The Economy

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An unemployment rate milestone for Black Americans

By the numbers: The rate peaked at 16.8% in May 2020, and since then has fallen by an astonishing 12.1 percentage points to 4.7% now (though the decline was driven, in part, by a drop in labor force participation among Black workers).

https://www.axios.com/2023/05/05/unemployment-rate-milestone-black-americans?

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The May Jobs Report - US Economy Remains Remarkably Strong, Republicans Are Trying to Ruin It

While Biden Is Working to Keep the Economy Strong, Rs are Pushing Us Into Recession and Default

https://simonwdc.substack.com/p/the-may-jobs-report-us-economy-remains?

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The labor market is strong, but it’s not ‘too hot’

Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 253,000 jobs added in April.

https://www.epi.org/blog/april-jobs-report-the-labor-market-is-strong-but-its-not-too-hot/?

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How Joe Biden’s Economic Ratings Could Rebound with Voters

Strong job growth and falling inflation may still pay off in 2024.

https://www.newyorker.com/news/our-columnists/how-joe-bidens-economic-ratings-could-rebound-with-voters?

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Job satisfaction hits highest point in decades

U.S. workers are more satisfied with their jobs than they have been in at least 36 years, according to a new survey, as companies have started to offer more flexible work options after the pandemic disrupted traditional working environments.

https://thehill.com/business/3999679-job-satisfaction-hits-highest-point-in-decades/?

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How Pundits’ Inflation Myth Crushed The Working Class

One year ago, as price hikes were becoming a major national concern, the world’s third-richest man touted his newspaper columnist asserting that corporate profits were not a driving force behind inflation — blaming temporary COVID-19 pandemic aid instead.

https://www.levernews.com/how-pundits-inflation-myth-crushed-the-working-class/

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Once a fringe theory, "greedflation" gets its due

Once dismissed as a fringe theory, the idea that corporate thirst for profits drives up inflation, aka "greedflation," is now being taken more seriously by economists, policymakers and the business press.

https://www.axios.com/2023/05/18/once-a-fringe-theory-greedflation-gets-its-due?

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US economy grew at end of 2022, defying recession fears

The U.S. economy grew robustly at the end of last year, defying recession fears and weathering an aggressive series of interest rate hikes from the Federal Reserve, government data showed.

https://abcnews.go.com/Business/gdp-data-show-economic-health-amid-recession-fears/story?id=96660379

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Know any airplane mechanics? A wave of retirements is leaving some US industries desperate to hire

WASHINGTON (AP) — Kwasi Bandoh, a senior recruiter for an airline, stood before a group of aviation mechanic students at their graduation ceremony last month and congratulated them for all having jobs.

https://apnews.com/article/jobs-workers-shortages-hiring-manufacturing-airplane-mechanics-84176a760eaacd1b629e9cef2f6ee42c?

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Walmart partnered with over 2,600 diverse small businesses

Walmart is creating more American jobs by supporting veteran-owned businesses like Bon AppéSweet.

Key numbers: In 2021, the retailer sourced $13.3 billion in goods and services from roughly 2,600 diverse small businesses.

Learn how Walmart supports U.S. manufacturing.

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The U.S. added 339,000 jobs in May. It's a stunningly strong number

Hiring surged last month as U.S. employers added 339,000 jobs, far above expectations, according to a report from the Labor Department on Friday.

https://www.npr.org/2023/06/02/1179621886/jobs-employment-employers-labor-market-economy-recession-inflation?

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Stock market today: Wall Street leaps, nearly escapes its bear market after strong jobs report

NEW YORK (AP) — Stocks rushed higher Friday after a strong report on the U.S. job market suggested a recession may not be as close as Wall Street had feared.

https://apnews.com/article/stock-markets-debt-deal-bank-rates-9cf49eaa2bdcb21ee958c3bb4477dd6e?

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America's holding pattern

Data: Federal Reserve "Survey of Household Economics and Decisionmaking." Chart: Axios Visuals

The U.S. economy continues to defy the odds — but Americans still aren't happy, Axios chief financial correspondent Felix Salmon reports.

