The Economy

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The evolution of the Southern economic development strategy

Rooted in Racism and Economic Exploitation: Part One

https://www.epi.org/publication/rooted-racism-part1/?

The inspiring wave of student worker organizing that the Trump administration tried to stop

Nearly 45,000 student workers at private colleges and universities have formed unions since 2022, seeking to bargain with their employers over wages, health care, protections from harassment and discrimination, and other issues. These student workers include graduate student teaching assistants, undergraduate and graduate student resident assistants, and student dining workers. They are organizing across the country, from Duke University in the South to Northwestern University in the Midwest, Boston University in the Northeast, and California Institute of Technology in the West.

https://www.epi.org/blog/the-inspiring-wave-of-student-worker-organizing-that-the-trump-administration-tried-to-stop/?

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The retire-early economy

Data: New York Fed. Chart: Axios Visuals Americans don't want to work past the traditional retirement age of 65. In fact, we increasingly don't intend to work past 62, Axios' Felix Salmon writes. Why it matters: The pandemic was a pointed reminder that we only live once. Millions of workers seem to have taken that lesson to heart. ?️ The big picture: The U.S. population is getting older. The Social Security trust fund is running out of money. Technological improvements mean that many jobs are much less physically taxing than they used to be. All of those developments favor working longer. Yet when we're asked, only 46% of workers under 62 expect to continue working past that age. That percentage has been declining for a decade — but has plummeted since the pandemic. New York Fed researchers found that since March 2020, the number of years Americans who expect to continue working has plunged by 9.5%. "The decline is broad-based across age, education, and income groups," they write. ? Between the lines: Thank the long bull market in stocks and housing, which has made 60- to 70-year-olds richer than ever — and able to afford retirement. Less happily, millions of Americans found themselves forced into retirement after 2020 by ill health — a phenomenon that contributed to the subsequent labor shortage.

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Finally, some relief: Inflation and retail sales reports point to cooler economy

After a series of too-hot-for-comfort inflation readings to start 2024, the April Consumer Price Index finally brought some relief.

https://www.axios.com/2024/05/15/cpi-april-2024-inflation-economy?

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? Stocks hit record

Data: YCharts. Chart: Axios Visuals The stock market hit a new record high yesterday — with all major indices notching uncharted territory, Axios' Felix Salmon writes. The last all-time high was set 48 days ago, on March 28. Why it matters: The optimism embedded in stock prices stands in stark contrast to a much gloomier national mood in an election year almost no one is excited about. Inflation numbers released yesterday came in lower than expected for April.

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The Dow closed above 40,000 for the first time. The number is big but means little for your 401(k)

NEW YORK (AP) — The Dow Jones Industrial Average just closed above 40,000 for the first time, the latest pop in what’s been a surprisingly good year for Wall Street.

https://apnews.com/article/dow-jones-industrial-average-record-rally-22aaf53da73b4550af35e7c40cf30214?

"Big psychological boost": Dow vaults above 40,000, setting new record

The Dow Jones Industrial Average touched a record high at 40,000 on Thursday, with investors momentarily downplaying fears about inflation and delayed interest rate cuts.

https://www.axios.com/2024/05/16/dow-40k-stock-market-us-record?

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? Biden's record regulation blitz

Data: George Washington University Regulatory Studies Center. Chart: Axios Visuals The White House has unleashed an unprecedented surge of major new regulations as it races a moving deadline to protect much of President Biden's agenda, Axios' Noah Bressner writes. Why it matters: No president has killed more regulations using an obscure law known as the Congressional Review Act than Donald Trump, who likely would target much of Biden's body of work if he wins this fall. The law has been successfully invoked just 20 times since it was passed in 1996. But the first two years of the Trump presidency — which featured GOP control of the House and Senate — account for 80% of its use. ? Zoom in: The Congressional Review Act gives Congress a "lookback period" where regulations can be overturned. The deadline for a rule to be safe from congressional review is fuzzy. Estimates range from next Wednesday to early September. Without using the law, rules could take months or years to kill, said Steven Balla, co-director of George Washington University's Regulatory Studies Center. ? By the numbers: Federal agencies passed 66 economically significant rules in April — more than any month since at least the Reagan administration, according to a Regulatory Studies Center analysis. ? Zoom out: Over the past two months, the Biden administration has announced landmark rules that... Boost electric vehicles by limiting auto tailpipe emissions. Trump has railed against EVs and often mentions them at rallies. Makes an extra 4 million workers eligible for overtime pay. Put national limits on forever chemicals in drinking water.

