Economic and jobs news thread

[caltrek]

Raise Corporate Taxes, Not Interest Rates
by Sarah Baron
October 12, 2022

Conclusion:

(Other Words) Instead of just relying on Fed officials — who have made it clear they will drive the economy into recession to get inflation down — policymakers should attack the problem head on in a way that protects working Americans. Big corporations and the Republicans who enable them must be held accountable for their price gouging.

Beyond the Inflation Reduction Act, congressional Democrats have introduced several additional bills that would help curb corporate price gouging. Some examples include the Price Gouging Prevention Act, the Big Oil Windfall Profits Tax Act, the Food and Agribusiness Merger Moratorium and Antitrust Review Act of 2022, the Emergency Price Stabilization Act, and the Ending Corporate Greed Act.

Big corporations and their Republican allies need to be held accountable and made to stop taking advantage of working Americans. They’ve proven time and time again that they won’t lower prices on their own.

There’s no denying that high prices have been good for big corporations. Instead of spending their windfalls on stock buybacks and lavish CEO pay packages, corporations could have put those extra profits towards workers’ wages—or simply kept their prices from skyrocketing.

But too few corporations are willing to put the good of the country and the health of our economy before their interests. Too many working Americans are paying the price of corporate greed. Americans need Congress to stand up for them.

Read more here: https://otherwords.org/raise-corporate ... st-rates/

[caltrek]

Markets are up (at least as of close on October 18, 2022): https://www.morganstanley.com/content/m ... -20221018

[caltrek]

Markets are up again, apparently due to business reports exceeding earnings expectations: https://image.msmail.morganstanley.com/ ... 1b01e.pdf

[weatheriscool]

Consumer confidence fell in October as inflation takes a toll

By Alicia Wallace, CNN Business
Published 10:14 AM EDT, Tue October 25, 2022

Minneapolis (CNN Business) — US consumer confidence fell in October to the lowest level since July as high borrowing costs and soaring inflation take their toll on household budgets.

The consumer confidence index slumped to 102.5 from a revised 107.8 in September, according to data released Tuesday by the Conference Board. Economists were expecting a reading of 106.5, per estimates from Refinitiv. A reading above 100 signals consumers have an optimistic attitude toward the economy. In February 2020, the consumer confidence index was 132.6.

Consumer spending, which drives the US economy, has remained strong since the start of the Covid-19 pandemic, with high levels of goods purchasing during lockdowns, followed by robust spending on travel and dining out once restrictions were lifted.

However, a global imbalance of supply and demand led to the current bout of decades-high inflation in the United States, which the Federal Reserve is trying to bring down through a series of jumbo-sized rate hikes. That has, in turn, pushed up borrowing costs, adding to higher overall expense for consumers, some of whom have begun to rein in their spending.

This story is developing and will be updated.

Read more: https://www.cnn.com/2022/10/25/economy/ ... index.html

[weatheriscool]

GDP grows 2.6% in third quarter

https://www.fxstreet.com/amp/news/break ... 2210271231

[weatheriscool]

U.S. GDP accelerated at 2.6% pace in Q3, better than expected as growth turns positive
Source: CNBC

The U.S. economy posted its first period of positive growth for 2022 in the third quarter, at least temporarily easing inflation fears, the Bureau of Economic Analysis reported Thursday. GDP, a sum of all the goods and services produced from July through September, increased at a 2.6% annualized pace for the period, against the Dow Jones estimate for 2.3%.

That reading follows consecutive negative quarters to start the year, meeting a commonly accepted definition of recession, though the National Bureau of Economic Research is generally considered the arbiter of downturns and expansions. The growth came in large part due to a narrowing trade deficit, which economists expected and consider to be a one-off occurrence that won’t be repeated in future quarters. GDP gains also came from increases in consumer spending, nonresidential fixed investment and government spending.

Declines in residential fixed investment and private inventories offset the gains, the BEA said. “Overall, while the 2.6% rebound in the third quarter more than reversed the decline in the first half of the year, we don’t expect this strength to be sustained,” wrote Paul Ashworth, chief North America economist at Capital Economics. “Exports will soon fade and domestic demand is getting crushed under the weight of higher interest rates. We expect the economy to enter a mild recession in the first half of next year.”

The report comes as policymakers fight a pitched battle against inflation, which is running around its highest levels in more than 40 years. Price surges have come due a number of factors, many related to the Covid pandemic but also pushed by unprecedented fiscal and monetary stimulus that is still working its way through the financial system.

