barrel, while gold rose to $1,766 per ounce. The US Dollar Index increased modestly.

Read more here: https://www.morganstanley.com/content/ ... e-20220803

[weatheriscool]

Employers added 528,000 jobs in July, as the hot labor market powers on
Source: Washington Post

The hot labor market continued to show rapid growth in July, with employers adding 528,000 jobs, despite fears of a recession.

The unemployment rate edged down to 3.5 percent, according to the Bureau of Labor Statistics. In July, the labor market continued to show stunning growth that afforded workers historic wage gains and more leverage at their jobs.
Share with The Post: What's one way you've felt the impact of inflation?

The labor market has shown little signs of cooling off, proving to be a pillar of strength for an economy facing strong head winds. Other indicators, especially inflation at 40-year highs and six months of negative economic growth paint a less rosy picture. The financial markets have lost trillions of dollars in value this year, and one measure of consumer sentiment hit a record low in June.

A slowdown in job growth would have indicated that the Fed's interest rate hikes are achieving their intended goal of cooling down the labor market. As the Fed continues to raise rates, and borrowing becomes more expensive for households and companies, workers will probably have less leverage in the job market than they did earlier this year. Also, higher interest rates could lead to a wave layoffs.

Read more: https://www.washingtonpost.com/business ... july-2022/

[caltrek]

Employers added 528,000 jobs in July, as the hot labor market powers on
Source: Washington Post

The hot labor market continued to show rapid growth in July, with employers adding 528,000 jobs, despite fears of a recession.

The unemployment rate edged down to 3.5 percent, according to the Bureau of Labor Statistics. In July, the labor market continued to show stunning growth that afforded workers historic wage gains and more leverage at their jobs.

Share with The Post: What's one way you've felt the impact of inflation?

The labor market has shown little signs of cooling off, proving to be a pillar of strength for an economy facing strong head winds.

Read more: https://www.washingtonpost.com/business ... july-2022/

why are they playing games with calling a recession a recession. it's a stupid game that will quickly make it so that people won't trust anything they say afterward.

Well, I think the new jobs growth report is part of the answer. Normally, one associates a recession with a rise in unemployment, not a reaching of an almost unprecedented low of 3.5%.

Still, I have always thought that a recession is defined as two consecutive quarters of negative growth. So, you are right, by that definition this is a recession, and should be called such. Maybe something like "a recession - with an explanation." Alternatively, a recession with an asterisk. An asterisk that notes the otherwise high employment figures.

[caltrek]

Fears of More Recessionary Fed Rate Hikes as Jobs Numbers Smash Expectations
by Jake Johnson
August 5, 2022

Extract:

(Common Dreams) Heidi Shierholz, president of the Economic Policy Institute (EPI), said Friday that while the new jobs figures show that "we're almost surely not in a recession now, the Fed may have already overshot and secured a recession in coming months" as rate hikes slowly work their way through the economy, slashing investment by making borrowing more expensive.

"Regardless, they should slow the pace of rate increases substantially and be ready to go into neutral or even cut rates," Shierholz argued. "A recession caused by the Fed raising rates too aggressively would undo a great deal of the enormous gains that have occurred in the current recovery."

Fed chair Jerome Powell has publicly admitted that rate hikes are not likely to impact key drivers of record-high inflation such as gas and food prices, leading lawmakers and economists to caution that the central bank is risking a recession and huge job loss for no reason.

The Fed chief has conceded that the central bank's actions could push the U.S. into recession, though he has said that is not policymakers' intention.
"The Fed's single tool for fire-fighting—interest-rate increases—is aimed in the wrong direction," former U.S. Labor Secretary Robert Reich wrote in an op-ed for The Guardian after the Fed's latest policy meeting on July 27. "It's hitting working people rather than corporations responsible for most price increases (over and above the rising costs of global supplies)."