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Booming business of eternal youth

Illustration: Annelise Capossela/Axios

Consumers, especially the rich, are spending big on the colossal, growing longevity industry — spas, food subscriptions, gym memberships and pills, Axios' Erica Pandey writes. ? Why it matters: The wellness industry is worth nearly $500 billion in the U.S. and $2 trillion globally, McKinsey says. But there's a growing gap between what's available to wealthy consumers and everyone else. Many new offerings come at sky-high prices. State of play: The wellness market is doubling down on rich customers with exclusive, luxury, hyper-personalized offerings, according to the Global Wellness Institute, an industry research group. Think invite-only Pilates classes at $75 a session, $200,000 facelifts — and elite clubs charging thousands in monthly fees for saunas and ice baths. Equinox, the high-end gym chain, just rolled out a $40,000-per-year longevity add-on. Customers will get access to individually tailored training and nutrition plans, sleep coaching and more. There's a waitlist. Costs are even increasing on the cheaper end: Planet Fitness announced its first membership price hike in 26 years earlier this month. Zoom in: Then there's an even higher tier — Silicon Valley billionaires chasing the fountain of youth. Entrepreneur and venture capitalist Bryan Johnson famously spends $2 million a year on health and longevity treatments, including weekly acid peels and blood transfusions from his teenage son. He eats a strict vegan diet, does daily meticulously planned workouts and takes near-constant blood, stool and urine tests to monitor his health, Bloomberg's Ashlee Vance reports. Tech titans Sam Altman, Jeff Bezos and Mark Zuckerberg have all invested millions in anti-aging startups. ? What's next: As more people have access to personalized fitness data through phones, watches and rings, look for tailored workouts and diets to gain popularity.

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? First on Axios: Biden inflation case

Photo illustration: Shoshana Gordon/Axios. Photo: Alex Wong/Getty Images

The Biden administration released a memo to allies outlining its actions to combat rising costs — and blaming Republicans for blocking its efforts, Axios' Emily Peck writes. Why it matters: It's an attempt to tell Americans that President Biden is focused on bringing prices down, at a time when voters are unhappy. "President Biden's top economic priorities are fighting inflation and lowering costs for the American people," writes White House deputy press secretary Andrew Bates. "Standing up to corporate price gouging is at the core of that fight." Read the memo ...

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Average wages have surpassed inflation for 12 straight months

Average hourly wage growth has exceeded inflation for 12 straight months, according to new Bureau of Labor Statistics data released this morning. This real (or inflation-adjusted) wage growth is a key indicator of how well the average worker’s wage can improve their standard of living. As inflation continues to normalize, I’m optimistic more workers will experience real gains in their purchasing power.

https://www.epi.org/blog/average-wages-have-surpassed-inflation-for-12-straight-months/?

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? America's money misfire

Illustration: Sarah Grillo/Axios

More than half of Americans — 56% — mistakenly believe the U.S. is currently in a recession and that Biden is responsible for a worsening economy, Axios' Emily Peck writes from a stunning new poll conducted by The Harris Poll for The Guardian. Why it matters: The economy is actually in good shape. There's no recession. But misperceptions like this are a huge political challenge for President Biden and an advantage for Donald Trump. ? By the numbers: 55% of Americans wrongly believe the U.S. economy is shrinking this year rather than growing. 49% believe the S&P 500 is down for the year. It's up. Figuring out the right answers is tough: 64% of Americans say they don't know who to trust when it comes to learning about the economy. And that number is relatively bipartisan. Even if the information on the economy is reported correctly, 62% of Americans think the economy is worse than the media makes it out to be. Keep reading.

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? America's glum workers

Data: Bank of America. Chart: Axios Visuals Fewer than half of working adults say they're feeling financially well, Axios' Emily Peck writes from a new Bank of America report on workplace benefits. Why it matters: The U.S. economy is in solid shape, but many Americans aren't feeling it. This is shaping up to be the dominant theme of 2024. 53% of men said they felt financially well. Just 36% of women said the same.

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Trump’s mass-deportation plan would have big economic consequences for South Florida

MIAMI — During a rally in Hialeah last fall, Donald Trump regaled supporters with a pledge to undertake “the largest domestic deportation operation in American history” if they helped put him back in the White House.

https://www.orlandosentinel.com/2024/05/25/trumps-mass-deportation-plan-would-have-big-economic-consequences-for-south-florida/?

