Economic and jobs news thread

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caltrek
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Re: Economic and jobs news thread

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With a deadlock now apparent in further fiscal actions, at least those requiring Congressional approval, all eyes turn to the Fed.

Why the Fed Might Want to Jolt the Markets
by Neil Irwin
January s4, 2022

https://www.axios.com/fed-markets-jolt- ... 55f58.html

Introduction:
(Axios) So far, financial markets are cooperating nicely with the Federal Reserve's efforts to restrain inflation. They're doing the Fed's work for it by creating tighter financial conditions, in a distinctly non-panicky way.
  • But as the central bank's policymakers meet this week, an underlying question they face is whether the adjustment is happening too slowly.
Why it matters: The Fed likes to move gradually to avoid spooking markets. But if its leaders conclude they are as behind the curve on re-setting monetary policy as some believe, it could mean more abrupt moves with far-reaching consequences.

By the numbers: Since the Fed's hawkish pivot began in mid-November, market moves have been consistent with the central bank's goals of achieving tighter financial conditions in an orderly way.
  • Bond yields have risen substantially, but not because investors expect higher inflation. Rather, inflation-adjusted rates are rising. The real yield on 10-year Treasuries has risen 58 basis points since November 9.
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caltrek
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Re: Economic and jobs news thread

Post by caltrek »

One important sector to keep an eye on is small business.

Small Businesses See Hiring as No. 1 Worry
by Mike Allen
January 24, 2022

https://www.axios.com/small-businesses- ... ebb29.html

Introduction:
(Axios) Almost every small business owner in a Goldman Sachs survey is having trouble hiring — and two-thirds think the federal government has done too little to ease their hiring, supply-chain and inflation worries.

Why it matters: The Goldman Sachs research gives a vivid window into the continuing headwinds and hardship for entrepreneurs.

The survey included 1,466 participants in the Goldman Sachs 10,000 Small Businesses program, representing 47 states. 58% were women.
  • By far, finding and retaining employees was seen as the biggest problem facing small business, with supply chain issues and inflation far behind.
  • Nevertheless, 73% of small business owners said they’re optimistic about the financial trajectory of their businesses this year
caltreks comment: At least there is still a sense of optimism in that sector.
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Ken_J
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Re: Economic and jobs news thread

Post by Ken_J »

the problem as I see it is that too many Businesses of any size have gotten used to the idea that they start small, over extend rapidly to look good for investment, and move rapidly to the infinite growth model, that then relies on sweat shop labor over seas to get building their empire, and no benefits, cheap workers in the US.

But other countries have started moving away from the idea of being used for cheap off shore options for infinite growth predatory capitalists, and the US labor pool is unable to live with the end of the deal they've been given and so the offers these companies make are no longer viable.

But so much of the retail company industry depends on these processes and they are not agile enough to completely remodel to a new way of working and meeting public need.

These companies are going to fall apart and ones that were working to grow up and fill the gaps are going to die before they get there. And the ones that were working on the bottom side won't have a plan for another way of doing things that will work in the new markets.

TL;DR expect a lot of chapter elevens, stores to close, companies to fail, having to o farther to get the things you need while brands and supplies you are used to will either because worse and more expensive or just disappear, while small businesses will take longer to get started and might not ever be able to shift into anything profitable enough to grow like they used to. the Titans will be able to hold monopoly for a while, but the regular store chains and businesses are about to be culled, and we'll be left with the monopolies and a collection of small options that cannot grow in the way they were intending and thus will likely die or be bought out by monopolies.
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caltrek
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Re: Economic and jobs news thread

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^^^ Yes, there is the old monopoly sector versus competitive sector theme, to which careful attention should continue to be paid. A part of that is the way that some jobs get exported.