Read more: https://www.cnbc.com/2022/10/27/us-gdp- ... itive.html

[weatheriscool]

Consumer spending was flat in September and below expectations as inflation takes toll

PUBLISHED FRI, OCT 14 2022 9:05 AM EDT

Jeff Cox
@JEFF.COX.7528 https://facebook.com/jeff.cox.7528
@JEFFCOXCNBCCOM https://twitter.com/JeffCoxCNBCcom

KEY POINTS
-- Retail and food services sales in total were little changed in September against the estimate for a 0.3% gain.
-- Excluding autos, sales rose 0.1%, vs. the estimate for spending to be unchanged.
-- The numbers are not adjusted for inflation, indicating that consumer spending slowed.

Consumer spending was flat in September as prices moved sharply higher and the Federal Reserve implemented higher interest rates to slow the economy, according to government figures released Thursday. ... Retail and food services sales were little changed for the month after rising 0.4% in August, according to the advance estimate from the Commerce Department. That was below the Dow Jones estimate for a 0.3% gain. Excluding autos, sales rose 0.1%, against an estimate for no change. (1)

Considering that the retail sales numbers are not adjusted for inflation, the report shows that real spending across the range of sectors the report covers retreated for the month. ... A Bureau of Labor Statistics report Thursday indicated that consumer prices rose 0.4% including all goods and services, and 0.6% when excluding food and energy. ... Miscellaneous store retailers saw a decline of 2.5% for the month, while gasoline stations were off 1.4% as energy prices declined. (2)

A slew of other sectors also posted drops, including sporting goods, hobby, books and music stores as well as furniture and home furnishing stores, both of which posted a -0.7% drop, while electronics and appliances were off 0.8% and motor vehicle and parts dealers fell 0.4%. ... General merchandise store sales rose 0.7%. Gainers also included online stores, bars and restaurants, clothing retailers and health and personal care stores, all of which saw 0.5% increases.

While the gains for the month were muted, retail sales rose 8.2% from a year ago, matching the rise in the consumer price index. Shoppers remain generally flush with cash though there are indications of late that they are dipping into savings to make ends meet. {snip} A separate report Thursday showed that import prices fell 1.2% in September, slightly more than the 1.1% estimate. Exports declined 0.8%. (3)

(1) https://www.census.gov/retail/marts/www ... urrent.pdf

(2) https://www.cnbc.com/2022/10/13/consume ... 2022-.html

(3) https://www.bls.gov/news.release/ximpim.nr0.htm

Read more: https://www.census.gov/retail/marts/www ... urrent.pdf

[weatheriscool]

Mortgage rates rise above 7 percent as Fed scrambles to slow economy
Source: Washington Post

Mortgage rates topped 7 percent this week, the highest level in 20 years — and the latest sign that the Federal Reserve’s aggressive moves to slow the broader economy are hitting the housing market hard already.

The average rate for a 30-year fixed mortgage, the most popular home-loan product, reached 7.08 percent, according to data released Thursday by Freddie Mac. The last time mortgage rates climbed so high was April 2002, and they are slated to keep climbing as the Fed moves swiftly to tame a red-hot housing market, a key step in lowering rent costs and ultimately quelling inflation in the broader economy.

The central bank doesn’t directly set mortgage costs, but changes in its policy rate — known as the federal funds rate — ripple through the economy and influence all kinds of lending. Since March, the Fed has raised rates five times, bringing its benchmark rate from near zero to between 3 percent and 3.25 percent. The central bank is expected to raise rates by another 0.75 percentage points next week.

https://www.washingtonpost.com/wp-apps/imrs.php?src=

[caltrek]

Dot-com Bust 2.0 is Becoming a Reality
October 28, 2022

Introduction:

(Axios) There's a distinctly dot-com-ish feel at the moment, as even tech companies that once seemed untouchable are taking massive tumbles in the stock market, Axios Markets author Matt Phillips reports.

Why it matters: Stocks that led the market for much of the past decade have fallen on hard times after surprisingly weak earnings from major tech companies.

• Meta's 75% collapse since its September 2021 peak has destroyed more than $800 billion in stock market wealth.

• Amazon shares collapsed after it, too, posted disappointing results — and a Q4 warning — at the close of trading Thursday.

The other side: Twitter and Apple are exceptions to the rule.

• Elon Musk closed his deal to purchase Twitter at $54.20 per share. One source inside Twitter noted they wouldn't be surprised if Twitter's stock would have been trading at $15 sans the deal drama — a figure similar to some of its competitors like Snap and Pinterest, Axios' Sara Fischer and Dan Primack write.

• Apple announced earnings on Thursday that narrowly exceeded expectations and became an exception to the recent drop in some Big Tech stock prices.