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The new inflation

Data: BLS; Chart: Axios Visuals The meaning of the word "inflation" has changed. It used to mean rising prices; now it means high prices. Why it matters: Pedants, economists and style-guide editors might not like it. But if you want to understand what people mean when they complain about inflation, you need to understand how the vernacular has evolved over the past couple of years, Axios chief financial correspondent Felix Salmon writes. The big picture: Inflation, at least as officially measured by the Bureau of Labor Statistics, has come down sharply from its peak of 9% in mid-2022. It now stands at 3.4%, broadly in line with where it was for the quarter-century between 1983 and 2008. ? Reality check: The headline measure of inflation is based on something pretty arbitrary — where prices were exactly one year ago. The more salient timeframe, especially in an election year, might be what has happened to prices since the pandemic, or since Joe Biden took office. In that time, prices have jumped 19.4%. Zoom out: A more intuitive concept of inflation is just "am I paying higher prices for things than I used to." Under that definition, inflation can be high even when prices are falling. ?️ Between the lines: This nerdy debate — the descriptivists versus the prescriptivists — has become a key driver of the 2024 presidential election campaign. Voters who think that inflation is high are likely to blame Biden for it, and less likely to vote for him. When Biden administration staffers push back by saying that inflation isn't high, they risk being seen as out of touch.

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✈️ Blockbuster travel weekend

Data: TSA. Table: Axios Visuals Five of the 10 busiest American airport travel days have occurred in the past two weeks, according to TSA screening data. A record 2.95 million travelers were screened at airports on Friday. The previous record, since the TSA was founded in 2001, was set last Thanksgiving. 9 of the top 10 days took place in the past 12 months.

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Price cuts

 

Several major retailers are slashing prices across the board to lure back inflation-weary shoppers who have pulled back on spending. Walgreens announced Wednesday that it is cutting prices on 1,500 items — joining competitors including Target, Walmart and Amazon that also recently lowered prices on thousands of household goods. Industry experts say that US households aren't shopping like they used to, and high prices are forcing Americans to choose between wants and needs. Some retail chains have been forced to declare bankruptcy and shutter their doors as a result. One example is 99 Cents Only, which filed for bankruptcy in April and closed all of its 370 locations. Dollar Tree said Wednesday that it acquired 170 of those leases to offer discount products to more Americans beginning in the fall.

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?️ 1 fun thing: Revenge of the mall retailers

Illustration: Brendan Lynch/Axios

Several mall-staple chains that were once floundering are enjoying a sudden resurgence, Axios' Nathan Bomey and Kelly Tyko write. Why it matters: Stores catering to Gen-Z shoppers — the drivers of the mall resurgence — are leading the comeback. Abercrombie & Fitch smashed expectations with a 22% jump in sales in its first fiscal period, compared with a year earlier. Gap Inc. beat top and bottom line expectations for all four of its brands — Gap, Banana Republic, Athleta and Old Navy. American Eagle Outfitters reported record revenue. Foot Locker's comparable sales were down 1.8% — but that was much better than expected. And CEO Mary Dillon said more customers are paying full price.

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?️ 1 food thing: Restaurant boom

Data: National Restaurant Association. Chart: Axios Visuals 2024 will be the U.S. restaurant industry's biggest year ever in sales — $1.1 trillion by the end of December, Axios' Jennifer A. Kingson writes from National Restaurant Association estimates. Why it matters: The pandemic devastated the restaurant industry, but sales are now far higher than before it started — and climbing. Keep reading ...

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Hiring blows past expectations, showing lingering labor market heat

Hiring is hot and wage growth is strong, indicating plenty of demand for workers.

https://www.axios.com/2024/06/07/jobs-market-inflation-report-hiring-unemployment?

US hiring and wage growth picked up last month in sign of sustained economic health

WASHINGTON (AP) — America’s employers added a strong 272,000 jobs in May, accelerating from April and a sign that companies are still confident enough in the economy to keep hiring despite persistently high interest rates.

https://apnews.com/article/jobs-hiring-unemployment-economy-inflation-federal-reserve-d1d73005dbc40b081a555850a44e73d1?

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? Exclusive: Economy's holding pattern

Data: Business Roundtable. Chart: Axios Visuals From the C-suites of big companies to the halls of the Fed, economic decision-makers are waiting to see whether the next shift is toward recession, reacceleration or something in between, Axios' Neil Irwin writes. Why it matters: The economy has hit a midyear holding pattern in which policy is static, growth and inflation have leveled out and CEOs aren't making major adjustments to hiring plans as they wait out the election and a Fed policy pivot. ? The Business Roundtable's quarterly survey of major company CEOs shows steady confidence in the economy. The BRT's economic outlook index, at 84, was a tick below the 85 reported in March and near the long-term average of 83. "The overarching message from our member CEOs is that the economy is steady and stable, but they remain cautious," Cisco CEO Chuck Robbins, who chairs the Business Roundtable, said in a statement. ? What we're watching: This morning, the Labor Department will release the Consumer Price Index for May. This afternoon, the Fed is expected to leave interest rates unchanged following a policy meeting. Go deeper: More survey data.

