Tag Archives: Unemployment

Here’s Why You’re Not Feeling Biden’s Booming Economy

Important Takeaways:

  • Inflation, unemployment and gross domestic product numbers are all giving Biden something to smile about.
  • Even though Americans are making more than they did before the pandemic, their money is getting them a lot less than it did two and half years ago.
  • While American paychecks are finally outpacing skyrocketing inflation, they have not been growing anywhere near as fast as prices have the last two and a half years
  • People don’t like inflation, even when their wages are up, Americans will focus on the slow pace of real wage growth, rather than real wage growth alone.

Read the original article by clicking here.

Layoffs at Dell a 5% cut to prepare for the road ahead

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Dell to lay off more than 6,500 employees
  • Dell has about 133,000 employees, the company told CNN. At that level, the 5% cut would represent more than 6,500 employees.
  • The computing giant cited the “challenging global economic environment” for the cuts.
  • “What we know is market conditions continue to erode with an uncertain future,” Clarke told employees. “The steps we’ve taken to stay ahead of downturn impacts – which enabled several strong quarters in a row – are no longer enough. We now have to make additional decisions to prepare for the road ahead.”

Read the original article by clicking here.

Federal Reserve expects unemployment to rise

Job Fait

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • More US companies brace for job cuts amid likely recession, survey shows
  • A new survey published on Monday by the National Association for Business Economics, which shows that about 20% of the group’s members expect employment at their company to fall in the coming months.
  • Wage growth has been a big contributor to stubbornly high inflation, which remains about three times higher than the pre-pandemic average.
  • The results “indicate widespread concern about entering a recession this year,” Coronado said. More than half of respondents see the possibility of a recession over the next year at 50% or higher, the survey showed.
  • The economy added just 223,000 jobs in December, the smallest gain in two years, and there have been a number of high-profile tech layoffs over the past month.
  • Federal Reserve officials have made it clear that they expect unemployment to climb as a result of their aggressive interest rate hike campaign
  • That could mean more than 1 million Americans lose their jobs over the course of this year.

Read the original article by clicking here.

Big Banks expect trouble: High inflation, High unemployment with largest economies expected to stall

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • 2023 Spells Big Trouble for US Economy, Majority of Big Banks Warn: Reports
  • The Wall Street Journal predict that the United States will fall into the grips of a recession in 2023 and millions of Americans will lose their jobs
  • The institutions that predict a coming recession expect consumer spending to weaken as Americans deplete their savings and an aggressive Fed drives up borrowing costs, and as banks’ lending standards get tighter.
  • Even though inflation has eased somewhat from its June peak, it’s far from enough for the Fed to hit the brakes on interest rates, which were brought up quickly from near zero in March 2022 to the current range of between 4.24–4.5 percent.
  • Frustrated by how sticky high inflation has remained despite the rate hikes, Fed officials have pledged to keep raising rates and keep them high until inflation recedes to around the Fed’s 2 percent target
  • Fed officials said they expect the terminal Fed Funds rate—meaning the highest level before it hits a ceiling and later falls—to come in at 5.1 percent.
  • Rates that high will push unemployment up from the current 3.7 percent to 4.6 percent in 2023 and stay at that level in 2024, according to the Fed.
  • The International Monetary Fund (IMF)… expects more economic pain. “More than a third of the global economy will contract this year or next, while the three largest economies—the United States, the European Union, and China—will continue to stall,”
  • “In short, the worst is yet to come, and for many people 2023 will feel like a recession.”

Read the original article by clicking here.

Remember when Larry Summers said Unemployment needs to be 10% for one year to bring inflation down?

Larry Summers Unemployment

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Larry Summers warns unemployment must rise to cool inflation
  • Ex-Treasury Secretary Larry Summers warned that millions of currently employed Americans must lose their jobs in order for the Federal Reserve to succeed in its bid to cool inflation
  • “We need five years of unemployment above 5% to contain inflation — in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” Summers said Monday during a speech in London, according to Bloomberg.

Read the original article by clicking here.

Bureau of Labor Statistics: less people working means less inflation. Unemployment currently at 3.7%, prefer closer to 5.5%

Revelations 18:23 ‘For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Yes, the unemployment rate rose. Here’s why that’s good news
  • The Bureau of Labor Statistics reported that the US unemployment rate had ticked up to 3.7% in August, an increase that surprised economists who had expected it to remain at July’s 3.5%
  • “If the unemployment rate goes up a little bit because of that, that’s okay. Because there are still many job openings in United States of America and we need to get more people back into work,”
  • “That 3.7% unemployment rate is probably still adding to inflation in the US economy through higher wages,” he said. “We think the unemployment rate will have to rise to 5.5%… to get inflation back to the Fed’s 2% target.” Wages rose at an annualized rate of 5.2% in August, the same as in July.
  • With inflation running at 8.5%, household finances are under pressure.