Another aspect of this sector-by-sector way of analysis is one I would like to now comment upon. That is the lender versus borrower versus renter angle. Regarding inflation, lenders generally like to see low rates of inflation. Simply put, they like to be paid back in dollars that are close to equal in value as dollars that they loaned out. Borrowers, especially those that receive COLAs and other inflation related adjustments to their income, can actually benefit from inflation. Mortgage payments, for example, can become a smaller portion of one's expenditures, providing you have already made a down payment and are currently making payments on the mortgage to your home. Student loan debt can also shrink as a share of your expenditure package, again providing you are receiving some increase in your income through such things as higher wages.

Renters, in contrast, are often at the mercy of landlords who simply charge what the market will bear. If enough people are getting raises, then landlords can see this as an opportunity to jack up rents to capture something more than their fair share of the increases in income. Landlords can range from folks who have a single room, apartment, or house to rent to large corporations running sizable apartment complexes or even entire housing subdivisions.
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Ken_J
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Re: Economic and jobs news thread

Post by Ken_J »

It's more than just a Monopoly vs the smaller guy issue. What I was trying clumsily to say is that the foundations of the entire economic system is built on the idea that any business that is more that a one or two person business gets there by having workers, and those workers are paid as little as possible in order to pump money into growing the business which in turn means hiring more [strike]peons, drones[/strike], workers which are continually paid with as little as possible. It's frequently expressed as the surplus value of the workers labor, that it is being used by the business to increase it's size while skimming money off to fill the pockets of the shareholders and owners.

There is a saying that Mcdonalds isn't in the burger business, it's in the franchise/realestate business. The real money being made by Mcdonalds is off of having more buildings paying to be part of the company, and more workers paying excess labor value to work for the company.

and the whole economy has been built up in such a way that the barriers to entry are steep for you or me to make a company that can meet a community need, supply service or product of value, and result in pay for the owners and workers that meets the needs. Any that can meet that threshold cannot generate enough to grow at any real rate. Some that do often get crushed by the monopolies that have enough surplus money around to rewrite laws ordinances and otherwise strongarm the company out of existence or buy them out. Others abandon the structure they started with to become mean and lean like the competition and ultimately you end up with another company lining shareholder and owners pockets and in the business of growing a money machine for those interests and no longer about meeting a need and filling a role in the communities they are located in.

That is what businesses are in our economies. But the workers are starting to refuse to be condemned to those positions, and the infinite growth and reassessment of values are clashing now. The businesses can't simply stop being the way they are and have been for decades. You can't suddenly make a money machine change it's supply chain, property managment and franchising structures to a completely different way to do things. This is not just turning a sword into a plowshare, this is asking that the swordsmith gather all their swords ever made and turn them into plowsahres and then give them all back to the soldiers weilding them and make them all farm with them.

So more than likely we'll get companies making more cuts to labor, automating, and brutally tightening things to keep working the money machine angle. companies will fail for not adapting, but the small alternatives still will have the same hurdles to filling that niche. It'll be almost like we see with voting locations disappearing from poor and minority communities and those people having to travel more than an hour to access those things. And scarcity will drive price up. The small alternatives won't be able to gain the economics of scale, supply chains and influence to grease the wheel and they will not be able to pay the needed rates to staff and create jobs fast enough to meet the needs for either worker or products they produce (they sure as heck won't be able to automate like the big companies. And the system will just get in the way because the system is built for the old way of doing things.

There has to be a massive fundamental shift in the what and how of business. But we've had a similar need for addressing climate change for a long time and the system keeps finding ways to avoid that... just like they will avoid the changes needed in the labour and economics reform needed to address these problems.
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caltrek
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Re: Economic and jobs news thread

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Two Sides of the Same Coin: Suppress the Vote, Cut Rich People’s Taxes
by Sam Pizzigati
January 22, 2022

https://www.counterpunch.org/2022/01/25 ... les-taxes/

Introduction:
(Counterpunch) America’s national media typically pay little attention to the moves the nation’s state lawmakers make. Not this year. State legislative battles have emerged over recent months as a top-tier national story. And deservedly so. The battling at the state level — on a tidal wave of proposed new voter-suppression laws — could well determine the course of American democracy.

