Economic and jobs news thread

[caltrek]

Wall Street Banks Huge Profits from Credit Card Debt
by Eric Gardner
January 25, 2023

Introduction:

(More Perfect Union) Major Wall Street banks are making billions from the Federal Reserve’s efforts to fight inflation, while American consumers are loading up on debt and falling behind to pay for necessities.

Bank of America, Citigroup, JP Morgan, and Wells Fargo reported stellar earnings last quarter due in large part to the Federal Reserve’s interest rate hikes and ballooning credit card debt.

Combined, the Wall Street titan’s net interest income – a financial metric that measures the difference between what they paid on deposits and what they earned through loan interest – topped $61 billion for the quarter. That means banks are extracting huge amounts from credit card interest while paying the bare minimum to those with savings accounts. Last quarter’s results amount to a 36% increase from the previous year.

With inflation soaring over the last year and government assistance drying up, consumers are resorting to credit cards to pay for basic expenses. Aggregate American credit card debt increased to $925 billion this month–the largest year-over-year increase in 20 years. 46% of credit card owners carry monthly credit card debt. Qualitatively, the most common answer to a US News and Report question about the cause of credit card debt was “increased cost coupled with insufficient income.”

Meanwhile, Big banks are profiting from the Federal Reserve’s interest rate hikes while saddling the consequences on consumers. Banks typically tie a credit card’s interest rate to actions by the Federal Reserve. The Fed’s actions have pushed the average credit card interest rate over 23%, a 30% increase compared to pre-pandemic levels. This helped J.P. Morgan, America’s largest bank, blow past its own internal profitability goals. Meanwhile, the dual mandate of inflation and rising interest rates has the industry preparing for an increase in consumer defaults.

Read more here: https://perfectunion.us/

[weatheriscool]

The Fed's favorite inflation gauge shows price hikes cooled last month

By Alicia Wallace, CNN
Published 8:33 AM EST, Fri January 27, 2023

Minneapolis (CNN) -- The Federal Reserve's preferred inflation gauge showed prices rose at a slower pace last month, indicating further progress in the central bank's battle with higher prices.

The Personal Consumption Expenditures price index, or PCE, rose by 5% in December, compared to a year earlier, the Commerce Department reported Thursday. ... In December alone, prices rose 0.1% from November.

Core PCE, which doesn't include the more volatile food and energy categories, increased by 4.4% annually, down from November's annual rate of 4.7%. On a monthly basis, it was up 0.3%.

Core PCE is the Fed's favored inflation gauge as it provides a more complete picture of consumer costs and spending.

This story is developing and will be updated.

Read more: https://www.cnn.com/2023/01/27/economy/ ... index.html

[weatheriscool]

US dairy policies drive small farms to 'get big or get out' as monopolies get rich
Source: Guardian/US

Exclusive: Misguided policies have hurt small-scale farms while enriching agribusinesses and corporate lobbyists, analysis shows.

Two decades of misguided US dairy policies centered around boosting milk production and export markets have hurt family-scale farms and the environment while enriching agribusinesses and corporate lobbyists, new research has found.

The average American dairy turned a profit only twice in the past two decades despite milk production rising by almost 40%, according to analysis by Food and Water Watch (FWW) shared exclusively with the Guardian.
[snip]
Nationally, the total number of US dairy farms fell by more than half between 1997 and 2017, while the average number of cows per farm increased by 139%, according to analysis of USDA data. More than 70% of US milk is produced on farms with at least 500 cows, with the largest dairies boasting herds of more than 25,000.

Read more: https://www.theguardian.com/environment ... s-get-rich

[weatheriscool]

US wage growth slowed in the final quarter of 2022
Source: ABC News

WASHINGTON -- Pay and benefits for America's workers grew at a healthy but more gradual pace in the final three months of 2022, a third straight slowdown, which could help reassure the Federal Reserve that wage gains won't fuel higher inflation. Wages and benefits, such as health insurance, grew 1% in the October-December quarter compared with the previous three months. That marked a solid gain, though it was slower than the 1.2% increase in the July-September quarter.