Read the original article by clicking here.

Former Treasury Secretary says the U.S. must sustain a jobless rate to bring down inflation

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Larry Summers says Americans will have to lose jobs to ease inflation
  • Former Treasury Secretary Larry Summers says the U.S. must sustain a jobless rate of more than 5% for five years if inflation is to drop.
  • The U.S. unemployment rate currently sits at 3.6%.
  • “We need five years of unemployment above 5% to contain inflation – in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” Summers said in a London speech

Read the original article by clicking here.

U.S. weekly jobless claims near 20-month low; labor costs surge

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 20 months last week, suggesting the economy was regaining momentum amid a significant improvement in public health, though supply constraints remain.

The tightening labor market is driving up wages as companies scramble for workers, contributing to keeping inflation high. Labor costs surged in the third quarter, other data showed on Thursday, with productivity sinking at its steepest pace in 40 years. The Federal Reserve announced on Wednesday that it would this month start scaling back the amount of money it is pumping into the economy through monthly bond purchases.

“Firms are reluctant to lay off workers with strong demand and labor in short supply,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “The big open question is what is happening to the millions of people who lost their benefits in September, or saw their benefits drop.”

Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 269,000 for the week ended Oct. 30, the Labor Department said. That was the lowest level since the middle of March in 2020, when mandatory business closures were being enforced to slow the first wave of COVID-19 infections. Claims have now declined for five straight weeks.

Unadjusted claims, which economists say offer a better read of the labor market, fell 7,114 to 240,216 last week. There were significant declines in filings in Missouri and Florida, which offset increases in California and Kentucky.

Claims in Kentucky were likely boosted by temporary layoffs in the automobile sector as motor vehicle manufacturers cut production because of scarce semiconductors.

The summer wave of infections driven by the Delta variant has subsided, encouraging more Americans to travel, dine out and frequent sporting venues among activities that were curtailed by the resurgence in cases. The Delta variant and shortages of goods contributed to restricting economic growth to its slowest pace in more than a year last quarter.

Claims, which have declined from a record high of 6.149 million in early April 2020, are now within a range that is generally viewed as consistent with a healthy labor market.

The number of people continuing to receive benefits after an initial week of aid dropped 134,000 to 2.105 million in the week ended Oct. 23. That was also the lowest level since the middle of March in 2020. The number of people receiving aid has declined by around 75% since early September when government-funded benefits expired.

Falling claims augur well for October’s employment report due on Friday. According to a Reuters survey of economists, nonfarm payrolls likely rose by 450,000 jobs. The economy created 194,000 jobs in September, the fewest in nine months.

U.S. stocks opened higher. The dollar rose against a basket of currencies. U.S. Treasury yields fell.

WORKER SHORTAGE

Expectations for an acceleration in job gains were bolstered by the ADP National Employment Report on Wednesday showing strong growth in private payrolls in October. The Conference Board’s labor market differential – derived from data on consumers’ views on whether jobs are plentiful or hard to get – hit a 21-year high.

But relentless worker shortages remain an obstacle. Caregiving needs during the pandemic, fears of contracting the coronavirus, early retirements and careers changes as well as an aging population have left businesses with 10.4 million unfilled jobs as of the end of August.

Fed Chair Jerome Powell told reporters on Wednesday that “these impediments to labor supply should diminish with further progress on containing the virus, supporting gains in employment and economic activity.”

There are concerns that the White House’s vaccine mandate, which applies to federal government contractors and businesses with 100 or more employees, could add to the worker shortages.

A report on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S.-based employers increased 27.5% in October to 22,822, the highest since May. It said 22% of the layoffs were people who refused to be vaccinated as per company requirements.

“The issue could push people out of the labor force or slow re-entry as people extend their searches for either employers not enforcing the mandate or workplaces where it doesn’t apply,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

With workers scarce, companies are raising wages. A second report from the Labor Department on Thursday showed unit labor costs, the price of labor per single unit of output, increased at an 8.3% annualized rate in the third quarter after rising at a 1.1% pace in the April-June quarter.