Read more here: https://www.commondreams.org/news/2022 ... ectations

[caltrek]

They are right when they say the Fed is not the appropriate institution to address the inflationary oil and food price situation. This is something that is more appropriately addressed through fiscal policy. Now, if only those deadbeats Joe Manchin and Kristin Sinema would come along and agree with Joe Biden on some sort of inflation reduction act.

Oh wait, there is news that they have come around (see below). My apologies for the insults. Of course, I will believe it when I see it.

Kyrsten Sinema Is on Board with Democrats’ Climate, Tax, and Inflation Reduction Bill
by Abigail Weinberg
August 5, 2022

Introduction:

(Mother Jones) Sen. Kyrsten Sinema (D-Ariz.), a crucial vote in an evenly divided Senate, announced last night that she would support a key piece of Biden’s legislative agenda—with some caveats.

Last week, Sen. Joe Manchin (D-W.Va.), a longtime holdout, stunned his colleagues when he announced that he had struck a deal with Senate Majority Leader Chuck Schumer (D-N.Y.) on the “Inflation Reduction Act of 2022,” which “includes roughly $370 billion in energy and climate spending, $300 billion in deficit reduction, three years of subsidies for Affordable Care Act premiums, prescription drug reform and significant tax changes,” per Politico.

But the bill was not going to move forward without the support of Sinema, who demanded that Democrats drop a provision that would place new limitations on the carried interest loophole—which many of her donors happen to benefit from—and garner roughly $14 billion in funding. Instead, the bill will reportedly include a 1 percent excise tax on stock buybacks—the practice of corporations repurchasing their own stock to drive up share prices—that’s set to garner $73 billion in federal revenue. Sinema also reportedly managed to win $5 billion in drought resiliency funding, a boon to Arizona.

Even in its altered form, the bill is a huge deal, promising to direct billions toward combating climate change, extend Obamacare subsidies through Biden’s term, and reduce prescription drug costs. The Senate parliamentarian still has to ensure that all the bill’s provisions all qualify for the reconciliation process that would allow the legislation to evade a GOP filibuster. But for now, things are moving. Schumer plans to introduce the final bill tomorrow.

Read more here: https://www.motherjones.com/politics/2 ... ion-deal/

caltrek's comment: Keeping carried interest loophole is not a good thing, so there is still some reason for shame there. A drought resiliency fund is probably a good idea, so Sinema has most likely earned some bragging rights there.

[weatheriscool]

US Productivity Falls for a Second Quarter, Labor Costs Surge

-- Consecutive declines in output per hour worst back to 1947
-- Unit labor costs jumped nearly 11% in second quarter

By Reade Pickert
August 9, 2022 at 8:32 AM EDTUpdated onAugust 9, 2022 at 9:21 AM EDT

US productivity slumped for a second-straight quarter as the economy shrank, driving another surge in labor costs that risks keeping inflation elevated and further complicates the Federal Reserve’s efforts to tame price increases.

Productivity, or nonfarm business employee output per hour, decreased at a 4.6% annual rate in the second quarter after falling at a 7.4% pace in the previous three months, Labor Department figures showed Tuesday. ... That marked the weakest back-to-back readings in data back to 1947. On a year-over-year basis, output per hour fell by the most on record.

With the drop in productivity, unit labor costs jumped at a 10.8% rate in the second quarter from the prior three months. The increase from a year earlier was the biggest since 1982.

Labor costs are the biggest expense for many businesses, so firms often adopt new technologies and upgrade equipment to make their workers more productive, helping blunt the inflationary impact of higher wages.

{snip}

Read more: https://www.bloomberg.com/news/articles ... osts-surge

[weatheriscool]

Inflation cools in July as CPI rises 8.5%

Alexandra Semenova · Reporter
Wed, August 10, 2022 at 8:33 AM

U.S. consumer prices rose at a slower pace in July as gas prices fell and supply chains improved, but inflation held near its highest level in 40 years.