• Why it matters: It's hard to see that turning around any time soon. Fed chair Jerome Powell doesn't want and won't allow some kind of economic boom. He thinks the economy is running too hot already.

What's happening: The May employment report, released Friday, marked the 14th straight month that more jobs were created than economists expected.

• It's all a far cry from the misery in other countries — including the U.K., with sky-high inflation, or Germany, now officially in a recession.

🧮 By the numbers: The U.S. economy has created more than 4 million new jobs in the past 12 months.

• GDP continues to grow — up more than 5% from its pre-pandemic peak, even after accounting for inflation.
• The average U.S. employee now makes $33.44 per hour, a raise of more than 17.5% since pre-pandemic.
• The stock market is up 10% so far this year, and we're not even halfway done.

🥊 Reality check: Americans aren't buying it.

• They're broadly happy with their personal finances. But a majority consistently thinks (erroneously) we're in a recession.
• Part of the problem is higher consumer prices: Inflation might be coming down rapidly. But even if it goes all the way to zero, prices will still be much higher than Americans became accustomed to.

🔎 Between the lines: The highly visible congressional dysfunction surrounding the debt ceiling — plus all the associated rhetoric about the unsustainable national debt — contribute to the sour mood.

The bottom line: Money can't buy happiness.

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The Inflation Reduction Act Is Making America Great Again!

For decades, people have been wringing their hands and bemoaning the fate of America’s once great industrial empire. They are used to seeing the smokestacks in Youngstown, Pittsburgh, and other industrial cities highlighted silently against the sky. They refer to America’s industrial heartland as the “Rust Belt.” The Inflation Reduction Act has changed all that. Thanks to some actual leadership by President Biden and Democrats in Congress, manufacturing in America is roaring back.

https://cleantechnica.com/2023/06/07/the-inflation-reduction-act-is-making-america-great-again/?

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Markets see "mission accomplished" on inflation

Data: Federal Reserve; Chart: Axios Visuals As we await new inflation data and a Fed decision next week, there's an important backdrop emerging from the markets: Bond prices imply that the Fed's war on inflation is, in effect, won, Axios' Neil Irwin writes. Why it matters: This backdrop makes it easier for the Fed to pause its rate hikes next week, as it has telegraphed it may — regardless of what the backward-looking Consumer Price Index shows on Tuesday. 🧮 By the numbers: The five-year breakeven rate — the gap between rates on five-year Treasury notes and comparable inflation-protected bonds — was 2.14% yesterday. That implies that the CPI will rise by that much each year over the next half-decade. Because the CPI runs a few ticks higher than the PCE price index the Fed targets, those breakeven numbers are entirely consistent with the central bank's 2% inflation target. By contrast, last spring, the five-year breakeven reached as high as 3.56% — a more alarming number that implied inflation was getting out of control. That surely contributed to the Fed's aggressive interest rate hikes last year. 🔎 Between the lines: Bond investors are pricing in enough of a growth slowdown that inflation will recede even without the Fed raising rates more. In that sense, they have a more benign outlook than ordinary Americans. The New York Fed's most recent survey of consumer expectations showed American households see inflation coming in at 2.9% annually over the coming five years. 🥊 Reality check: Bond investors are hardly perfectly prescient. Breakeven rates didn't give any early warning of the outburst of inflation in the spring of 2021, for example. Market prices, just like any forecast, can be wrong. From the Fed's perspective, the fact that ordinary citizens still expect inflation well above the 2% target in the coming years could be alarming in its own right.

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Fed keeps rates unchanged but signals 2 more potential hikes this year

WASHINGTON (AP) — The Federal Reserve kept its key interest rate unchanged Wednesday after having raised it 10 straight times to combat high inflation. But in a surprise move, the Fed signaled that it may raise rates twice more this year, beginning as soon as next month.

https://apnews.com/article/interest-rates-inflation-federal-reserve-economy-f6318be5023f6e50afc115778c9ec174?