Fed Chair Jerome Powell and economists consider the data released Tuesday, known as the employment cost index, to be the most comprehensive gauge of labor costs. Powell last year cited a sharp increase in the index as a key reason why the Fed accelerated its interest rate hikes.

Powell has said that he sees rapid wage gains, particularly in the labor-intensive service sector, as the biggest impediment to bringing inflation down to the Fed’s 2% target. When restaurants, hotels, veterinary clinics and other services companies raise pay, they often pass along those higher costs by charging their customers higher prices.

In last year’s first quarter, total worker compensation had jumped 1.4% — the most on records dating to 2001. Before then, quarterly compensation growth had rarely topped 1%.

Read more: https://abcnews.go.com/Business/wireSto ... 2-96787888

[weatheriscool]

Private payroll growth slowed to 106,000 in January as weather hit hiring, ADP says
Source: CNBC

Private companies added just 106,000 new workers for January, down from an upwardly revised 253,000 the month before and well below the 190,000 Dow Jones estimate.
Most of the growth came in the hospitality industry, as bars, restaurants, hotels and the like added 95,000 positions.
ADP Chief Economist Nela Richardson said weather factors were at play and hiring was strong outside of the reference week the firm uses to compile the report.

Read more: https://www.cnbc.com/2023/02/01/adp-job ... 2022-.html

[weatheriscool]

Fed raises rates a quarter point, expects 'ongoing' increases
Source: CNBC

The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point and gave little indication that it is nearing the end of this hiking cycle. Aligning with market expectations, the rate-setting Federal Open Market Committee boosted the federal funds rate by 0.25 percentage point. That takes it to a target range of 4.5%-4.75%, the highest since October 2007.

The move marked the eighth increase in a process that began in March 2022. By itself, the funds rate sets what banks charge each other for overnight borrowing, but it also spills through to many consumer debt products. The Fed is targeting the hikes to bring down inflation that, despite recent signs of slowing, is still running near its highest level since the early 1980s.

The post-meeting statement noted that inflation “has eased somewhat but remains elevated,” a tweak on previous language. Markets, however, were looking to this week’s meeting for signs that the Fed would be ending the rate increases soon. But the statement provided no such signals. Stocks sold off in the wake of the announcement, with the Dow Jones Industrial Average tumbling more than 300 points.

The document included language noting that the FOMC still sees the need for “ongoing increases in the target range.” Market participants had been hoping for some softening of the phrase, but the statement, approved unanimously, kept it intact. The statement did alter one part when describing what will determine the future policy path.

Read more: https://www.cnbc.com/2023/02/01/fed-rat ... -hike.html

[caltrek]

Why the Fed Raised Interest Rates by the Smallest Amount Since It Began its Epic Inflation Fight
by William T. Chittenden
February 1 , 2023

Introduction:

(The Conversation) The Federal Reserve’s policy-setting committee lifted interest rates on Feb. 1, 2023, by a quarter of a percentage point to a range of 4.5% to 4.75%. The increase, the smallest since the Fed began an aggressive campaign of rate hikes in March 2022, came amid signs the fastest pace of inflation in decades is cooling. But the Fed also indicated more rate hikes are coming.

So why is the Fed slowing the size of rate increases now, and what does it mean for consumers? We asked finance scholar William Chittenden from Texas State University to explain what’s going on and what comes next.

Why did the Fed raise rates by only a quarter point?

The Fed is trying to figure out whether last year’s rate hikes have slowed the economy enough to get inflation near its target of about 2%.

By raising what’s known as the Fed funds rate, the U.S. central bank makes borrowing more expensive, which means buying large-ticket items, like cars and homes, is more costly. This should lead to fewer people buying cars, which will likely result in lower car prices.

Read more here: https://theconversation.com/why-the-fe ... ht-199057

[weatheriscool]

Payrolls increased by 517,000 in January, crushing estimates, as unemployment rate hit 53-year low

Source: CNBC

The employment picture started off 2023 on a stunningly strong note, with nonfarm payrolls posting their biggest gain since July 2022. Nonfarm payrolls increased by 517,000 for January, above the Dow Jones estimate of 187,000 and December’s gain of 260,000, according to a Labor Department report Friday.

