Economic and jobs news thread

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wjfox
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Re: Economic and jobs news thread

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Fed raises interest rates by half a percentage point

Updated 1900 GMT (0300 HKT) May 4, 2022

New York (CNN Business) – The Federal Reserve said Wednesday it is raising interest rates by a half-percentage point to get a handle on the worst inflation America has seen in 40 years.

It's the first time in 22 years that the central bank has hiked rates this much.

In March, it ramped up its benchmark borrowing rate for the first time since late 2018, increasing it by a quarter-percentage point.

The central bank cited high inflation, as well as the strong labor market in its post-meeting statement.

Americans are struggling with rising costs everywhere from the grocery store to the gas pump. And with the Russia-Ukraine conflict still raging, price pressures on food and energy are unlikely to abate any time soon.

https://edition.cnn.com/2022/05/04/econ ... index.html


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weatheriscool
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Re: Economic and jobs news thread

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U.S. weekly jobless claims increase; layoffs creep up in April

Reuters

WASHINGTON, May 5 (Reuters) - The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at a level consistent with tightening labor market conditions and further wage gains.

Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 200,000 for the week ended April 30, the Labor Department said on Thursday. Economists polled by Reuters had forecast 182,000 applications for the latest week.

Claims had hovered below the 200,000 level since mid-February amid strong demand for workers. Government data this week showed there were a record 11.5 million job openings on the last day of March, which widened the jobs-workers gap to a record 3.4% of the labor force from 3.1% in February.

The labor market imbalance is forcing employers to increase wages, contributing to soaring inflation. Compensation for American workers logged its largest increase in more than three decades in the first quarter, government data showed last week.

{snip}
Read more: https://www.reuters.com/world/us/us-wee ... 022-05-05/
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Re: Economic and jobs news thread

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Stocks Are Boring Again — and That's Good News
by Felix Salmon

https://www.axios.com/2022/05/05/stocks ... -good-news

Introduction:
(Axios) We've reverted to normal, and, all things considered, it's not so bad.

Why it matters: For the first time in well over a decade, it's hard to look at the stock market and declare that it's being artificially boosted by ultra-low interest rates.

• Now that rates are positive and are expected to continue to rise, some of the most high-flying stocks have fallen sharply to earth. But the stock market as a whole looks remarkably healthy.

The big picture: The S&P 500 is having a bad morning on Thursday, bringing it to a level roughly 13% below the all-time high seen in January. But it's still up 25% from the pre-pandemic high, and up 270% from the 2007 pre-financial crisis high point.

Conclusion:
The bottom line: The markets seem to be pricing in a soft landing — one where the economy remains strong, while stocks revert to being a vehicle for long-term savings rather than short-term speculation. That's a huge vote of confidence in Jay Powell's Federal Reserve.
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caltrek
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Re: Economic and jobs news thread

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The 1% Move Report for May 5, 2022

https://www.morganstanley.com/content/m ... e-20220505
(Morgan Stanley) What Happened in the Markets?
  • The S&P 500 declined 3.6% on Thursday to close at 4,147. With the sell-off, the index is now down 13.0% year-to-date.
  • Stocks reversed all of the prior session's gains on Thursday as outsized weakness in technology and growth stocks drove the broad indexes lower. While markets initially took Wednesday's FOMC statement as partially dovish - prompting both bonds and stocks to rally - that sentiment appeared to sour overnight as interest rates surged, stocks tumbled and volatility surged today. The Nasdaq 100 recorded the largest daily drawdown since September 2020, and 10-year Treasury yields breached 3% for the first time since 2018. Investors will look ahead to tomorrow's jobs report, where consensus expects 380,000 jobs added in the month of April and the unemployment rate to tick down to 3.5%.
  • All 11 S&P 500 sectors were lower in the session, with Utilities (-1.1%) and Energy (-1.4%) outperforming the broad market while Information Technology (-4.9%) and Consumer Discretionary (-5.8%) lagged.
  • As of the 4pm equity market close, Treasury yields were sharply higher across the curve with the 10-year yield closing at 3.04%. WTI oil prices were virtually flat at $108 per barrel while gold was modestly lower at $1,880 per ounce. The US Dollar Index rose nearly 1%.
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Re: Economic and jobs news thread