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Economy

 

A key inflation report will be released today, hours before the Federal Reserve is slated to announce its decision on interest rates. The central bank is widely expected to hold rates steady for the seventh straight meeting and, more importantly, outline how many times it hopes to ease rates in 2024. This comes after the April Personal Consumption Expenditures index — the Fed's preferred inflation gauge — showed the US economy made little progress in keeping costs in check. US home prices are at record highs and prices for new and used cars are running hot. The Consumer Price Index and the Fed's rate announcement have fallen on the same day just seven times since 2014. Despite the rare event, analysts say it's unlikely to move the stock market.

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Federal Reserve sees some progress on inflation but envisions just one rate cut this year

WASHINGTON (AP) — Federal Reserve officials said Wednesday that inflation has fallen further toward their target level in recent months but signaled that they expect to cut their benchmark interest rate just once this year.

https://apnews.com/article/federal-reserve-inflation-prices-interest-rates-cuts-4384e6b128915458aba2d178bf31ee1b?

Inflation cools, interest rates don't

Illustration: Shoshana Gordon/Axios

Inflation slowed for the second straight month in May, according to Consumer Price Index figures out today. ? Grocery prices ticked up just 0.1% and gas prices fell. Airline fares, new cars and apparel also got a bit cheaper. Why it matters: That's all good news for American households. But the Federal Reserve still wants more evidence price pressures are receding before cutting interest rates, Axios Macro's Neil Irwin and Courtenay Brown write. ? Driving the news: The Fed left its target interest rate unchanged today and is expecting only one rate cut this year, new projections show. That's a considerably more cautious approach than the three rate cuts the median Fed official expected as of March. "The economy has repeatedly surprised forecasters in both directions," chair Jerome Powell said at a press conference, in response to a question from Axios. "Today was certainly a better inflation report than almost anybody expected, and we'll just have to see what the incoming data flow brings." The bottom line: Lower borrowing costs might be coming this year, though Powell would not say when.

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? Dueling economic auditions

Former President Trump and White House Chief of Staff Jeff Zients offered America's top CEOs competing visions in separate appearances in front of the powerful Business Roundtable yesterday, Axios' Hans Nichols writes.

• Why it matters: The 2024 election comes as corporate America is bracing for a battle royale over taxes next year, when many of Trump's 2017 tax cuts for individuals expire.

Trump — interviewed by Larry Kudlow, his former National Economic Council chair — pledged to reduce the corporate tax rate from 21% to 20%.

• His new plan would represent a small tax cut — but it gives Trump something concrete to offer businesses for their bottom line.

Zients — interviewed by Comcast CEO Brian Roberts — didn't mention Trump by name. But he clearly took aim at some policies the ex-president has embraced, such as rounding up immigrants for mass deportations and imposing high tariffs on Chinese imports.

• Both of those actions, Zients argued, would reignite inflation.

Keep reading.

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Travel is an essential driver of the U.S. economy

Travel is essential to economic growth and job creation in states and communities nationwide. The proof: In 2023, travelers in the United States directly spent $1.3 trillion, producing an economic footprint of $2.8 trillion and supporting more than 15 million American jobs. Learn more.

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Congressional Budget Office raises this year’s federal budget deficit projection by $400 billion

WASHINGTON (AP) — The Congressional Budget Office said Tuesday that it projects this year’s federal budget deficit to be $400 billion higher, a 27% increase compared to its original estimate released in February.

https://apnews.com/article/taxes-budget-deficit-treasury-outlays-deec88540a7855eb46eeb7fad3ab2712?

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? Magnificent 7 drive markets to new highs

Data: S&P Dow Jones Indices. Chart: Axios Visuals As the S&P 500 hits yet another new record high, all credit must be given to technology stocks, Axios' chief financial correspondent Felix Salmon writes. Why it matters: The so-called Magnificent 7 stocks (Apple, Nvidia, Microsoft, Meta, Alphabet, Amazon, Tesla) account for 75% of this year's gains. ? Between the lines: The degree to which the S&P 500 is concentrated in a handful of trillion-dollar companies can be seen either as a worrying development — overexposure to a single sector — or as an encouraging sign that the rest of the market still has a substantial amount of upside.