Read more here: https://www.axios.com/2022/10/28/stock ... bble-2022

[caltrek]

Big Tech's Hiring Splurge Makes Cost Cuts Even Harder
October 28, 2022

Introduction:

(Axios) In just the past year, Microsoft, Facebook and Google parent Alphabet have all seen their headcount rise by upwards of 20%. As Big Tech companies shift from growth to belt tightening, they will have to reckon with just how many employees they've hired since the pandemic began.

Why it matters: Hiring freezes may not do enough to cut costs, as companies' payroll will rise significantly just due to all the employees hired in the last year.

The big picture: Nearly all large tech companies say they expect to slow hiring this year, with many turning to partial or complete hiring freezes. Microsoft has already conducted a small number of layoffs, Snap is cutting 20% of staff and other tech companies have indicated layoffs could be coming.

• Meta has said that most departments outside of a few priorities will see lower budgets in the coming year. "So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year," CEO Mark Zuckerberg said on the earnings conference call this week. "In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today."

• Microsoft CFO Amy Hood told analysts that any growth above current levels "should be minimal" this quarter.

Read more here: https://www.axios.com/2022/10/28/big-t ... e-layoffs

[weatheriscool]

Pending home sales fell 10% in September, much worse than expected

PUBLISHED FRI, OCT 28 2022 • 10:00 AM EDT

KEY POINTS

• Pending home sales suffered a worse decline than expected from August to September, as mortgage rates surged.
• Economists had predicted a 4% drop. Sales were down 31% year over year.
• Excluding April 2020, at the start of the Covid pandemic, the pending home sales index is at its lowest level since June 2010.

Pending home sales, a measure of signed contracts on existing homes, dropped a much worse-than-expected 10.2% in September from August, according to the National Association of Realtors. ... Economists had predicted a 4% drop. Sales were down 31% year over year.

This marks the lowest level on the pending sales index since June 2010, excluding April 2020, when the Covid pandemic was in its early days.

Realtors point squarely to sharply higher mortgage rates, which had sat at record lows for the first two years of the pandemic. The average rate on the popular 30-year fixed mortgage was right around 3% at the start of this year, but then rose swiftly, crossing 6% in June, according to Mortgage News Daily. It pulled back a bit in July and August, but then began rising again, crossing 7% in September, when these contracts were signed.

“Persistent inflation has proven quite harmful to the housing market,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”

{snip}

Read more: https://www.cnbc.com/2022/10/28/pending ... ugust.html

[weatheriscool]

U.S. Wages Rose Rapidly in Third Quarter, Keeping Pressure on Inflation

Pay and benefits increased 5% last quarter from year prior, a slight easing in gains from earlier in 2022

By Gabriel T. Rubin
Updated Oct. 28, 2022 9:06 am ET

Worker pay and benefits rose rapidly in the third quarter from a year before, maintaining pressure on inflation. ... The employment-cost index, a measure of what employers pay for wages and benefits, rose 5% in the third quarter from the same period a year earlier, the Labor Department said Friday. That was a slightly slower pace than in the second quarter but still well above gains prior to the pandemic.

On a quarterly basis, wages and benefits rose a seasonally-adjusted 1.2% in the third quarter from a 1.3% increase in the second quarter. The third-quarter gain matched economists’ expectations. ... Wages and benefits have been increasing rapidly since the middle of last year as employers competed for workers in a tight labor market.

The report follows government figures released Thursday showing that the U.S. economy expanded at a solid pace in the third quarter despite climbing interest rates and signs of easing consumer and business demand.

The labor market cooled a bit, with monthly job growth slowing, but it remained strong through the third quarter. Employers shaved down the number of job openings and took longer to fill positions as they reassessed growth prospects and future consumer demand. The unemployment rate fell in September to a level matching a half-century low, and new claims for jobless benefits, a proxy for layoffs, are hovering around 2019 average levels.

{snip}

Write to Gabriel T. Rubin at [email protected]

Read more: https://www.wsj.com/articles/us-inflati ... 1666925660

[caltrek]

GDP and Inflation Data Stave Off Recession Talk and Boost Wall Street’s Rebound
by Nick Rummell
October 28, 2022

Introduction:

MANHATTAN (Courthouse News) — Investors rallied late in the week, capping a fourth consecutive week of gains, erasing much of the summer’s losses and nearly reaching the highs from May.

The gains are likely due to a pair of positive economic releases on inflation and growth that suggest the United States was never in a recession earlier this year and that prices are likely to come down soon.

Investors were cheered on Friday by data from showing that personal income and expenditures both outpaced inflation in September, gaining 0.4% and 0.6%, respectively, which lends credence to the belief that inflation has peaked.