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🕶️ Falling prices for eggs, gas

Data: Bureau of Labor Statistics via FRED. Chart: Axios Visuals 🥚 The government index that tracks egg prices fell 13.8% in May — the largest monthly drop since January 1951, according to Consumer Price Index data out yesterday. Axios Markets' Emily Peck says she's ready to ... get crackin' ... on all sorts of custardy recipes. Data: FactSet, Bureau of Labor Statistics. Chart: Axios Visuals ⛽ Gas prices dropped roughly 20% over the past 12 months. Explore the data.

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🏡 Axios events: Housing drives inflation

"I never thought I'd use the word 'sticky' when it comes to inflation, but you do see that in core [inflation]," Shalanda Young, President Biden's top budget aide, told Courtenay Brown at an Axios News Shapers event this morning.

• "And housing is really the driver."

Young, director of the Office of Management and Budget, was asked whether the U.S. should tighten fiscal policy to bring down inflation.

• "Housing and shelter prices are too high," she said. "We've had proposals to get more supply of affordable housing. That is where we see the need to have some targeted conversations."

Sen. Raphael Warnock. Photo: Eric Lee/Axios

Sen. Raphael G. Warnock (D-Ga.) told Alexi McCammond at today's event that Republican criticisms of the FBI and law enforcement in the wake of the indictment of former President Trump are "unconscionable."

• "We ought to do our jobs as legislators and let the legal process play out. That's the great thing about being an American," he said.

Warnock dismissed concerns about Biden's age: "He's doing just fine."

• The senator said he knows Biden's age will keep coming up. "In a democracy, everything gets discussed."

📺 Watch the event.

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Fed Chair Powell sees progress on inflation, though not quickly enough

WASHINGTON (AP) — Inflation may be cooling — just not yet fast enough for the Federal Reserve.

https://apnews.com/article/interest-rates-inflation-federal-reserve-economy-f6318be5023f6e50afc115778c9ec174?

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🕶️ Fed confidence grows

The economy just might be able to avoid the painful slump that Fed officials warned could be the unfortunate result of their rate-hiking campaign.

• That's the message from new forecasts from the central bank, projecting a smaller rise in joblessness and faster economic growth than it predicted three months ago, Axios' Courtenay Brown reports.

Why it matters: If so, the U.S. may not have to sacrifice the economic gains achieved in the pandemic recovery for inflation to recede.

Catch up quick: The Fed yesterday held off on raising interest rates, but most officials project at least two more increases by December. Wall Street called it a "hawkish skip."

• Fed chair Jerome Powell called it a "skip" before quickly correcting himself, implying that a rate increase in July is all but a sure thing.

💭 "There is a path to getting inflation back down to 2% without having to see the kind of sharp downturn and large losses of employment that we've seen in so many instances," Powell said in response to a question from Axios at a news conference yesterday.

• "It's possible that a strong labor market that gradually cools could aid that along."

🧮 By the numbers: As recently as March, Fed officials expected the unemployment rate would rise to 4.5%, by year-end. New projections show a milder increase to 4.1%.

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📈 First look: Biden's economic pitch

President Biden will use a Philadelphia address to union supporters tomorrow to make the economic case for his re-election, Axios' Hans Nichols and Alex Thompson report.

• Why it matters: Biden is presiding over a healthy — if somewhat confounding — Timex economy: It just keeps ticking.

His challenge is to take credit for a hot labor market and respectable GDP growth in the face of lingering inflation and voters who don't quite share his sunny optimism.

• The plan is to use the Philadelphia rally to try to persuade a core constituency — labor unions — that there’s a direct link between his policies and an economy that is defying expectations.
• Republicans also plan to contest the union vote — particularly the United Auto Workers, which endorsed Biden in 2020 but so far has held off over concerns about how his push for electric vehicles will affect the auto industry.

🔭 Zoom out: The president and his top economic advisers take pride in the economy's resilience, privately and publicly snickering at analysts and economists who have predicted its demise.

• But voters are still skeptical of the president's economic achievements, and Biden’s team knows it has some work to do to persuade them that his economy is working for them.

