Economic and jobs news thread

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caltrek
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The Fed’s Austerity Program to Reduce Wages
by Michael Hudson
June 22, 2022

Introduction:
(Counterpunch) The Federal Reserve Board’s ostensible policy aim is to manage the money supply and bank credit in a way that maintains price stability. That usually means fighting inflation, which is blamed entirely on “too much employment,” euphemized as “too much money.”… In Congress’s more progressive days, the Fed was charged with a second objective: to promote full employment. The problem is that full employment is supposed to be inflationary – and the way to fight inflation is to reduce employment, which is viewed simplistically as being determined by the supply of credit.

So in practice, one of the Fed’s two directives has to give. And hardly by surprise, the “full employment” aim is thrown overboard – if indeed it ever was taken seriously by the Fed’s managers. In the Carter Administration (1777-80) leading up to the great price inflation of 1980, Fed Chairman Paul Volcker expressed his economic philosophy in a note card that he kept in his pocket, to whip out and demonstrate where his priority lay. The card charted the weekly wage of the average U.S. construction worker.

Chairman Volcker wanted wages to go down, blaming the inflation on too much employment – meaning too full. He pushed the U.S. bank rate to an unprecedented 20 percent – the highest normal rate since Babylonian times back in the first millennium BC. This did indeed crash the economy, and with it employment and prosperity. Volcker called this “harsh monetary medicine,” as if the crash of financial markets and economic growth showed that his “cure” for inflation was working.
Read more here: https://www.counterpunch.org/2022/06/2 ... ce-wages/

caltrek's comment: To me, this all argues for a Uniform Basic Income (UBI) policy. It is quite cynical and unjust to throw people into poverty just to put a tamper on inflation. While a UBI might complicate the problem of reducing inflation, it would cushion the negative impact on those most vulnerable. Of course, conservatives will oppose such measures, even as they accuse Biden and the Democrats of promoting inflation. Another version of the shock doctrine: Take advantage of worsening economic conditions to impose even more repressive measures upon a naive public.
Don't mourn, organize.

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caltrek
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One Percent Move Report for June 24, 2022

Introduction:
•(Morgan Stanley) The S&P 500 Index rallied sharply on Friday to close up 3.1% to 3,912. With the gains, the index is still down 17.9% year to date.

• US stocks rose for the fourth time in the past five sessions on Friday. Markets staged a rebound this week as the S&P 500 gained 6.5%, reclaiming all of the prior week's losses. Perhaps part of the rally was catalyzed by month-end rebalancing, as equity indexes were down double digits in the month of June going into Tuesday's session. On Wednesday and Thursday, Federal Reserve Chairman Jerome Powell spoke to the Senate Banking Committee about the economy and reiterated that the Federal Open Market Committee (FOMC) "anticipate(s) ongoing rate increases will be appropriate" so that US inflation may return to the Fed's 2.0% goal. However, he noted that a "soft landing" could be "very challenging" as the Fed is projected to hike short-term interest rates above the neutral rate.

• While equities posted strong gains multiple days this week, commodities were more mixed. Industrial metals, which tend to be more sensitive to economic growth prospects, suffered steep declines on the week; in particular, copper closed the week down 7.0%.

• All 11 S&P 500 sectors closed higher Friday, as Materials (+4.0%) and Communication Services (+3.9%) outperformed the broad market while Health Care (+1.6%) and Energy (+1.5%) lagged.

• As of the 4pm equity market close, the 10-year Treasury yield rose to 3.13%. WTI oil rose 3% to just above $107 per barrel. The US Dollar Index weakened in the session.
Read more here: https://www.morganstanley.com/content/ ... -20220624
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Time_Traveller
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Re: Economic and jobs news thread

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G7 relaunches funding programme for developing countries under new name
Sun 26 Jun 2022

The G7 has been forced to relaunch its vehicle to provide infrastructure funds to poor and developing countries only a year after a largely similar scheme was unveiled at the G7 conference in Cornwall last July under the label Build Back Better World.

The fund was relaunched at the start of the G7 in Germany on Sunday as the Global Investment and Infrastructure Partnership and with the same goal of providing an alternative to the Chinese belt and road initiative that Beijing has used for more than a decade to build economic ties with developing countries.

All the G7 leaders led by the US president, Joe Biden, came together at a side meeting on the first day of the summit to make statements backing the partnership and so underscore their commitment to helping poorer countries. The aim would be to leverage a total $600bn (£490bn) of private and public funds by 2027, with Biden claiming $200bn over the next five years would come from the US.

