Economic and jobs news thread

[weatheriscool]

Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago

Source: CNBC

Inflation rose in February but was in line with expectations, likely keeping the Federal Reserve on track for another interest rate hike next week despite recent banking industry turmoil.

The consumer price index increased 0.4% for the month, putting the annual inflation rate at 6%, the Labor Department reported Tuesday. Both readings were exactly in line with Dow Jones estimates.

Excluding volatile food and energy prices, core CPI increased 0.5% in February and 5.5% on a 12-month basis. The monthly reading was slightly ahead of the 0.4% estimate, but the annual level was in line.



Stocks rose following the release, with the Dow Jones Industrial Average up more than 300 points in early trading. Treasury yields, which plummeted Monday amid fears over the banking industry’s health, rebounded solidly, pushing the policy-sensitive 2-year note up 30 basis points to 4.33%. Heading into the release, markets had widely expected the Fed to approve another 0.25 percentage point increase to its benchmark federal funds rate. That probability increased following the CPI report, with traders now pricing in about an 85% chance that the Fed will increase the rate by a quarter point, according to a CME Group estimate.

Read more: https://www.cnbc.com/2023/03/14/cpi-inf ... 2023-.html

[wjfox]

Moody's warns of more pain for US banks as downgrades sector

18 minutes ago

Ratings giant Moody's has warned of more pain ahead for the US banking system after a run on deposits led to the collapse of Silicon Valley Bank.

Moody's cut its outlook for the sector to "negative" from stable, warning of "a rapid deterioration in the operating environment".

https://www.bbc.com/news/business-64949786

[wjfox]

[wjfox]

Swiss central bank ready for Credit Suisse support

1 hour ago

Swiss regulators have said they are ready to help troubled banking giant Credit Suisse "if necessary", as the collapse of Silicon Valley Bank in the US raises fears of a wider crisis.

The comments from the Swiss National Bank came after shares in Credit Suisse plunged 24% to a record low.

Investors are concerned about the state of the troubled firm and have already been spooked by US bank failures.

The worries spread across share markets with all major indexes falling sharply.

https://www.bbc.co.uk/news/business-64964881

[weatheriscool]

U.S. weekly jobless claims fall; housing finding bottom

Source: Reuters

WASHINGTON, March 16 (Reuters) - The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to continued labor market strength, though financial market turmoil is casting a shadow over the economy.

Other data on Thursday also struck a fairly upbeat note on the economy, with homebuilding surging in February, driven by the rental housing market, and import prices posting their first year-on-year decline since December 2020. Regional factories, however, continued to struggle in March.

"The sky is not falling for the real economy as the labor market shows no fresh sign of layoffs, and builders are preparing the ground to start work on more multifamily housing," said Chris Rupkey, chief economist at FWDBONDS in New York. "More rentals means less inflation from rents some might think."

Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 192,000 for the week ended March 11, the Labor Department said. Economists polled by Reuters had forecast 205,000 claims for the latest week.

Read more: https://www.reuters.com/markets/us/us-w ... 023-03-16/

[caltrek]

Why Didn’t Regulators See Silicon Valley Bank’s Collapse Coming?
by Hannah Levitona and Ross Levine
March 16, 2023

Introduction:

(Mother Jones) Ross Levine, an economist at the University of California, Berkeley business school who specializes in banking and finance, believes SVB’s collapse is a manifestation of other problems within the banking system, and among federal banking regulators, that have been growing for years
…
What is your theory of how things got this bad at SVB?

SVB took lots of uninsured deposits from 100 or 200 really large depositors and invested a large portion of that money in long-term securities—very, very safe securities, so US Treasury securities and government-backed mortgage securities. This created an extremely fragile bank with respect to interest rates: Interest rates go up, bond prices go down, and that change is particularly big for long-term securities. So the value of the assets of SVB fell as interest rates rose.

The fact that it had a few large, uninsured depositors who were very well connected meant that any sign of vulnerability triggered a flow of information such that the uninsured depositors wanted to remove their deposits, and everything unraveled very quickly.

Now, the key thing in my view of all of this is that this interest rate risk—the vulnerability existed two years ago, three years ago, so I’m just stunned that financial supervisors and regulators didn’t induce the bank to hedge its interest rate risk. This is not rocket science. This is Banking 101. This is like my undergrads after a year of money in banking would look at this bank and say, “Wow! This bank is really vulnerable. It has a lot of uninsured depositors, and it’s exposed to interest rate risk, what are they doing to hedge that risk?”
…
To me, there was a really kind of grossly incompetent supervision and regulation at the FDIC and the Fed that I just don’t understand at this point.