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The U.S. Employment Situation - April 2022

https://www.bls.gov/news.release/pdf/empsit.pdf

Introduction:
(Bureau of Labor Statistics) Total nonfarm payroll employment increased by 428,000 in April, and the unemployment rate was
unchanged at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was
widespread, led by gains in leisure and hospitality, in manufacturing, and in transportation and
warehousing
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Re: Economic and jobs news thread

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Post-pandemic Reset Leads to Wave of Layoffs in Tech
by Amanda Silberling and Natasha Mascarenhas
May 6, 2022

https://techcrunch.com/2022/05/06/start ... fs-in-may/

Introduction:
(TechCrunch) Ok, maybe it is a reckoning.

Over the past week, we’ve witnessed an alarming amount of layoffs across the startup ecosystem, from buzzy, big names like Cameo, OnDeck and Robinhood, to b2b platforms like Workrise and Thrasio. The common thread between most of these layoffs, according to founders, is that there’s been a shift in the market and a serious pivot in business is required. A pivot, that is, that hurts the employees that built your product up after high demand.

A pullback has been in the cards for months. It first impacted public tech companies and then slowly trickled down to late-stage deals and even their well funded early-stage counterparts. In February, Hopin cut 12% of staff, citing a goal of more sustainable growth while April included Workrise cutting staff and verticals despite a $2.9 billion valuation.

Now feels like an inflection point, in which tech unicorns are realizing that they may have overpromised a growth trajectory, over-hired, or overestimated their ability to raise that next round. They aren’t alluding to the market changing, they’re blaming it. The irony here is tough: the same workforces that helped companies meet a boom in pandemic demand, are the same workforces on the chopping block when trends change.
The article goes on to briefly discuss specific firms. The firms discussed and the number losing jobs at those firms are as follows:

Cameo - 87
Robinhood - about 300
On Deck - about 72
Thrasio - no number given
Tudum (editorial arm of Netflix) - 25
Main Street - 35% of its staff
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caltrek
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Re: Economic and jobs news thread

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What's Behind Inflation? Greedy Corporate Executives
by Jim Hightower
May 4, 2022

https://otherwords.org/whats-behind-inf ... xecutives/

Introduction:
(Other Words) Today, CEOs of big corporations are playing the tricky “Inflation Blame Game.”

Publicly, they moan that the pandemic is slamming their poor corporations with factory shutdowns, supply chain delays, wage hikes, and other increased costs. But inside their board rooms, executives are high fiving each other and pocketing bonuses.

What’s going on?

The trick is that these giants are in non-competitive markets operating as monopolies, so they can set prices, mug you and me, and scamper away with record profits. In 2019 for example, before the pandemic, corporate behemoths hauled in roughly a trillion dollars in profit. In 2021, during the pandemic, they grabbed more than $1.7 trillion.

This huge profit jump accounts for 60 percent of the (increase in) inflation now slapping U.S. families! (Source: https://mattstoller.substack.com/p/corp ... lation?s=r)
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Re: Economic and jobs news thread

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caltrek wrote: Fri May 06, 2022 8:21 pm What's Behind Inflation? Greedy Corporate Executives
by Jim Hightower
May 4, 2022

https://otherwords.org/whats-behind-inf ... xecutives/

Introduction:
(Other Words) Today, CEOs of big corporations are playing the tricky “Inflation Blame Game.”

Publicly, they moan that the pandemic is slamming their poor corporations with factory shutdowns, supply chain delays, wage hikes, and other increased costs. But inside their board rooms, executives are high fiving each other and pocketing bonuses.

What’s going on?

The trick is that these giants are in non-competitive markets operating as monopolies, so they can set prices, mug you and me, and scamper away with record profits. In 2019 for example, before the pandemic, corporate behemoths hauled in roughly a trillion dollars in profit. In 2021, during the pandemic, they grabbed more than $1.7 trillion.