“It was a phenomenal report,” said Michelle Meyer, chief U.S. economist at the Mastercard Economics Institute. “This brings into question how we’re able to see that level of job growth despite some of the other rumblings in the economy. The reality is it shows there’s still a lot of pent-up demand for workers were companies have really struggled to staff appropriately.”

The unemployment rate fell to 3.4% versus the estimate for 3.6%. That is the lowest jobless level since May 1969. The labor force participation rate edged higher to 62.4%. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons also edged higher to 6.6%. The household survey, which the Labor Department uses to compute the unemployment rate, showed an even bigger increase of 894,000.

“Today’s jobs report is almost too good to be true,” wrote Julia Pollak, chief economist at ZipRecruiter. “Like $20 bills on the sidewalk and free lunches, falling inflation paired with falling unemployment is the stuff of economics fiction.” Markets, however, dropped following the report, with the Dow Jones Industrial Average down about 100 points in early trading.

Read more: https://www.cnbc.com/2023/02/03/jobs-re ... 2023-.html

[caltrek]

Payrolls increased by 517,000 in January, crushing estimates, as unemployment rate hit 53-year low

Source: CNBC

The employment picture started off 2023 on a stunningly strong note, with nonfarm payrolls posting their biggest gain since July 2022. Nonfarm payrolls increased by 517,000 for January, above the Dow Jones estimate of 187,000 and December’s gain of 260,000, according to a Labor Department report Friday.

...

Read more: https://www.cnbc.com/2023/02/03/jobs-re ... 2023-.html

More on that:

MANHATTAN (Courthouse News) — An unbelievably strong jobs report caught Wall Street by surprise, bolstering investors’ fears that the Federal Reserve will keep its thumb pressed on the interest rate scale.

...

Most of the gains in the private sector were among the leisure and hospitality space, which saw 128,000 jobs gained; professional services, which picked up by about 82,000 jobs; and private education and health services, which saw a 105,000-job increase. Government jobs also increased by 74,000 last month.

Stock futures plummeted when the report came out before the opening bell Friday morning, and by the end of the week’s trading the Dow Jones Industrial Average had dropped 55 points. The S&P 500 and Nasdaq continued to gain, increasing 66 points and 385 points, respectively.

“The undeniably strong report is what markets hope for coming out of a recession, but not what you want to see when expectations for the end of the Fed rate hike campaign is suddenly challenged by significantly stronger labor market,” said Quincy Krosby, chief global strategist for LPL Financial.

...
The services sector gained all of the jobs, while manufacturers actually lost 3,000 jobs last month. Job gains were fairly consistent among U.S. regions except for the Midwest, which saw 40,000 jobs lost. Similarly, mid- and large-sized businesses gained 64,000 jobs and 128,000 jobs, respectively, while companies with fewer than 50 employees let go of 75,000 jobs.

ADP Chief Economist Nela Richardson blamed weather-related disruptions for the lukewarm hiring in certain sectors and areas —likely referencing heavy snow storms in mid-January — and said hiring during the remainder of the month was as strong as it was during January of last year.

Source: https://www.courthousenews.com/massive- ... fed-fears/

[weatheriscool]

Inflation rose 0.5% in January, more than expected and up 6.4% from a year ago
Source: CNBC

Inflation turned higher to start 2023, as rising shelter, gas and fuel prices took their toll on consumers, the Labor Department reported Tuesday. The consumer price index, which measures a broad basket of common goods and services, rose 0.5% in January, which translated to an annual gain of 6.4%. Economists surveyed by Dow Jones had been looking for respective increases of 0.4% and 6.2%.

Excluding volatile food and energy, core CPI increased 0.4% monthly and 5.6% from a year ago, against respective estimates of 0.3% and 5.5%. Markets were volatile following the release, with Dow Jones futures around flat.

Rising shelter costs accounted for about half the monthly increase, the Bureau of Labor Statistics said in the report. The component accounts for more than one-third of the index and rose 0.7% on the month and was up 7.9% from a year ago. Energy also was a significant contributor, up 2% and 8.7% respectively, while food costs rose 0.5% and 10.1% respectively.