This marks the second consecutive month that real consumer spending has increased — though the savings rate fell from August — with analysts guessing consumers are tapping into savings and credit to buy their goods and services. While the price of goods still outpace income from a year ago, prices have fallen for the third month in a row.

On the heels of the reports, markets continued their move in a positive direction, the Dow Jones Industrial Average met the closing bell 1,779 points up since last Friday, and the S&P 500 gained 149 points over that same time frame. The Nasdaq, which has been plagued by earnings woes among its tech-heavy listings, gained 243 points since last Friday.

Read more here: https://www.courthousenews.com/gdp-and ... -rebound/

[weatheriscool]

U.S. inflation still running hot, key PCE price gauge shows


By Jeffry Bartash

Core PCE index climbs 0.5% in September

The numbers: A key gauge of U.S. inflation rose a mild 0.3% in September, aided by the lower cost of gas. Yet prices are still going up even if they aren’t climbing as fast as they were earlier in the year. ... Another measure of inflation that omits volatile food and energy costs rose a sharp 0.5% last month. Wall Street had forecast a 0.5% increase in the so-called core personal consumption expenditures price index.

The Federal Reserve views the PCE index as the best barometer of inflation trends. What it’s shown lately are easing but still-high price pressures.

Key details: The overall rate of inflation in the past year was unchanged at 6.2% compared to the prior month. ... The core rate of inflation in the past 12 months climbed to 5.1% from 4.9%. That leaves it just a few ticks below a 40-year high of 5.4% in February.

Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their behavior due to rising prices.

{snip}

Read more: https://www.marketwatch.com/story/comin ... 1666959077

[weatheriscool]

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead
Source: CNBC

The Federal Reserve on Wednesday approved a fourth consecutive three-quarter point interest rate increase and signaled a potential change in how it will approach monetary policy to bring down inflation.

In a well-telegraphed move that markets had been expecting for weeks, the central bank raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008. The move continued the most aggressive pace of monetary policy tightening since the early 1980s, the last time inflation ran this high.

Along with anticipating the rate hike, markets also had been looking for language indicating that this could be the last 0.75-point, or 75 basis point, move. The new statement hinted at that policy change, by saying the Fed “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

Economists are hoping this is the much-talked about “step-down” in policy that could see a rate increase of half a point at the December meeting and then a few smaller hikes in 2023. This week’s statement expanded on previous language simply declaring that “ongoing increases in the target range will be appropriate.“ The new language read: “The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.“

Read more: https://www.cnbc.com/2022/11/02/fed-hik ... -2008.html

[weatheriscool]

Private payrolls rose 239,000 in October, better than expected, while wages increased 7.7%, ADP says

PUBLISHED WED, NOV 2 2022 * 8:15 AM EDT * UPDATED 45 MIN AGO

KEY POINTS
-- Companies added 239,000 positions in October, ahead of the Dow Jones estimate of 195,000 and up slightly from the previous month, ADP reported Wednesday.
-- Most of the gains came from the leisure and hospitality industry, which added 210,000 positions while wages rose 11.2% for the sector.
-- Wages overall rose 7.7% from a year ago, down just slightly from the September pace.

Private payroll growth held strong in October while worker pay rose as well, particularly in the leisure and hospitality industry, according to a report Wednesday from payroll processing firm ADP. ... Companies added 239,000 positions for the month, ahead of the Dow Jones estimate of 195,000 and better than the downwardly revised 192,000 in September. Wages increased 7.7% on an annual basis, down 0.1 percentage point from the previous month.

Job gains were especially strong in the pivotal leisure and hospitality sector, which added 210,000 positions while wage growth accelerated 11.2%. The industry, which includes hotels, restaurants, bars and related businesses, is seen as a bellwether as it took the hardest Covid and is still below pre-pandemic levels.

All the job growth came from services-related industries, which added 247,000 jobs, while goods-producing sectors lost 8,000 jobs, due largely to a loss of 20,000 manufacturing positions. Trade, transportation and utilities rose by 84,000.

“This is a really strong number given the maturity of the economic recovery but the hiring was not broad-based,” ADP’s chief economist, Nela Richardson, said. “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market.”

{snip}

Read more: https://www.cnbc.com/2022/11/02/adp-job ... -2022.html

[weatheriscool]

U.S. productivity rebounds moderately in third quarter

Reuters

WASHINGTON, Nov 3 (Reuters) - U.S. worker productivity rebounded less than expected in the third quarter, resulting in continued upward pressure on labor costs that could keep inflation elevated.