Projects cited at the event include a secure sub-sea cable linking Europe and south-east Asia, an industrial MRNA vaccine plant in Senegal, solar projects in Angola, a modular nuclear reactor plant in Romania and a port linking Christmas Island with the rest of the world.

The US has always claimed that the Chinese offer of loans is laced with hidden terms that leave countries eventually facing high payback clauses, and intrusive conditions that often cut across climate change objectives.

But little had been heard of Build Back Better world since its launch, while in January the EU launched its own infrastructure fund for developing countries, called the Global Gateway, aiming to mobilise €300bn (£260bn) in investments between 2021 and 2027.
https://www.theguardian.com/world/2022/ ... artnership
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Re: Economic and jobs news thread

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Pokemon Go Dev Cancels Transformers Game And Three Others, Lays Off As Many As 90 - Report
June 29, 2022

Pokemon Go developer Niantic is cutting jobs and has canceled four games--including a Transformers title--according to a report from Bloomberg that has been confirmed in part by the developer itself. The site obtained a memo from Niantic CEO John Hanke, who reportedly said the company was "facing a time of economic turmoil" and was looking to cut costs "in a variety of areas."

Hanke is reported to have said Niantic planned to "further streamline" the company's operations to help "weather any economic storm" that may come in the future. Some economists believe the United States is headed for a recession, with layoffs expected at a wide variety of companies in the future.

According to Bloomberg, Niantic is cutting between 85 and 90 jobs.

As for the reportedly canceled games, Bloomberg said its Transformers game, Heavy Metal, will no longer see release, while the Hamlet game from Niantic and Punchdrunk is also not going forward. The other two games that were canceled were new title called Blue Sky and Snowball, Bloomberg said. No details about these reported games have been disclosed.

While Pokemon Go was a massive success for Niantic, its follow-up games, including Harry Potter: Wizards Unite and Pikmin Bloom, did not find a big audience like Pokemon Go did. Wizards Unite shut down earlier this year.
https://www.gamespot.com/articles/pokem ... 0-6504991/
"We all have our time machines, don't we. Those that take us back are memories...And those that carry us forward, are dreams."

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weatheriscool
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Re: Economic and jobs news thread

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Consumer spending growth slows in May, as higher prices weigh on the economy
Source: Washington Post

ECONOMY

Consumer spending growth slows in May, as higher prices weigh on the economy

‘The good news is that we still have savings, but the bad news is that inflation is burning a hole in consumers’ pockets,’ one economist said

By Abha Bhattarai
June 30, 2022 at 8:43 a.m. EDT

Americans are still spending, but at a slower pace than a few months ago, a sign that the biggest part of the U.S. economy is beginning to moderate

Overall consumer spending rose by 0.2 percent in May, down from 0.9 percent growth a month earlier, the Bureau of Economic Analysis (BEA) said Thursday. The report also showed that one measure of inflation remained steady, with overall prices up 6.3 percent in the last year.

Consumer spending has so far been a bright spot in the U.S. economy, even as inflation hits 40-year highs. Although Americans say they’ve lost confidence in the economy — consumer sentiment measures have plunged to record lows — they have so far continued to pay for goods and services. But economists say there are signs that is beginning to change, as higher interest rates and slowing savings rate take a toll on families’ budgets.

“The good news is that we still have savings, but the bad news is that inflation is burning a hole in consumers’ pockets,” said Diane Swonk, chief economist at Grant Thornton. “This is a hard time for consumers, and we’re starting to see inflation eating into some forms of spending.”

Read more: https://www.washingtonpost.com/business ... g-economy/
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Pessimism about the economy is growing, a U.S. poll shows.

Source: New York Times

Americans are becoming more pessimistic about the economy, more worried about inflation — and now, more anxious about the job market, as well.

Fifty-two percent of American adults say they are worse off financially than they were a year ago, according to a survey conducted for The New York Times this month by the online research platform Momentive. That was up from 41 percent in April, and was by far the highest share in the survey’s five years. Only 14 percent of Americans said they were better off than a year ago, the worst in the survey’s history.

The dour mood is also reflected in other surveys. The University of Michigan’s index of consumer sentiment this month hit its lowest level in its 70-year history. Another measure of consumer confidence, from the Conference Board, has also fallen, though less drastically.

There is no mystery as to what is causing consumers’ bleak outlook: prices that are rising at the fastest rate in a generation. More than nine in 10 Americans say they are concerned about inflation, according to the Momentive poll, including 70 percent who say they are “very concerned,” up from 63 percent in April.
Read more: https://www.nytimes.com/2022/06/30/busi ... urvey.html
weatheriscool
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US jobless claims total 231,000 last week

Alexandra Semenova · Reporter
Initial jobless claims ticked down last week, but were marginally higher than forecast, as investors continue to assess the labor market for potential signs of a slowdown.