Rising prices meant a loss in real pay for workers. Average hourly earnings fell 0.2% for the month and were down 1.8% from a year ago, according to a separate BLS report.

Read more: https://www.cnbc.com/2023/02/14/consume ... 2023-.html

[weatheriscool]

Retail sales jump 3% in January, smashing expectations despite inflation increase
Source: CNBC

Sales at retailers rose far more than expected in January as consumers persevered despite rising inflation pressures. Advance retail sales for the month increased 3%, compared with expectations for a rise of 1.9%, the Commerce Department reported Wednesday. Excluding autos, sales increased 2.3%, according to the report, which is not adjusted for inflation. The ex-autos estimate was for a gain of 0.9%.

Food services and drinking places surged 7.2% to lead all major categories. Motor vehicle and parts dealers increased 5.9%,while furniture and home furnishing stores saw an increase of 4.4%. Even with a 2.4% increase in gas prices, receipts at service stations were flat. Online retailers saw an increase of 1.3%, while electronics and appliances stores increased 3.5%. No categories saw a decline, following a December in which sales fell 1.1%.

Markets moved lower following the news, with futures connected to the Dow Jones Industrial Average pointing to a slightly negative open on Wall Street. On a year-over-year basis, retail sales increased 6.4%, which was exactly in line with the consumer price index move reported Tuesday.

Inflation as gauged by the consumer price index accelerated by 0.5% in the first month of the year, the Labor Department reported Tuesday. The sales report indicates that even with elevated inflation pressures, consumers continued to spend. The report comes as the Federal Reserve is grappling with rising prices that appear to be abating but are still well ahead of the central bank’s 2% annual target.

Read more: https://www.cnbc.com/2023/02/15/retail- ... 2023-.html

[weatheriscool]

Wholesale prices rose 0.7% in January, more than expected, fueling inflation increase
Source: CNBC

Inflation rebounded in January at the wholesale level, as producer prices rose more than expected to start the year, the Labor Department reported Thursday.

The producer price index, a measure of what raw goods fetch on the open market, rose 0.7% for the month, the biggest increase since June. Economists surveyed by Dow Jones had been looking for a rise of 0.4% after a decline of 0.2% in December.

Excluding food and energy, the core PPI increased 0.5%, compared with expectations for a 0.3% increase. Core excluding trade services climbed 0.6%, against the estimate for a 0.2% rise.

On a 12-month basis, headline PPI increased 6%, still elevated but well off its 11.6% peak in March 2022.

Read more: https://www.cnbc.com/2023/02/16/produce ... 2023-.html

[caltrek]

Economic Tailwind from Flush States
by Neil Irwin
February 21, 2023

Introduction:

(Axios) State and local governments are facing very different circumstances than they did during the yearslong slog that followed the Great Recession: They are swimming in cash.

Why it matters: State lawmakers have begun to hash out budget plans for this fiscal year. There are exceptions — California being one — but for the most part, state coffers are fat and generally finances are in good shape. That enables state-level spending to help keep growth humming.

Federal Reserve chair Jerome Powell acknowledged this tailwind as one reason why the economy will continue to grow this year.

• "State and local governments are really flush these days ... and many of them are considering tax cuts or even sending checks," Powell said at a press conference earlier this month.

By the numbers: In nominal dollars, states' total balances — a tally of rainy day funds and other reserves — have roughly tripled over the past two years, according to a report by the National Association of State Budget Officers released last month.

Read more here: https://www.axios.com/2023/02/21/econo ... sh-states

[weatheriscool]

US home sales fell again in January; prices edged higher
Source: AP

By ALEX VEIGA an hour ago

LOS ANGELES (AP) — The nation’s housing slump dragged on into January as home sales fell for the 12th consecutive month to the slowest pace in more than a dozen years.

The National Association of Realtors said Tuesday that existing U.S. home sales fell to a seasonally adjusted annual rate of 4 million properties last month. That’s the slowest annual pace since October 2010, when the housing market was still reeling from the 2008 foreclosure crisis.

January’s sales cratered by nearly 37% from a year earlier and slipped 0.7% from December. Economists had projected a modest monthly rise in sales, according to FactSet.