This huge profit jump accounts for 60 percent of the (increase in) inflation now slapping U.S. families! (Source: https://mattstoller.substack.com/p/corp ... lation?s=r)

Seriously, what is Biden and the democratic party doing to stop them? They won't use anti-trust, they won't enforce labor laws(or even stop them from using literally slave labor from the third world) or step up to the plate. They're owned by these greedy corporations hook line and sinker!
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Seriously, what is Biden and the democratic party doing to stop them? They won't use anti-trust, they won't enforce labor laws(or even stop them from using literally slave labor from the third world) or step up to the plate. They're owned by these greedy corporations hook line and sinker!
Good point. I would add a few things:

The Republicans are no better. I know, a tired line of argument, but still worth keeping in mind.

Democrats like Elizabeth Warren are arguing strenuously for anti-trust action. The problem is that on that issue they do not control the Democratic party, much less Congress or the executive branch. Republican support for anti-trust vanished a long time ago, well after Theodore Roosevelt's days as a Republican, but well before today.

While the current administration may be reluctant to strike at the root of the problem, they are far more willing to address the negative effects on the middle class and others. Here, the problem is the sabotage by Senators Manchin and Sinema. These two Senators, in league with the Republican party, have blocked the Build Back Better initiative which has all sorts of provisions to help cope with the effects of inflation. If memory serves me correct, that includes tax hikes on the wealthy that otherwise benefit from inflation in the manner that Hightower describes. Such hikes would minimize government borrowing, which can fuel inflation, and place helpful programs on a pay as you go basis. In this case, "you" meaning the government.

Strategically, Democrats like Warren within the Democratic party need to be elected and/or re-elected. "Moderate" Democrats need to be challenged in the primaries, and firmer numerical control of the Senate is needed so that Manchin and Sinema's alliance with Republicans is not decisive. You are right in that a big problem with that is that corporate influence is too great. As I have written before, that is due to their deep pockets and the campaign contributions that flow from those deep pockets. That influence might have been held somewhat in check through the McCain-Feingold legislation regarding corporate financing of election campaigns. Legislation that was supported more by Democrats than Republicans (with McCain a notable exception). Legislation which was struck down by Republican appointees to the Supreme Court, with Democrat appointed justices in dissent.

Giving the Democrats more backbone should be done in the primaries. Withholding support from the Democrats in the general election only favors the Republicans and will continue to worsen the problem.

I know that is very frustrating, but it is also the reality of the current situation.
Don't mourn, organize.

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caltrek
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Re: Economic and jobs news thread

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Post-pandemic Reset Leads to Wave of Layoffs in Tech
https://techcrunch.com/2022/05/06/start ... fs-in-may/
More on that:

The Great Resignation, Meet the Great Reset
by Natasha Mascarenas
May 7, 2022

https://techcrunch.com/2022/05/07/the-g ... eat-reset/

Extract:
(TechCrunch) Unlike before, when startups had to lay off employees in response to the sudden shock of the pandemic, today’s tech companies are making cuts due to – more or less – their own lack of discipline. I have more empathy for a founder who was caught off guard by a pandemic than one who overspent despite knowing that the boom wouldn’t exist forever, and is now cutting the same employees that helped them soar. Whiplash, I’m hearing from some now former employees, is an understatement.

Growth is tricky, and a part of a founder’s job is to moonshot their way to scale, but we also need to remember that change was inevitable. Especially for startups that hit product market fit during a once-in-a-lifetime event.

The biggest difference between layoffs in 2020 versus layoffs in 2022 is cash, potentially a lifeline. Startups raised massive amounts of capital thanks to larger average deal sizes over the past two years; meaning that some of the capital that was once used to sweeten benefits or candidates’ offers may be pivoting to runway. Jason Lemkin, head of SaaStr, put it well on Twitter: “Many startups also lucked out and have years in the bank due to covid rounds… capital that they wouldn’t have had otherwise.”

If you’re a founder, now is the time to unlearn some of that lavish spending and focus on conserving what you do have
Don't mourn, organize.

-Joe Hill
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