First-time filings for unemployment insurance in the U.S. totaled 231,000 for the week ended June 25, falling slightly from the prior week's upwardly revised 233,000, the Department of Labor said Thursday. Economists surveyed by Bloomberg had expected the latest reading to come in at 230,000.

The 4-week moving average, which smooths out some weekly volatility in the data, was 231,750, an increase of 7,250 from the previous week's revised average, per the Labor Department.

Claims filed last week held near a five-month high but continue to show the labor market remains hot, even as tighter monetary conditions and persistent inflation raise worries that unemployment may spike.
{snip}

Read more: https://finance.yahoo.com/news/jobless- ... 46658.html
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caltrek
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The End of the Second Straight Month of Layoffs in Tech
by Natasha Mascarenhas and Amanda Silberling
July 1, 2022

Introduction:
(TechCrunch) June brought another wave of layoffs in tech, with cuts impacting roughly the same number of employees as May: 16,000 employees, according to tracker layoffs.fyi. Another layoff aggregator from TrueUp paints a more dire picture, counting 26,000 impacted employees this month, up from about 20,000 last month. Either way, the data is grim.

The end of a second straight month of nearly daily layoffs shows how every startup sector, from mobility to fintech, is impacted by the downturn. Strategy ranges; some companies are laying off specific teams, others are distributing cuts across all departments, and many aren’t responding to comments when asked for further information. There are also the founders who — within the same breath of their layoff announcement — will make it clear that they are still hiring for strategic roles.

Here are some of the companies that laid off staff this week, and the stated reasons behind those cuts (see link below for stated reasons):
Niantic…(see also post of Wed Jun 29, 2022 12:18 pm by Timetraveler)
Byju’s…
Tesla…
Backstage Capital…
StockX…
Substack…
Amount…
Read more here: https://techcrunch.com/2022/07/01/the- ... -in-tech/
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caltrek
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Hopes for a Turnaround Remain Even as Markets Decline Again for Back End of 2022
by Nick Rummel
July 1, 2022

Introduction:
MANHATTAN (Courthouse News) — The year so far hasn’t been pleasant for Wall Street, which has lost considerable ground as inflation woes and recession worries have taken hold. For the first day of July at least, markets pulled out a win.

Since the start of the year, all three U.S. indices have lost a tremendous amount of value and had their worst starting six months in more than 50 years. The S&P 500, for example, is down more than 21% since the beginning of the year, its worst first-half outing since 1970. Things are even worse for the Nasdaq, which has shed 30% of its value, that index’s worst outing since the dot-com bubble burst.

The losses so far in 2022 have all but wiped out the gains seen in 2021. Last year, the Dow gained about 5,700 points. So far this year, however, it has lost 5,224 points. The S&P 500 gained about 1,000 points in 2021, but it has declined 953 points to date in 2022. The Nasdaq netted 2,686 points last year only to shed a whopping 4,725 points so far this year.
Conclusion:
On Tuesday, the consumer confidence survey released by The Conference Board fell for a second consecutive month to 98.7 points in June, its lowest reading since early 2021. Expectations are now well below 80 on the survey, which indicates consumers expect weak growth during the second half of this year and a possible recession by 2023.

“Right now we are at an inflection point in the economy, where actual spending and economic activity is still positive,” Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, said after the survey was released on Tuesday. “If we are able to avoid a recession then the stock market is fairly valued. However, if we do go into recession then we would expect the lows for the year haven’t been hit yet.”
Read more here: https://www.courthousenews.com/hopes-f ... -of-2022/
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weatheriscool
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Re: Economic and jobs news thread

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The Atlanta Federal Reserve announced on Friday that the second quarter of 2022 saw a GDP of minus 2.1 percent.
https://www.thegatewaypundit.com/2022/0 ... ecessions/
...

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is -2.1 percent on July 1, down from -1.0 percent on June 30. After this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management and the construction report from the US Census Bureau, the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 1.7 percent and -13.2 percent, respectively, to 0.8 percent and -15.2 percent, respectively.

The next GDPNow update is Thursday, July 7. Please see the “Release Dates” tab below for a list of upcoming releases.

The GDP shrank by 1.6 percent in the first quarter of 2022.

As we reported previously, the US GDP is on a downturn and has been down with the last all-time high being in October of 2021. That is now more than six months ago.

For the record — Recessions are typically marked by an economy shrinking in back-to-back quarters, measured by gross domestic product.

The numbers reported by the Atlanta Fed will make the second quarter of negative growth.
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