The median U.S. home price edged up 1.3% from January last year to $359,000. That’s the slowest annual increase in home prices since February 2012. The median home price is down around 13% since it peaked in June last year.

Read more: https://apnews.com/article/national-ass ... 92c474d748

[weatheriscool]

Key Fed inflation measure rose 0.6% in January, more than expected
Source: CNBC

A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices.

The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago, the Commerce Department reported Friday. Wall Street had been expecting respective readings of 0.5% and 4.4%. Including the volatile food and energy components, headline inflation increased 0.6% and 5.4% respectively.

Markets fell following the report, with futures tied to the Dow Jones Industrial Average off more than 300 points. Consumer spending also rose more than expected as prices increased, jumping 1.8% for the month vs. the estimate for 1.4%. Personal income rose 1.4%, higher than the 1.2% estimate. The personal saving rate increased, rising to 4.7%.

All of the numbers suggest inflation accelerated to start the new year, putting the Fed in a position where it likely will continue to raise interest rates. The central bank has pushed benchmark rates up by 4.5% since March 2022 as inflation hit its highest level in some 41 years.

Read more: https://www.cnbc.com/2023/02/24/key-fed ... ected.html

[weatheriscool]

Private payrolls rose by 242,000 in February, better than expected, ADP says

PUBLISHED WED, MAR 8 2023 8:15 AM EST UPDATED 47 MIN AGO

Jeff Cox
@JEFF.COX.7528 https://facebook.com/jeff.cox.7528
@JEFFCOXCNBCCOM https://twitter.com/JeffCoxCNBCcom

KEY POINTS

-- Private payrolls in February increased by 242,000 versus the estimate for 205,000 and above the 119,000 in January, ADP reported Wednesday.
-- Leisure and hospitality led job growth with 83,000 additions. Financial activities added 62,000 while manufacturing showed a 43,000 gain.
-- The ADP report comes two days before the government’s nonfarm payrolls count, which is expected to show a gain of 225,000.

Companies added jobs at a brisk pace in February as the U.S. labor market kept humming, payroll services firm ADP reported Wednesday.

Private payrolls increased by 242,000 for the month, ahead of the Dow Jones estimate for 205,000 and well above the upwardly revised 119,000 jobs gain, from 106,000, in January. (1)

Wage growth decelerated slightly, with those remaining in their jobs seeing a 7.2% annual increase, down 0.1 percentage point from a month ago. Job changers saw growth of 14.3%, compared with 14.9% in January.

{snip}

The ADP report serves as a precursor to the more closely followed nonfarm payrolls report the Labor Department is schedule to release Friday. ... Though ADP last year entered into a new partnership with Stanford University, the two counts still have differed by large margins in some cases. For instance, the Labor Department estimated payrolls rose 517,000 in January, more than four times what ADP reported. (2)

{snip}

(1) https://www.cnbc.com/2023/02/01/adp-job ... 2022-.html

[weatheriscool]

US weekly jobless claims post largest increase in five months

Source: Reuters

WASHINGTON, March 9 (Reuters) - The number of Americans filing new claims for unemployment benefits increased by the most in five months last week, but the underlying trend remained consistent with a tight labor market.

Initial claims for state unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4, the Labor Department said on Thursday. That was the largest increase since October and lifted claims to a two-month high.

Economists polled by Reuters had forecast 195,000 claims for the latest week. The four-week moving average for new claims, a better measure of labor market trends as it irons out weekly fluctuations, climbed 4,000 to 197,000 last week.

"It is not clear that last week's rise is signaling a shift in the trend," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. "We do expect demand for workers to ease as the effects of restrictive monetary policy take hold and spread more broadly through the economy. But for now, layoffs remain low and job growth is strong, given companies appear to be hoarding workers."

Read more: https://www.reuters.com/markets/us/us-w ... 023-03-09/

[weatheriscool]

U.S. economy added 311,000 jobs in February, exceeding expectations as jobs growth stays hot

Job creation decelerated in February but was still stronger than expected despite Federal Reserve efforts to slow the economy and bring down inflation.

Read More:

https://www.nbcnews.com/business/busine ... -rcna74329

[Yuli Ban]

[wjfox]