The Bureau of Labor Statistics' July Consumer Price Index (CPI) reflected a year-over-year increase of 8.5% last month, down from June's 40-year high of 9.1%. Consensus economists were expecting last month's reading to show an 8.7% increase, according to estimates compiled by Bloomberg.

Core CPI, which excludes the volatile food and energy components of the report, rose 5.9%, unchanged from 5.9% in June.

Read more: https://finance.yahoo.com/news/july-inf ... 30998.html

[caltrek]

On Wednesday, August 10, 2022, the marketets were up again: https://www.morganstanley.com/content/ ... -20220810

[weatheriscool]

Jobless claims rise again to highest level since November
Source: The Hill

FINANCE

Jobless claims rise again to highest level since November

BY KARL EVERS-HILLSTROM - 08/11/22 9:09 AM ET

New applications for unemployment benefits rose slightly in the first month of August to the highest level since November, according to Labor Department data released Thursday.

Jobless claims totaled 262,000 in the week ending Aug. 6, up 14,000 from the previous week’s revised total. Claims continue to hover around pre-pandemic levels, but they’ve risen in five out of the last six weeks.

The four-week average of claims rose 4,500 to 252,000, according to the report.

Economists are closely monitoring jobless claims to gauge whether interest rate hikes are causing businesses to cut back on jobs, an indicator of an economic slowdown. The Federal Reserve has raised rates by 2.25 percent to fight 40-year high inflation.

{snip}

Read more: https://thehill.com/policy/finance/3596 ... -november/

[weatheriscool]

New York Manufacturing Plunges by Second-Most in Data to 2001

-- Empire State business activity index dives more than 42 points
-- New orders and shipments gauges underscore weaker demand

By Vince Golle
August 15, 2022, 12:30 PM UTC Updated on August 15, 2022, 1:16 PM UTC

A gauge of New York state manufacturing activity plunged by the second-most in data back to 2001, with sharp declines in orders and shipments that indicate an abrupt downturn in demand.

The Federal Reserve Bank of New York’s August general business conditions index slumped more than 42 points to minus 31.3, with the drop just behind that seen in April 2020, a report showed Monday. A reading below zero indicates contraction, and the figure was far weaker than the most downbeat forecast in a Bloomberg survey of economists.

{snip}

Read more: https://www.bloomberg.com/news/articles ... ta-to-2001

[weatheriscool]

U.S. retail sales flat in July; core sales rise

Source: Reuters

WASHINGTON, Aug 17 (Reuters) - U.S. retail sales were unchanged in July as declining gasoline prices weighed on receipts at service stations, but consumer spending appeared to holding up, which could further assuage fears that the economy was already in recession. The Commerce Department on Wednesday said that retail sales' flat reading last month followed a downwardly revised 0.8% increase in June. Retail sales in June were previously reported to have advanced 1.0%.

Economists polled by Reuters had forecast that sales would gain 0.1%, with estimates ranging from as low as a 0.3% decline to as high as a 0.9% increase. Retail sales are mostly goods and are not adjusted for inflation. Monthly consumer prices were unchanged in July as gasoline prices retreated from record highs, lowering the annual rate of increase in inflation to 8.5% from 9.1% in June.

The national average gasoline price dropped to about $4.27 per gallon in the last week of July after hitting an all-time high just above $5.00 in mid-June, according to data from motorist advocacy group AAA. Prices at the pump were averaging $3.943 per gallon on Wednesday. Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.8% last month after rising 0.7% in June.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have risen 0.8% in June. Consumer spending grew at its slowest pace in two years in the second quarter. The modest rise was offset by weakness in business and government spending as well as residential investment, resulting in the second straight quarter of GDP contraction. But with the labor market maintaining a brisk pace of job growth in July and industrial production hitting a record high, the economy is probably not in recession.

Read more: https://www.reuters.com/markets/us/us-r ... 022-08-17/