Labor costs rose at a 4.8% rate compared to a year ago. The report followed on the heels of news last month that wage growth in the third quarter was the largest on record. Strong wage gains, together with rising rents, challenge the Fed’s narrative that high inflation is transitory.

“The rise will add to concerns about inflation becoming more entrenched and/or the growing risk to profits, as businesses are not able to offset higher wage costs via productivity gains,” said Sarah House, a senior economist at Wells Fargo in Charlotte, North Carolina.

Worker productivity fell at a 5.0% rate last quarter, the biggest drop since the second quarter of 1981. That followed a 2.4% growth pace in the April-June period.

A third report from the Commerce Department showed the trade deficit surged 11.2% to a record $80.9 billion in September.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. labor market regaining footing as weekly jobless claims fall sharply

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for jobless benefits dropped by the most in three months last week, suggesting the labor market recovery was regaining momentum after a recent slowdown, as the wave of COVID-19 infections began to subside.

The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy’s health, also showed the number of people on state unemployment rolls plunging to an 18-month low in late September.

Improving labor market conditions bode well for the government’s closely watched employment report for September and also provide ammunition for the Federal Reserve, which signaled last month it could begin reducing is monthly bond buying as soon as November.

“The labor market is back on track after a few weeks of rising claims threw a question mark into the markets’ understanding of just how solid the economic outlook really is,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The Fed has the evidence it needs to start paring back its emergency stimulus purchases when it meets next month.”

Initial claims for state unemployment benefits decreased 38,000 to a seasonally adjusted 326,000 for the week ended Oct. 2. That was the biggest drop since late June. Economists polled by Reuters had forecast 348,000 claims for the latest week.

Unadjusted claims, which economists say offer a better read of the labor market, tumbled 41,431 to 258,909 last week. California led the drop in claims last week. There were also decreases in Michigan, Ohio, Washington DC and Missouri. They offset notable increases in Pennsylvania and Virginia.

Claims had increased for three straight weeks as California moved people to another program following the expiration of federal government-funded aid on Sept. 6, to allow the recipients to collect one additional week of benefits.

There had also been increases in filings related to the idling of assembly plants in some states by automakers as they managed their supply of semiconductors amid a global shortage.

A resurgence in COVID-19 infections, driven by the Delta variant, also disrupted activity in the high-contact services sector. That suggested some moderation in labor market conditions in the prior weeks, which was confirmed by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by U.S.-based employers increased 14% to 17,895 in September.

Still, layoffs were down 85% compared to September 2020.

In the third quarter, employers announced 52,560 job cuts, the fewest since the second quarter of 1997 and down 23% from the July-September period.

Stocks on Wall Street were trading higher. The dollar dipped against a basket of currencies. U.S. Treasury prices fell.

SUPPLY WOES

Layoffs last month were led by companies in the healthcare/products sector, with 2,673 announced cuts. Since the Pfizer vaccine received full-FDA approval, many healthcare facilities have implemented vaccine mandates, which have led to the firing of non-compliant workers.

Ongoing strains in the supply chain saw industrial goods manufacturers laying off 2,328 workers in September, while warehousing businesses reported 1,936 job cuts. There were 1,679 job cuts in the services sector.

But the rise in layoffs was dwarfed by an explosion in planned hiring, in part as retailers gear up for the holiday season. The Challenger report showed companies announced plans to hire 939,790 workers compared to only 94,004 in August.

With companies eager to hire, more people are coming off the state unemployment rolls. The claims report showed the number of people continuing to receive benefits after an initial week of aid tumbled 97,000 to 2.714 million in the week ended Sept. 25. That was the lowest level since mid-March 2020.

The total number of people collecting unemployment checks under all programs dropped to 4.172 million during the week ended Sept. 18 from 5.027 million in the prior week. That reflected the end of extended benefits last month, which economists hope will increase the labor pool.

The pandemic forced some people to drop out of work to become caregivers. Others are reluctant to return for fear of contracting the coronavirus, while some have either retired or are seeking career changes. That has left employers desperate to fill a record 10.9 million job openings as of the end of July.

The worker shortages have impacted job growth, though there is optimism that hiring picked up in September. According to a Reuters survey of economists, nonfarm payrolls likely increased by 500,000 jobs last month.

Estimates range from as high as 700,000 jobs to as low as 250,000, reflecting the mixed labor market indicators in September. A survey from the Conference Board last week showed consumers’ views of current labor market conditions softened.