The bottom line: Biden's goal is to channel the energy from progressive activists and institutional Democratic organizations to build a campaign that's prepared for a difficult race in the fall of 2024.

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The manufacturing supercycle

Data: Census Bureau. Chart: Axios Visuals It's easy to get so caught up in month-to-month economic data that we miss a longer-term trend emerging before our eyes: Massive new investment is pouring into U.S. heavy industry, shaping the economic landscape for years to come, Axios chief economic correspondent Neil Irwin writes for Axios Macro. Why it matters: The 2010s were a period of chronic underinvestment. Now, billions are flooding into big, expensive megaprojects to make batteries, solar cells, semiconductors and much more. This boom is fueled by hundreds of billions of dollars from President Biden's signature legislation — the Inflation Reduction Act, Bipartisan Infrastructure Law, and CHIPS and Science Act — as well as pent-up demand. It signals sustained upward pressure on demand for workers and raw materials for years to come. 💬 "We believe the U.S. is in the early stages of a manufacturing supercycle," Joseph Quinlan, head of CIO Market Strategy at Merrill and Bank of America Private Bank, in a report this week. He emphasizes the role of foreign direct investment in the surge, as global companies rush to build large-scale facilities in the U.S. He sees the trend extending well into the second half of the 2020s. 👀 "It's really gotten the attention of the world," Quinlan tells Axios. "When you talk to companies in South Korea, Japan, Europe, all they want to talk about is building out a presence in the U.S." 🧮 By the numbers: As of April, spending on manufacturing construction — new factories — is tracking at a $189 billion annual rate, triple the average rate in the 2010s ($63 billion). That helps explain some of the underlying strength in the U.S. economy, even amid elevated recession fears. For example, the construction sector has added 192,000 jobs over the last year, despite higher rates hammering the housing sector. 🔎 Between the lines: The types of investment in this boom tend to involve much larger capital outlays than were seen in the 2010s. For example, two European companies announced this month they will invest $2 billion in Texas for a plant to make synthetic natural gas. 🔮 What we're watching: This sustained surge in investment will form the economic backdrop for the rest of the 2020s. Recessions should be less likely, and milder if they do happen. It's usually manufacturing and construction that pull the economy into downturns. Those sectors now have a floor under them. It means more demand for capital, which should keep interest rates higher, rather than returning to their ultra-low pre-2022 levels. These industrial facilities tend to create high-wage jobs, which could put sustained upward pressure on wages (but also could induce inflation). This supercycle changes the geography of growth in the U.S.: Much of the investment is happening in exurban and rural areas — not the major coastal metropolises that were the winners of the 2010s economy.

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Catch me up

🏠 There aren't enough homes in the U.S. That's one big reason house prices have barely fallen since the Fed's rate hikes sent mortgage costs soaring. Go deeper.

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America's housing shortage

Data: FRED via Moody's Analytics; Chart: Axios Visuals America is short millions of homes. 🚨 Why it matters: The shortage touches almost every aspect of Americans' lives and livelihoods and hits the economy at large, Axios' Emily Peck writes. The lack of affordable housing means some are shut out from that first rung on the ladder to building wealth. And for others, the more immediate threat of homelessness is never too far off. 🧮 By the numbers: According to the most recent estimates from Freddie Mac, the country is short about 3.8 million units of housing, both for rent and for sale. A few reasons for the shortage: NIMBYism: The "not in my backyard" pushback that new construction gets in the nation's suburbs and cities, Freddie Mac explains. A lack of available labor to build homes, as well as regulations over land use and zoning. The work-from-home revolution increased the demand for space, Axios' Felix Salmon writes. 📈 Stunning stat: The median home price, at $419,103, is now 40% higher than it was in January 2020, per Redfin. Go deeper.

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Biden announces $42 billion high-speed internet initiative

WASHINGTON — President Joe Biden is kicking off a more than $42 billion plan to give every American household access to high-speed internet by 2030.

https://www.cnbc.com/2023/06/26/biden-high-speed-internet-initiative.html