But state lawmakers are threatening democracy with more than schemes for voter suppression. In one state after another, legislators have been advancing and enacting tax cuts that pump more dollars into rich people’s pockets — and fix in place more plutocratic power over the political process.

In Arizona, for instance, the tax cuts enacted last year figure to deliver 55.5 percent of their benefits to the state’s top 1 percent. Arizonans making over half a million dollars will save an average $30,000 off their tax bills. Taxpayers making between $21,000 and $40,000 will average $13 in savings.

In Arkansas, among other tax changes, lawmakers chopped the highest state income rate — on income over $37,200 — from 5.9 to 4.9 percent. The state’s overall tax changes will save the poorest 20 percent of Arkansas taxpayers an average $17 each. Households in the state’s top 1 percent will average $10,400 in tax savings.

In Kansas, a state that should know better, a similar story. A decade ago, the state’s right-wing governor gave taxpayers of means a massive tax break that cratered state revenues and, relates Wesley Sharpe of the Center on Budget and Policy Priorities, “forced schools to shift more costs on to parents and teachers” and “left millions of people without health insurance.” The Kansas economy, meanwhile, would see no sign of the “shot of adrenaline” the governor had promised the tax cut would deliver.
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caltrek
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Re: Economic and jobs news thread

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If Congress Fails to Act, Monthly Child Tax Credit Payments Will Stop, Child Poverty Reductions Will Be Lost
More on that in this January 26, 2022 article by Clara Moore:

https://otherwords.org/why-are-we-torch ... d-poverty/

Extract:
(Other Words) …the COVID-19 relief programs Congress passed — like the stimulus checks and those monthly Child Tax Credit payments — helped me keep our apartment.

With this help, I could look for work while homeschooling my daughter. I was even able to put a few dollars into a savings account for the first time in my life, which was a huge relief. My family wasn’t just surviving — we were on our way to thriving.

That’s exactly what a safety net is for. But now what’s going to happen?

The credit expired last December because Republicans, plus Democrat Joe Manchin, have stalled efforts to extend this tax relief to working families. Millions of families like mine missed our check in January — and we won’t get another unless they’re renewed.

…A Columbia study found that the December payments alone kept 3.7 million children out of poverty, reducing the monthly child poverty rate by about 30 percent.

But in the first month without payments, Columbia experts project that the monthly child poverty rate may rise from the current 12 percent to over 17 percent — the highest it’s been in over a year.
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Re: Economic and jobs news thread

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Federal Reserve Plans to Raise Interest Rates ‘Soon’ to Fight Inflation: What that Means for Consumers and the Economy
by Alexander Kurow and Marketa Wolf
January 26, 2022

https://theconversation.com/federal-res ... omy-175791

Introduction:
(The Conversation) The Federal Reserve signaled plans to begin raising interest rates “soon” in a bid to tamp down inflation before it poses a serious risk to the U.S. economy. A hike would be the first time the central bank has increased its benchmark lending rate in over three years.

Lifting the borrowing costs consumers and businesses pay for loans has the effect of slowing economic activity, which in turn could curb inflation. But there are also concerns that it could put on the brakes too quickly. We asked Alexander Kurov, a finance professor at West Virginia University, and Marketa Wolfe, an economist at Skidmore College, to explain what the Fed is doing and what it means for you.

1. Why is the Fed raising interest rates?

Short-term interest rates in the U.S. are now essentially zero.

The Fed quickly cut rates to zero at the beginning of the COVID-19 crisis in March 2020 in an attempt to soften the blow of the sharp recession that began that month as the U.S. went into lockdown. As a reminder of how bad things were back then, over 40 million workers – a quarter of the American workforce – filed for unemployment in the first few months of the pandemic, a staggering number with no precedent in the job market.
.
The rest of the article does a fairly good job of explaining how the prospective Fed action may impact upon certain identified sectors of the economy.
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Re: Economic and jobs news thread

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The One Percent Move Report for January 25, 2022

https://www.morganstanley.com/content/m ... e-20220125

Introduction:
(Morgan Stanley) What Happened in the Markets?

