Economic and jobs news thread

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caltrek
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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/
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caltrek
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Markets are up (at least as of close on October 18, 2022): https://www.morganstanley.com/content/m ... -20221018
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caltrek
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Markets are up again, apparently due to business reports exceeding earnings expectations: https://image.msmail.morganstanley.com/ ... 1b01e.pdf
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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
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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
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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
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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=
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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
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caltrek
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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
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