Another point made in the article is that uninsured deposits are also going to be protected by the FDIC and the Federal Reserve. Why?
Because of the fear that many other banks are almost as exposed as SVB. So, protecting uninsured deposits is needed for stability in the over all system. So much for “moral hazard”.

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

caltrek’s comment: High rates of return are supposed to be justified by high risk. If the government acts to mitigate that risk, then we see yet another mechanism by which the rich get richer, and inequality of income and wealth grows.

[caltrek]

Biden Demands Stricter Penalties for Executives in Bank Failures
by Nolan Stout
March 17, 2023

Introduction:

WASHINGTON (Courthouse News) — President Joe Biden called Friday for stiffer laws to hold bank executives accountable after the second-largest banking collapse in U.S. history, but some economists say regulations won’t stop a similar situation.

Saying Congress needs to strengthen the government's ability to respond when crises hit the financial sector, Biden lamented limitations on the executive branch’s ability to take action.

“When banks fail due to mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,” Biden said in a statement. “Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing.”

Read more here: https://www.courthousenews.com/biden-d ... failures/

[weatheriscool]

Disney considers layoffs, nearly 4,000 employees at risk of job loss in April, says Report

Entertainment conglomerate Disney after eliminating 7,000 jobs in February, is now again considering to lay off at least 4,000 current employees in April, reported Business Insider

--------

However, it is still unclear that the layoff will be done in batches or will be done in a single shot. The planned job cuts were announced ahead of Disney's annual meeting on 3 April.

Apart from this, Disney has also announced that a reduction will be done in general entertainment aimed at adults and considering options for what to do with the streaming service Hulu. The the streaming service specialises in entertainment shows and owned two-thirds by Disney and one-third by Comcast Corp.

---

Earlier in February, Disney CEO Bob Iger had announced to lay off 7,000 employees with the firm looking to save billions of dollars by restructuring it, cutting content, and trimming payroll.

Excluding sports, the firm is expecting deliver approximately $3 billion in savings over the next few years.

https://www.livemint.com/companies/news ... 69561.html

[weatheriscool]

Amazon to lay off 9,000 more workers after earlier cuts
Source: CNBC

Amazon will lay off 9,000 more employees, CEO Andy Jassy said in a memo to staff on Monday.

Read more: https://www.cnbc.com/2023/03/20/amazon- ... rkers.html

[weatheriscool]

Home sales spike 14.5% in February as the median price drops for the first time in over a decade
Source: CNBC

Sales of previously owned homes rose 14.5% in February compared with January, according to a seasonally adjusted count by the National Association of Realtors. That put sales at an annualized rate of 4.58 million units. It was the first monthly gain in 12 months and the largest increase since July 2020, just after the start of the Covid-19 pandemic. Sales were, however, 22.6% lower than they were in February of last year.

These sales counts are based on closings, so the contracts were likely signed at the end of December and throughout January, when mortgage rates had fallen sharply. The average rate on the popular 30-year fixed loan hovered in the low 6% range throughout January after reaching a high of 7% last fall.

The relative drop caused a jump in sales of newly built homes, before rates jumped back toward 7% in February. They not stand at 6.67%, according to Mortgage News Daily. “Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said Lawrence Yun, chief economist for the Realtors, in a release. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”

Higher mortgage rates have been cooling home prices since last summer, and for the first time in a record 131 consecutive months — nearly 11 years — prices were lower on a year-over-year comparison. The median price of an existing home sold in February was $363,000, a 0.2% decline from February 2022.

Read more: https://www.cnbc.com/2023/03/21/februar ... spike.html

[caltrek]

Life has been a bit of a distraction for me lately, so I missed posting some of these one percent move reports. So, the market has actually been a little bit more volatile lately than one might suppose from a strict reading of this thread. As indicated, over all there has been a 4.3% gain in the S&P since the beginning of the year. This could easily be wiped out by a couple of bad days in the market.

One Percent Move Report for March 21, 2023

Introduction:

(Morgan Stanley)

What Happened in the Markets?

• The S&P 500 Index rose 1.3% Tuesday to 4,003.16. With the gains, the index is now up 4.3% year to date.

• Eight of the 11 S&P 500 sectors rose on the day, as Energy (+3.4%) and Consumer Discretionary (+2.7%) outperformed while Real Estate (-0.6%) and Utilities lagged (-2.0%).

• Stocks bounced for the second straight day this week. The move higher comes after last week's volatility, where pressures mounted for some regional banks within the US banking system. However, remarks by the US Treasury Secretary Janet Yellen in addition to measures and protections put in place by the FDIC, the Federal Reserve, the Swiss central bank, and a consortium of large banks helped rebuild confidence in recent days.

• The uncertainty that still remains could potentially lead to more volatility in financial markets. In particular, tomorrow's FOMC meeting has investors debating whether the Fed will hike rates or choose to pause entirely. Currently, the odds of a 25 basis point (bp) rate hike are 80%, down from 100% on March 10th. MS & Co.'s US Economics team forecasts the Fed will deliver a 25bp rate hike at each of the March and May meetings, to a peak rate of 5.125%. The team then expects the Fed to pause until the Fed cuts rates 25bp in March 2024.

Read more here: https://www.morganstanley.com/content/ ... -20230321

[caltrek]

California Adds Jobs but Growth is Down From January
by Eric Burkett
March 24, 2023

Introduction:

SAN FRANCISCO (Courthouse News) — California, the world’s fourth largest economy, continues to add jobs although that growth has slowed since the last jobs report came out for January. February added 32,300 new non-agricultural jobs throughout the state across eight major industry sectors. Tech, however, continues to bleed jobs, laying off thousands.

The state has created jobs in 16 out of the last 17 months, according to Governor Gavin Newsom’s office, while unemployment inched up by a tenth of a percent to 4.3%. That’s still higher than the national rate which stands at 3.6%. California’s growth accounted for 10.4% of the nation’s overall non-farm job growth, compared with January’s dramatic 19%.

The latest report from the California Employment Development Department released Friday showed that eight of the 11 major industry sectors continued to show growth although, in several cases, it was very slow. Construction showed the most dramatic growth over the past month, shooting up from a loss of 7,300 jobs in January to a gain of more than 7,600 last month. That’s nearly 15,000 jobs.

Education and health services — the fast growing sector — grew over January, which saw an increase of 11,000 jobs, while February moved upward to 11,300. Leisure and hospitality’s growth slowed to a still respectable 11,200 new jobs compared to January’s figures, which stood at 20,800. Most notably, government positions dropped from January, when it was the fastest growing industry, reporting 46,000 new hires compared to February, which saw it drop to just 2,400.

“Overall, these numbers paint a very encouraging picture. Tourism and healthcare are major industries in San Francisco, and these strong increases in payroll show that the recent obituaries for San Francisco are premature,” said state Senator Scott Weiner, a Democrat from San Francisco.

Read more here: https://www.courthousenews.com/califor ... -january/

caltrek's comment: Reports of continued job growth alongside news of the Silicon Valley Bank (SVB) collapse seems paradoxical. In addition to the downturn in the tech sector noted in the article, there is another connection. That is that the Fed's raising of interest rates to curb inflation has been in part due to rapid overall job growth. It was that raising of interst rates which appear to be very much a root of the SVB collapse.

[weatheriscool]

Jobless claims edge up to 198,000, higher than expected
Source: CNBC

Initial filings for unemployment insurance ticked higher last week but remained generally low in a tight labor market. Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate, the Labor Department reported Thursday.

Though the number was slightly higher than expectations, the total indicates that companies are slow to lay off workers despite expectations that the unemployment rate will rise through the year. Continuing claims, which run a week behind, edged up 4,000 to 1.689 million. That was below the FactSet estimate for 1.6935 million.

The four-week moving average of weekly claims, which smoothes volatility in the numbers, edged up to 198,250, but has been below 200,000 since mid-January. The relatively benign claims numbers come despite aggressive Federal Reserve efforts to slow down inflation. In large part, the central bank is targeting a labor market beset by a sharp supply-demand imbalance in which there are nearly two open jobs for every available worker.

According to estimates last week, central bankers expect the unemployment rate to rise to 4.5% this year, from its current 3.6% level. Doing so would require the loss of more than 540,000 jobs, according to an Atlanta Fed calculator.

Read more: https://www.cnbc.com/2023/03/30/jobless ... cted-.html

[weatheriscool]

Key Fed inflation gauge rose 0.3% in February, less than expected
Source: CNBC

An inflation gauge the Federal Reserve follows closely rose slightly less than anticipated in February, providing some hope that interest rate hikes are helping ease price increases.

The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the 0.5% January increase.

On a 12-month basis, core PCE increased 4.6%, a slight deceleration from the level in January. Including food and energy, headline PCE increased 0.3% monthly and 5% annually, compared to 0.6% and 5.3% in January.

The softer than expected data came with monthly energy prices decreasing 0.4% while food prices rose 0.2%. Goods prices rose 0.2% while services increased 0.3%. In other data from the report, personal income increased 0.3%, slightly above the 0.2% estimate. Consumer spending increased 0.2%, compared to the 0.3% estimate.

Read more: https://www.cnbc.com/2023/03/31/fed-inf ... 2023-.html

[caltrek]

caltrek’s comment: High rates of return are supposed to be justified by high risk. If the government acts to mitigate that risk, then we see yet another mechanism by which the rich get richer, and inequality of income and wealth grows.

Here is an article more or less centered on that same basic theme:

Making The Rich Richer: The Silicon Valley Bank Bailout
by Dean Baker
April 1, 2023

(Eurasia Review) There is a standard tale of politics where conservatives want to leave things to the market, whereas the left want a big role for government. The right likes to tell this story because it advantages them politically, since most people tend to have a positive view of the market. The left likes to tell it because they are not very good at politics and have an aversion to serious thinking.

The Silicon Valley Bank (SVB) bailout is yet another great example of how the right is just fine with government intervention, as long as the purpose is making the rich richer. Left to the market, the outcome in this case was clear. The FDIC guaranteed accounts up to $250k. This meant that the government’s insurance program would ensure that everyone got the first $250,000 in their account returned in full.

The amounts above $250,000 were not insured. This is both a matter of law and a matter of paying for what you get. The FDIC charges a fee on the first $250,000 in an account based on the size and strength of the bank. This fee ranges from 0.015 percent to 0.40 percent annually, depending on the size and riskiness of the bank. Most people would not see the insurance fee directly, because it is charged to bank, but we can be sure that the bank passes this cost on to its depositors.

However, these fees only apply to the first $250,000 in an account. This means that people who had more than $250,000 in an account were not paying for insurance. Nonetheless, when they needed insurance from the government, they got it, even though they didn’t pay for it.

As we are now hearing, in many cases this handout ran into the tens of millions, or even billions, of dollars, almost all of it going to the very richest people in the country. Compare these depositors’ sense of entitlement to a government handout, to the outrage over President Biden’s proposal to forgive $10,000 of student loan debt. (To be clear, depositors likely would have gotten 80 to 90 percent of their money back in any case.)

Read more here: https://www.eurasiareview.com/01042023- ... -analysis/

[caltrek]

Markets End March on a High After Tempestuous Start
by Nick Rummell
March 31, 2023

Introduction:

MANHATTAN (Courthouse News) — Wall Street was able to overcome a rocky beginning to finish March on the positive side of the ledger, though consumer confidence hints at problems to come.

For the week, the Dow Jones Industrial Average gained 1,036 points, while the S&P 500 increased 138 points and the Nasdaq netted 398 points. All three indices ended the month up, despite massive losses a couple weeks ago. The Dow began the month trading at 32,656 points; it ended the month at 33,273 points. Similar gains were seen in the S&P and Nasdaq.

On Friday, much-awaited inflation data from the U.S. Bureau of Economic Analysis showed that the personal consumption expenditures index rose by just 0.3%, less than what experts had predicted. The report also noted that real spending fell by 0.1% as the economy continues to slow down after a 1.5% surge in spending in January.

In particular, food price increases have dropped for seven consecutive months, gaining just 0.2% last month compared with 0.4% in January. Prices for energy goods and services, which have see-sawed up and down the last few months, fell by 0.4% in February.

Experts are encouraged by the report but believe the central bank likely still has one more interest rate hike in the works, noting that annual and three-month-annualized interest inflation both remain above 4.5%.

Read more here: https://www.courthousenews.com/markets ... us-start/

[weatheriscool]

Private payrolls rose by 145,000 in March, well below expectations, ADP says
Source: CNBC

Private sector hiring decelerated in March, flashing another potential sign that U.S. economic growth is heading for a sharp slowdown or recession, payroll processing firm ADP reported Wednesday. Company payrolls rose by just 145,000 for the month, down from an upwardly revised 261,000 in February and below the Dow Jones estimate for 210,000.

That took first-quarter hiring to an average of just 175,000 jobs a month, down from 216,000 in the fourth quarter and a sharp reduction from the average of 397,000 in the first quarter of 2022. “Our March payroll data is one of several signals that the economy is slowing,” said ADP chief economist Nela Richardson. “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”

Annual pay rose at a 6.9% rate in March, down from 7.2% in February, according to the firm’s calculations. Job growth was almost evenly split between services and goods-producing firms, an unusual occurrence. The U.S. economy is heavily services-oriented, so that sector generally produces much stronger hiring gains. The data released Wednesday showed a gain of 75,000 in services and 70,000 in goods producers.