US stocks had another rollercoaster trading day Tuesday. A morning sell-off sent the S&P 500 down nearly 3% at its lowest point intraday, before a mid-session rally saw the index gain back all of its losses only to give way to a late session slide that left the index to close down 1.2%. In the first 16 trading days of the year the S&P 500 has posted 11 declines. The index is now down 8.6% year to date.

The S&P 500 Energy (+4.0%) and Financials (+0.5%) sectors posted gains vs the prior trading day. Out of the remaining nine S&P 500 sectors that declined on Tuesday, the worst performers were Communication Services (-2.2%) and Information Technology (-2.3%).

Underscoring the extent of recent weakness in markets, as of Tuesday's close, 30% of the S&P 500 constituents have posted declines greater than 20% versus their 52-week intraday highs. Of particular note, just over half of the constituents within each of the Communication Services, Consumer Discretionary and Information Technology sectors are down more than 20% vs their 52-week intraday highs.

The Russell 1000 Value (-4.0% year-to-date) continued to outperform the Russell 1000 Growth (-13.6% year-to-date) on Tuesday. The Nasdaq 100 closed down 2.5% Tuesday (-15.6% since its November 22nd intraday high). The CBOE Volatility Index closed above 30 for the first time since the beginning of December.
Further Extract:
Markets have sold off in recent weeks as investors have grappled with a surge in bond yields, geopolitical tensions, and continued COVID related pressures on economic data and the recovery. With the Federal Reserve's recent hawkish pivot, investors will be closely watching tomorrow's FOMC meeting for signals from the central bank with regards to its approach for monetary policy tightening in the months ahead. Fundamentals will also be in focus as 4Q21 earnings season continues; just over 100 companies release 4Q21 earnings this week (approximately 34% of the S&P 500 market cap). Wednesday and Thursday will be the heaviest days of earnings reports this week, with more than 35 S&P 500 companies reporting each day. Thus far this earnings season, five sectors have seen estimate revisions trend to the downside.
From J.P Morgan:

Extract:
https://www.chase.com/personal/investme ... twenty-two
(J.P. Morgan) The types of companies that have suffered the most during this bout of weakness are ones that don’t have any profits now but could have rapid growth and huge profits in the future. A basket of unprofitable tech/tech adjacent companies is down over 17% so far this year, much worse than the market as a whole.
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Re: Economic and jobs news thread

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Q4 GDP: US economy expanded at 6.9% annualized rate, topping expectations

Emily McCormick · Reporter
Thu, January 27, 2022, 8:31 AM · 3 min read
U.S. gross domestic product (GDP) ramped up in the final months of 2021, with still-solid consumer spending helping stoke growth and offset early negative impacts from the Omicron variant's spread. ... The Bureau of Economic Analysis released its first estimate of fourth-quarter GDP on Thursday. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:

-- GDP quarter-over-quarter, annualized: 6.9% vs. 5.5% expected, 2.3% in Q3

-- Personal consumption: 3.3% vs. 3.4% expected, 2.0% in Q3

-- Core personal consumption expenditures, quarter-over-quarter: 4.9% vs. 4.9% expected, 4.6% in Q3

Growth in the fourth quarter rebounded more than expected from the third quarter's disappointing rate of expansion, when GDP rose at a 2.3% annualized rate -- its slowest since mid-2020.

A jump in consumer spending during this year's record holiday shopping season was expected to contribute heavily to the headline gain. As consumers attempted to get ahead of supply chain delays and out-of-stocks, spending was pulled forward from the typical holiday period of November and December to October. This helped to lift overall fourth-quarter consumption for the final three months of the year, even as retail sales in December pulled back on a month-over-month basis.

{snip}

"The pace of business investment growth should remain steady, with intellectual property offsetting softness in equipment and structures investment, both of which have been hampered by supply shortages, rising costs and work-related shifts away from the office," he added. "Following two quarters of decline, residential investment should turn positive as sales and home improvement spending have recovered in recent months."
{snip}

Read more: https://finance.yahoo.com/news/q4-gdp-u ... 45002.html
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