While the Institute for Supply Management’s measure of manufacturing employment rebounded last month after contracting in August, its measure of services industry employment slipped.

The economy created 235,000 jobs in August, the fewest in seven months. The unemployment rate is forecast dipping to 5.1% in September from 5.2% in August.

“Going forward, the combination of easing labor supply constraints, strong labor demand and an improving COVID outlook should spur further labor market progress,” said Lydia Boussour, lead U.S. economist at Oxford Economics in New York.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. weekly jobless claims at 14-month low; inflation heating up

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits dropped to a 14-month low last week as companies held onto their workers amid a growing labor shortage that helped to curb employment growth in April.

The scramble for workers comes as the reopening economy is experiencing a boom in demand, resulting in widespread shortages of inputs at factories and fanning inflation. Producer prices increased more than expected in April, leading to the biggest annual gain since 2010, other data showed on Thursday.

The worker shortage is despite nearly 10 million Americans being officially unemployed, a disconnect that economists expect will resolve in the coming months as increased vaccinations ease COVID-19 stress and enhanced unemployment benefits expire, allowing some workers to return to the labor market.

“With demand for workers high and layoffs relatively low, we should see strong hiring in the months to come, as barriers to employment, such as lack of childcare, lessen,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “For many, especially low-wage workers, returning to a job is a puzzle in which several pieces, such as transportation, wage levels and benefits must fall into place.”

Initial claims for state unemployment benefits dropped 34,000 to a seasonally adjusted 473,000 for the week ended May 8, the Labor Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Economists polled by Reuters had forecast 490,000 applications for the latest week. The decrease in claims was led by Michigan, New York and Florida.

Claims have dropped from a record 6.149 million in early April 2020, but remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market.

Some economists believe the enhanced unemployment benefits programs, including a weekly $300 government subsidy, could be encouraging some people to attempt to file a claim for assistance, though not every application is approved.

The economy created 266,000 jobs in April after adding 770,000 in March, which was partly blamed on the generous unemployment benefits. There are a record 8.1 million open jobs.

Several states in the South and Midwest, such as Tennessee and Missouri, that have unemployment rates below the national average of 6.1% have recently announced they will end federally funded pandemic unemployment benefits next month.

Economists cite the still-bloated jobless rolls as supporting the thesis that unemployment checks were keeping some workers home. There were 3.655 million people receiving benefits after an initial week in the week ended May 1, down 45,000 from the prior week. A total 16.9 million people were collecting unemployment checks under all programs at the end of April.

The government-funded benefits end in early September.

Richmond Federal Reserve president Thomas Barkin said on Thursday, “the question of how to unclog the labor market is going to be a critical one,” in keeping the recovery on track.

Stocks on Wall Street rebounded on the claims data after declining for three straight sessions. The dollar was steady against a basket of currencies. U.S. Treasury prices rose.

DEMAND BOOM

The government has provided nearly $6 trillion in pandemic relief over the past year. More than a third of the population has been fully vaccinated, leading many states to lift most capacity restrictions on businesses.

The resulting pent-up demand is pushing against supply constraints. In another report on Thursday, the Labor Department said its producer price index for final demand rose 0.6% in April after surging 1.0% in March.

A 0.6% increase in the cost of services accounted for about two-thirds of the rise in the PPI. Services, which increased 0.7% in March, were last month driven by higher prices for portfolio management, airline tickets and food retailing as well as physician care.

Goods prices gained 0.6%, lifted by an 18.4% jump in steel mill products. In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in November 2010 and followed a 4.2% jump in March.

Part of acceleration in the PPI was due to last spring’s weak readings dropping out of the calculation. The report followed on the heels of news on Wednesday that consumer prices increased by the most in nearly 12 years in April.

Though rising prices have spooked investors, the Federal Reserve has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average.

Fed Vice Chair Richard Clarida said on Wednesday it would be “some time” before the economy is healed enough for the U.S. central bank to consider scaling back its support. The Fed slashed its benchmark overnight interest rate to near zero last year and is pumping money into the economy through monthly bond purchases. Its preferred inflation measure, the core personal consumption expenditures (PCE) price index is at 1.8%.

“Each big inflation report for the next several months will test the Fed’s approach to seeing through these issues it promises to be transitory,” said Will Compernolle, a senior economist at FHN Financial in New York.

Based on the CPI and PPI data, Goldman Sachs is forecasting that core PCE increased 0.49% in April and 3.38% year-on-year.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)