Last month, though, financial activities lost 51,000 jobs and professional and business services fell by 46,000. Manufacturing also saw a decline of 30,000. On the plus side, leisure and hospitality added another 98,000 workers, trade transportation and utilities grew by 56,000 and construction rose by 53,000. Natural resources and mining also showed a gain, up 47,000, while education and education and health services added 17,000.

Read more: https://www.cnbc.com/2023/04/05/adp-march-2023.html

[weatheriscool]

US Jobless Claims Show Emerging Cracks in a Strong Labor Market

Source: Bloomberg

Applications for US unemployment benefits last week signaled that the labor market still remains relatively strong, even though data revisions indicate some emerging signs of softening. Initial unemployment claims were 228,000 in the week ended April 1, Labor Department data showed Thursday.

For the week before that, the government revised the numbers up by 48,000 to 246,000, likely explaining why the latest reading exceeded almost all economists’ estimates. This report included updated seasonal factors going back to 2018. “These changes should provide a more accurate picture of claims levels and patterns for both initial and continued claims,” the report said.

The Labor Department had to change the way it adjusts for seasonal factors during the pandemic to limit distortions. Thursday’s data maintain that method for the first year of the pandemic but use the traditional way when looking at figures before March 2020 and after June 2021. Continuing claims, which include people who have received unemployment benefits for a week or more and are a good indicator of how hard it is for people to find work after losing their job, was little changed at 1.82 million in the week ended March 25. The previous week was revised up.

Economists have been puzzled as to why claims were so low, especially given large waves of layoffs and other signs of softening in the labor market. Even with the adjustments, applications are still relatively low and indicative of strong demand for workers. A separate report Thursday showed job-cut announcements from US-based employers rose 15% in March from the prior month, marking the highest first-quarter total since 2020, according to Challenger, Gray & Christmas, Inc.

Read more: https://www.bloomberg.com/news/articles ... al-factors

[caltrek]

US Jobless Claims Show Emerging Cracks in a Strong Labor Market

Source: Bloomberg

Applications for US unemployment benefits last week signaled that the labor market still remains relatively strong, even though data revisions indicate some emerging signs of softening. Initial unemployment claims were 228,000 in the week ended April 1, Labor Department data showed Thursday.

For the week before that, the government revised the numbers up by 48,000 to 246,000, likely explaining why the latest reading exceeded almost all economists’ estimates. This report included updated seasonal factors going back to 2018. “These changes should provide a more accurate picture of claims levels and patterns for both initial and continued claims,” the report said.

...

Read more: https://www.bloomberg.com/news/articles ... al-factors

More on that:

Job Market Shows Signs of Cooling as Payrolls Rise by 236,000

by Kevin Lessmiller
April 7 , 2023

Extract::

(Courthouse News) Nick Bunker, economic research director for North America at career site Indeed, said Friday’s report shows a still-strong labor market with historically low unemployment.

“The U.S. labor market has lost some speed, but all indications are that it’s slowing down not stalling,” he wrote. “And even if employment isn’t growing at the pace we saw last year, its speed is still rapid.”

The report comes two weeks after the Fed delivered its ninth straight rate hike in an attempt to cool down the economy in the face of surging inflation, which hit a four-decade high last year.

Andrew Hunter, deputy chief U.S. economist at Capital Economics, said the slower payroll growth combined with a drop in job openings, higher weekly unemployment claims and the fallout from banking instability all point to job gains slowing sharply soon.
…
Bunker said the robust hiring pace of 2022 is over, but he noted the average of 345,000 new jobs a month so far this year is more than enough to keep up with population growth.

Read more here: https://www.courthousenews.com/job-mar ... y-236000/

[weatheriscool]

IMF cuts GDP forecasts, says global economy heading for weakest growth since 1990
Source: CNBC

The International Monetary Fund on Tuesday released its weakest global growth expectations for the medium term in more than 30 years.

The D.C.-based institution said that five years from now, global growth is expected to be around 3% — the lowest medium-term forecast in an IMF World Economic Outlook since 1990.

“The world economy is not currently expected to return over the medium term to the rates of growth that prevailed before the pandemic,” the Fund said in its latest World Economic Outlook.

The weaker growth prospects stem from the progress economies like China and South Korea have made in increasing their living standards, the IMF said, as well as slower global labor force growth and geopolitical fragmentation, such as Brexit and Russia’s invasion of Ukraine.

Read more: https://www.cnbc.com/2023/04/11/imf-wor ... -2025.html