Nonfarm productivity, which measures hourly output per worker, rose at a 0.3 annualized rate last quarter, the Labor Department said on Thursday. Data for the second quarter was unrevised to show productivity declining at a 4.1% rate. ... Economists polled by Reuters had forecast productivity would rise at a 0.6% pace.

The increase was flagged in last week's third-quarter gross domestic product report, which showed the economy rebounding at a 2.6% rate after contracting for two straight quarters.

Productivity fell at a 1.4% rate from a year ago. Large shifts in the composition of the workforce in the wake of the COVID-19 pandemic have made it harder to measure productivity.

{snip}

Read more: https://www.reuters.com/markets/us/us-p ... 022-11-03/

[weatheriscool]

U.S. payrolls surged by 261,000 in October, better than expected as hiring remains strong
Source: CNBC

Job growth was stronger than expected in October despite Federal Reserve interest rate increases aimed at slowing what is still a strong labor market.

Nonfarm payrolls grew by 261,000 for the month while the unemployment rate moved higher to 3.7%, the Labor Department reported Friday. Those payroll numbers were better than the Dow Jones estimate for 205,000 more jobs, but worse than the 3.5% estimate for the unemployment rate.

Average hourly earnings grew 4.7% from a year ago and 0.4% for the month, indicating that wage growth is still likely to pressure inflation. The yearly growth met expectations while the monthly gain was slightly ahead of the 0.3% estimate.

(snip)

The new figures come as the Fed is on a campaign to bring down inflation running at an annual rate of 8.2%, according to one government gauge. Earlier this week, the central bank approved its fourth consecutive 0.75 percentage point interest rate increase, taking benchmark borrowing rates to a range of 3.75%-4%.

Read more: https://www.cnbc.com/2022/11/04/jobs-re ... 2022-.html

[caltrek]

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead
Source: CNBC

...

Read more: https://www.cnbc.com/2022/11/02/fed-hik ... -2008.html

Here is more on that from the wealth management firm J.P. Morgan:

What changed: The big change is a hint that the tightening cycle is entering a new (still hawkish) phase. Earlier this year, the Fed was focused on getting policy rates higher “expeditiously” to fight against decades-high inflation. Now, it seems like they will still be moving in a direction of higher rates, but the pace will be a little more deliberate.

Some signals:

The committee added a sentence to their policy statement acknowledging that it has already done a lot of heavy lifting to slow down the economy. When they meet in December and at the beginning of next year, they will pay close attention to the lagged effects of previous hikes on the economy.
Chair Powell also seemed to suggest that the pace of rate hikes might slow down, but that the eventual destination of the “terminal” policy rate may be higher than they thought previously. The silver lining is that we’d expect a slower pace to reduce volatility across markets and could provide an opportunity to actually pivot if growth and inflation slow down faster than the Fed expects.

How did markets react: Stocks fell on the day after popping in the immediate aftermath of the statement. Most of the underperformance was seen within high growth, high volatility assets while low volatility, high quality names outperformed.

Zooming out, the S&P 500 is still +8% above its intra-day, year-to-date low. Over the last month, the index is up +5%.

https://www.chase.com/personal/investme ... -two-daily

[caltrek]

The Federal Reserve’s Overkill
November 4, 2022

Introduction:

(The American Prospect) The Fed’s decision Wednesday to raise short-term rates by another three-quarters of a point, and its signaled intent to keep raising rates, flies in the face of evidence that inflation is already subsiding and that supply chain bottlenecks—the main driver of price increases—are easing.

Used-car prices, which spiked during the pandemic because of new-car production bottlenecks, are way down. Lumber prices are also down dramatically. Housing costs, a big driver of inflation, are moderating. Rental prices are actually trending down.

Wages are certainly not driving inflation. As Josh Bivens of the Economic Policy Institute points out, “Average hourly earnings from the Current Employment Statistics (CES) data compiled by the BLS have grown at an average annualized rate of 3.6% over the past two months. This is down significantly relative to mid-2021.”

Bivens adds that this is a pretty normal pace of wage growth and is consistent with the Fed’s goal of 2 percent price inflation over the long run. For an excellent summary of the state of inflation, see Bivens’s overall analysis.

Meanwhile, Paul Donovan, the chief economist at UBS Global Wealth Management, not exactly a Bolshevik outfit, writes in the Financial Times that corporate windfall profits are a prime driver of inflation—as the Prospect and our friends at the American Economic Liberties Project and the Open Markets Institute have long been pointing out.

Read more of the American Prospect article here: https://americanprospect.bluelena.io/i ... d315cf0c

For the commentary by Josh Biven: https://www.epi.org/blog/recent-data-i ... recession

For the Financial Times take: https://www.ft.com/content/837c3863-fc ... c623565ae
caltrek’s comment: