Evelyn Reynolds

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    Here’s where the jobs are for July 2023 — in one chart

    The health care and social assistance category grew by 87,100 jobs last month, according to the Labor Department.
    That total jumped to 100,000 when including education jobs, as some economists do.

    The labor market added a smaller-than-expected 187,000 jobs in July, but one sector delivered roughly half of that total.
    The health care and social assistance category grew by 87,100 jobs last month, according to the Labor Department. That total jumped to 100,000 when including education jobs, as some economists do.

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    Health care and social assistance added more than 70,000 jobs in each of the prior two months as well. Ambulatory care services alone added 35,000 jobs in July.
    “Healthcare alone has accounted for 35% of the job gains in the past 3 months, with the industry’s employment increasing at a 4.4% annualised pace. That’s likely to slow as industry employment is now well ahead of prepandemic levels,” Preston Caldwell, chief U.S. economist at Morningstar, said in a note.
    Two other bright spots were construction and financial activities, which added 19,000 jobs each.
    Several categories shed jobs, however, led to the downside by a 12,000 net loss for information.
    Professional and business services also lost about 8,000 jobs. That was driven by a loss of more than 22,000 jobs for temporary help services, which could be an early warning sign that the labor market is weakening.
    “We also see signs that firms are looking to cut labour usage by the fact that temporary help employment is falling (down 5% Y/Y and falling sharply in the last several months). … Temporary help employment was a leading indicator of overall employment in the 2001 and 2008 recessions,” Caldwell said. More

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    The U.S. economy added 187,000 jobs in July, fewer than expected

    Nonfarm payrolls expanded by 187,000 for July, slightly below the Dow Jones estimate for 200,000.
    The unemployment rate was 3.5%, against a consensus estimate that the jobless level would hold steady at 3.6%.
    Average hourly earnings rose 0.4% for the month, good for a 4.4% annual pace, both above expectations.
    Health care, social assistance, financial activities and wholesale trade were the leading sectors for job creation.

    Job growth in July was less than expected, pointing to slower growth in the U.S. economy, the Labor Department reported Friday.
    Nonfarm payrolls expanded by 187,000 for the month, slightly below the Dow Jones estimate for 200,000. Though the headline number was a miss, it actually represented a modest gain from the downwardly revised 185,000 for June.

    The unemployment rate was 3.5%, against a consensus estimate that the jobless level would hold steady at 3.6%.The rate is just above the lowest level since late 1969.
    Average hourly earnings, a key figure as the Federal Reserve fights inflation, rose 0.4% for the month, good for a 4.4% annual pace. Both numbers were higher than the respective estimates for 0.3% and 4.2%.

    Another important figure, the labor force participation rate held at 62.6%, the fifth straight month at that level. A more encompassing unemployment rate that includes discouraged workers and those holding part-time jobs for economic reasons fell to 6.7%, down 0.2 percentage point from June. The survey of households, which is used to calculate the unemployment rate, showed a more robust gain of 268,000.
    Health care led job creation by industry, adding 63,000 jobs for the month. Other sectors contributing included social assistance (24,000), financial activities (19,000) and wholesale trade (18,000). The other services category contributed 20,000 to the total, which included 11,000 from personal and laundry services.
    Leisure and hospitality, which has been a leading sector for most of the recovery in the Covid pandemic era, added just 17,000 jobs, consistent with a slowing trend after averaging gains of 67,000 a month in the first three months of 2023.

    Previous months’ totals were revised lower — the June count dropped to185,000, a downward revision of 24,000, while May was cut to 281,000, down 25,000 from the previous estimate.
    Even with the slowing job gains, the economy has proved resilient against a variety of challenges, particularly a series of 11 Federal Reserve interest rate hikes aimed at bringing down inflation.
    Most Wall Street experts have been forecasting a recession at least for the past year, but growth has managed to stay positive as consumers keep spending and the services sector rebounds from its pandemic-related disruptions.
    Gross domestic product gains have averaged 2.2% annualized for the first half of 2023, and the Atlanta Fed’s GDPNow tracker of growth is pointing to a 3.9% gain for the third quarter.
    However, Fed officials including Chairman Jerome Powell have warned that the full effect of the rate increases has not been felt yet. Economists worry that the Fed could overtighten and send the economy into recession.
    Inflation data of late has been moving in the right direction. However, the Fed’s preferred gauge is still showing prices rising at a 4.1% annual rate, or more than double the central bank target.
    Wages have been one component of the inflation picture. Average hourly earnings had been declining, though the annual figures are somewhat distorted by comparisons to a year ago when wages were surging.
    A Labor Department gauge that the Fed follows closely showed compensation costs rising at a 4.5% 12-month rate through the second quarter. That level is not consistent with the Fed’s inflation target.
    At the same time, recession fears on Wall Street appear to be ebbing. Goldman Sachs has been slowly reducing its probability for a contraction, and Bank of America this week said it now thinks the U.S. could avoid a recession completely. More

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    Las Vegas Suffers as Nevada Economy Droops, Costing Jobs

    Pedro Alvarez never imagined his high school job delivering filet mignon and sautéed lobster tail to rooms at the Tropicana Las Vegas would turn into a longtime career.But in a city that sells itself as a place to disappear into decadence, if for only a weekend, providing room service to tourists along the Strip proved to be a stable job, at times even a lucrative one, for more than 30 years.“Movie stars and thousands of dollars in tips,” Mr. Alvarez, 53, said. “If it was up to me, I was never going to leave.”Yet when the Strip shut down for more than two months early in the coronavirus pandemic, Mr. Alvarez became one of tens of thousands of hospitality workers in Nevada to lose their jobs. After the hotel reopened, managers told him that they were discontinuing room service, at least for a while. Since then, he has bounced between jobs, working in concessions and banquets.“It’s been an uphill climb to find full-time work,” he said.Nevada is an outlier in the pandemic recovery. While the U.S. economy has bounced back and weathered a steep ratcheting-up of interest rates — and even as many Americans catch up on vacation travel that the coronavirus derailed — the Silver State has been left behind.Job numbers nationwide have continued to increase every month for more than two years, but the unemployment rate has remained stubbornly high in Nevada, a political swing state whose economic outlook often has national implications.The state has had the highest unemployment rate in the nation for the past year, currently at 5.4 percent, compared with the national rate of 3.6 percent; in Las Vegas, it’s around 6 percent.Because of Nevada’s reliance on gambling, tourism and hospitality — a lack of economic diversity that worries elected officials amid fears of a nationwide recession — the state was exceptionally hard hit during the shutdowns on the Strip. Unemployment in the state reached 30 percent in April 2020.And although the situation has improved drastically since then — over the past year, employment increased 4 percent, among the highest rates in the country — Nevada was in a deeper hole than other states.“This leads to a bit of a paradox,” said David Schmidt, the chief economist for the Nevada Department of Employment, Training and Rehabilitation. “We are seeing rapid job gains, but have unemployment that is higher than other states.”Nearly a quarter of jobs in Nevada are in leisure and hospitality, and international travel to Las Vegas is down by about 40 percent since 2019, including drops in visits from China, where the economy is slowing, and the United Kingdom, according to an estimate from the Las Vegas Convention and Visitors Authority.Tourists on the Strip. International travel to Las Vegas is down about 40 percent from 2019.Gabriella Angotti-Jones for The New York TimesTo-go drinks for sale outside Planet Hollywood Las Vegas Resort & Casino. Gabriella Angotti-Jones for The New York TimesUnion officials say there are about 20 percent fewer hospitality workers in the city than before the pandemic.Gov. Joe Lombardo acknowledged the state’s high unemployment in a statement, saying that “many of our businesses and much of our work force are still recovering from the turmoil of the pandemic.”“The long-term economic solution to Nevada’s employment and work force challenges begins with diversifying our economy, investing in work force development and training,” said Mr. Lombardo, a Republican, who unseated a Democrat last year in a tight race in which he attacked his opponent and President Biden over the economy.The state is making progress toward those diversification goals, Mr. Lombardo said, citing Elon Musk’s announcement in January that Tesla would invest $3.6 billion in the company’s Gigafactory outside Reno to produce electric semi trucks and advanced battery cells, vowing to add 3,000 jobs.Major League Baseball is preparing for the relocation of the Oakland Athletics to Las Vegas, where a stadium to be built adjacent to the Strip will, by some projections, create 14,000 construction jobs. The Las Vegas Grand Prix — signifying Formula 1 racing’s return to the city for the first time since the 1980s — is expected to draw huge crowds this fall, as is the Super Bowl in 2024.Despite the state’s unemployment rate, the fact that the economy is trending in the right direction, both locally and nationally, bodes well for Mr. Biden’s chances in the state as the 2024 campaign begins, said Dan Lee, a professor of political science at the University of Nevada, Las Vegas.“Should it remain on the right track,” Mr. Lee said, “that’s clearly good for the incumbent.”But a potential complication lies ahead.The Culinary Workers Union Local 226, which represents 60,000 hotel workers, has been in talks since April on a new contract to replace the five-year agreement that expired in June. The union could take a strike authorization vote this fall in an attempt to pressure major hotels, including MGM Resorts International, Caesars Entertainment and other casino companies, to give pay raises and bring back more full-time jobs.More than a potential strike, the union, which estimates it has 10,000 members who remain out of work since the pandemic started, is a critical bloc of Mr. Biden’s Democratic base in Nevada. In 2020, Mr. Biden won the state by roughly two percentage points in part because of a huge ground operation by the culinary union. Those members could be difficult to organize should a shaky economic climate in the state persist.“Companies cut workers during the pandemic, and now these same companies are making record profits but don’t want to bring back enough workers to do the work,” said Ted Pappageorge, the head of the local, which is affiliated with the union UNITE HERE. “Workload issues are impacting all departments.”Juanita Miles has struggled to find steady income since the pandemic hit.Gabriella Angotti-Jones for The New York TimesFor Juanita Miles, landing a stable, full-time job has been challenging.For much of the past decade, she worked as a security guard, patching together gigs at several hotels and restaurants. But when the pandemic hit and businesses closed, she realized she would need to pivot.“I’m now looking anywhere, for anything,” Ms. Miles, 49, recalled.In late 2020, she took a $19-an-hour job as a part-time dishwasher at the Wynn Las Vegas, Ms. Miles said, but the hotel soon reduced its staff and she lost her job. She returned, for a time, to working security at hotel pools, nightclubs and apartment complexes.But Ms. Miles started to feel increasingly unsafe on the job during her night shifts, she said, recounting the time a man who appeared to be high on drugs followed her onto her bus home early one morning after a shift.“I was no longer willing to risk my life,” Ms. Miles said inside an air-conditioned casino along the Strip where she had stopped for a respite from the 110-degree heat outside.As slot machines clanged in the background and people packed around craps tables, Ms. Miles reflected on the job interview she had just come from at a nearby Walgreens.She thought it had gone well, she said, and she hoped it would pan out. The $15-an-hour pay would help cover her $1,400 rent, as well as the other monthly bills — cellphone, $103; utilities, $200; groceries, $300 — that she splits with her husband, who works at a call center.“Things are going to be tight no matter what,” Ms. Miles said, adding that if offered the job, she still hoped to eventually find something with higher pay.Her dream, she said, is to open a day care center — a fulfilling job that would allow her to alleviate some of the pressure she knows rests on many parents.A worker busing a table at a restaurant inside a hotel. Nearly a quarter of jobs in Nevada are in leisure and hospitality.Gabriella Angotti-Jones for The New York TimesCarey Nash performed “End of the Road” by Boyz II Men for tourists on the Strip.Gabriella Angotti-Jones for The New York TimesFor Mr. Alvarez, the longtime Tropicana employee, any hope of returning to the job he long enjoyed is increasingly fleeting. The hotel, which opened in 1957, is on track to be demolished to make space for the new Athletics baseball stadium.“The city and the state seem to be on the rise,” he said. “But workers cannot be left behind.”After he lost his job at the Tropicana, Mr. Alvarez started working at Allegiant Stadium when it opened to fans in fall 2020.He helped set up platters of food in the stadium’s suites during football games, but the work, which was part time, ended when the season was over.“I was putting together two and sometimes three jobs, just to make enough to live,” he said.Several times during the pandemic, he said, he has feared he might lose his home in North Las Vegas, which he bought in 2008. (Eviction filings in the Las Vegas area in April were up 49 percent from before the pandemic, according to a report from The Eviction Lab at Princeton University.)He filed for unemployment benefits and eventually found part-time work at the Park MGM as a doorman. On a recent morning, Mr. Alvarez put on his gray vest and tie and prepared to begin his midday shift there.In June, the Vegas Golden Knights won the Stanley Cup finals at the T-Mobile Arena next door to the Park MGM. Witnessing the joy and celebration that swept through the hotel reminded him of why he had stayed in the industry.“Helping people and bringing them joy is what this city is all about,” he said. “I just hope I can keep doing this work.” More

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    Wages and Hiring Weigh on Minds of Company Executives

    As companies reported their latest quarterly earnings in recent weeks, hiring, wages and head counts were popular topics as analysts quizzed executives about their plans.Some said they were avoiding expanding their payrolls as rapidly as in the past. Others said that rising wages remained a worry for their bottom lines. And many still looking to hire said that attracting and retaining workers was difficult as the labor market remained robust.“You have to work extra to hire people and to keep people,” Andrew Watterson, the chief operating officer of Southwest Airlines, said on a call with analysts. “Our clients still grapple with labor shortages,” said Martine Ferland, who runs the consultancy Mercer.Even so, the rate of workers quitting their jobs, a measure of workers’ confidence in their prospects and bargaining power, continued to fall in June, according to data released Tuesday. “If you think about our turnover coming down, that means we don’t have as many people we’re hiring as we were before,” said Rick Cardenas, the chief executive of Darden Restaurants, owner of the Olive Garden chain.Wage growth has also cooled in recent months, but remained robust last month, rising 4.4 percent from a year earlier. “We still face above normal levels of wage and benefit cost inflation in our cost structure,” Andre Schulten, the finance chief at the consumer goods company Procter & Gamble, said on a call with analysts.Kathryn A. Mikells, the chief financial officer of Exxon Mobil, said that the oil giant had seen lower prices for some of its materials like chemicals and sand, but “as it relates to things where labor is a high component of the cost, I would say we’re not yet necessarily seeing that deflationary pressure coming through yet.”Anthony Wood, the chief executive of Roku, the streaming device maker, told analysts that the company would continue hiring, but planned to do so outside of the United States, in places where workers “are just less expensive than Silicon Valley engineers.”Other companies, especially in the tech industry, said that they had become more judicious about hiring, with some freezing payrolls or even cutting jobs.Mark Zuckerberg of Meta, which cut tens of thousands of jobs in multiple rounds of layoffs since late last year, said last week that “newly budgeted head count growth is going to be relatively low” at the company, which owns Facebook, Instagram and WhatsApp. Sundar Pichai of Alphabet said that the tech giant would “continue to slow our expense growth and pace of hiring.” More

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    Here’s everything you need to look for in Friday’s July jobs report

    Wall Street prognosticators expect that nonfarm payrolls increased by 200,000 in July, a number that would be the smallest gain since December 2020.
    “This will most likely be a report that has a little bit for everybody,” said LPL Financial economist Jeffrey Roach.
    Areas to watch in the report Friday include prime-age labor force participation, hours worked and average hourly earnings, and the sectors where job growth was highest.

    Miami Beach, Florida, Normandy Isle, 7ty One Venezuelan restaurant, interior with customers dining and wait staff cleaning up. 
    Jeff Greenberg | Universal Images Group | Getty Images

    Friday’s jobs report could provide a crucial piece to the increasingly complicated puzzle that is the U.S. economy and its long-anticipated slide into recession.
    Wall Street prognosticators expect that nonfarm payrolls increased by 200,000 in July, a number that would be the smallest gain since December 2020, while unemployment is projected to hold steady at 3.6%. June saw a gain of 209,000, and the year-to-date total is around 1.7 million.

    While slower job growth might fit the narrative that the U.S. is headed for a contraction, other data, such as GDP, productivity and consumer spending, lately have been surprisingly strong.
    That could leave the payrolls number as a key arbiter for whether the economy is headed for a downturn, and if the Federal Reserve needs to keep raising interest rates to control inflation that is still running well above the central bank’s desired target.
    “This will most likely be a report that has a little bit for everybody, whether your view is skirting recession altogether, a soft landing, or an outright recession by the end of the year,” said Jeffrey Roach, chief economist for LPL Financial. “The challenge is, not every metric is telling you the same story.”

    Inside the numbers

    For economists such as Roach, the clues to what the generally backwards-looking report tells about the future lie in some under-the-hood numbers: prime-age labor force participation, hours worked and average hourly earnings, and the sectors where job growth was highest.
    The prime-age participation rate, for one, focuses on the 25-to-54 age group cohort. While the overall rate has been stuck at 62.6% for the past four months and is still below its pre-pandemic level, the prime-age group has been moving up steadily, if incrementally, and is currently at 83.5%, half a percentage point above where it was in February 2020 — just before Covid hit.

    Rising participation means more people are coming into the labor force and easing the wage pressures that have been contributing to inflation. However, the lower participation rate also has been a factor in payroll gains that continue to defy expectations, particularly amid a series of Fed rate hikes specifically aimed at bringing back in line outsized demand over supply in the labor market.

    “The durability of this labor market largely comes because we simply don’t have the people,” said Rachel Sederberg, senior economist for job analytics firm Lightcast. “We’ve got an aging population that we have to support with much smaller groups of people — the millennials, Gen X. They don’t even come close to the Baby Boomers who have left the labor market.”
    Hours worked is a factor in productivity, which unexpectedly shot up 3.7% in the second quarter as the length of the average work week declined.
    The jobs report also will provide a breakdown of what industries are adding the most. For much of the recovery, that has been leisure and hospitality, along with a variety of other sectors such as health care and professional and business services.
    Wages also will be a big deal. Average hourly earnings are expected to increase 0.3% for the month and 4.2% from a year ago, which would be the lowest annual rise since June 2021.
    Together, the data will be looked at to confirm that the economy is slowing enough so that the Fed can start to ease up on its monetary policy tightening due to a slowing labor market, but not because the economy is in trouble.

    Balancing act

    Payrolls will provide “a litmus test for markets amid a stretch of economic data that continues to show not just a resilient U.S. economy, but one that may be facing renewed risks of overheating,” said Tom Garretson, senior portfolio strategist at RBC Wealth Management.
    RBC is expecting below-consensus payroll growth of 185,000 as “cooling labor demand [is] ultimately likely to reinforce growing economic soft-landing scenarios,” Garretson said.
    However, Goldman Sachs is looking for a hot number.
    The firm, which is perhaps the most optimistic on Wall Street regarding the economy, is expecting 250,000 due to expected strength in summer hiring.
    “Job growth tends to remain strong in July when the labor market is tight — reflecting strong hiring of youth summer workers — and three of the alternative measures of employment growth we track indicate a strong pace of job growth,” Goldman economist Spencer Hill said in a client note.
    Those measures include job data from alternative sources, the job openings count from the Labor Department, and the firm’s own employer surveys. Hill said labor demand has “fallen meaningfully” from its peak a year ago but is still “elevated” by historical norms.
    Indeed, Homebase data shows that small businesses are still hiring but at a decreased pace. The firm’s Main Street Health Report indicates that employees working dropped 1.2% in July while hours worked fell 0.9%. Wage growth, though, rose 0.6%, indicating that the Fed still could feel the heat even if the top-line payrolls number is softer.
    The trick, said Lightcast economist Sederberg, is for the labor market to be cooling but not crashing.
    “We want to see a slow drawdown from the upheaval that we’ve seen in the past few months and years. We don’t want to see a crash and jump back to that 5% unemployment rate that we knew a decade ago or so,” she said. “So slow and steady wins the race here.” More

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    White House Hits Back on Fitch Credit Downgrade, Protecting Biden

    The president’s team has mobilized to counter the downgrade of Treasury debt by the Fitch Ratings agency, rushing to defend the story of an improving economic outlook.When the Fitch Ratings agency announced this week that it was downgrading its long-term credit rating of the United States from AAA to AA+, Biden administration officials were ready — and angry.Administration officials had been lobbying Fitch against the downgrade, which bewildered many economists but became immediate fodder for congressional Republicans and nonpartisan budget hawks to criticize the nation’s current fiscal direction.When the ratings agency went through with the move anyway, President Biden’s team mobilized a rapid response, with economic heavyweights inside and outside the administration criticizing the timing and substance of the announcement.The swift pushback was an effort to keep the downgrade from tarnishing Mr. Biden’s economic record amid a run of good news in key measures of the health of the American economy. And its aggressiveness reflected the critical importance of an improving economic outlook to Mr. Biden’s re-election campaign.“What was important to the president was to point out not only was the Fitch decision arbitrary and outdated, but his administration has taken action to accomplish things that go in the exact opposite of the markdown,” Jared Bernstein, the chairman of the White House Council of Economic Advisers, said in an interview, citing a bipartisan deal to raise the debt limit and modestly reduce federal spending.“One reason why we punched back hard is because Fitch completely ignored accomplishments under this president, both on fiscal policy and on economic growth,” he said.The White House got lucky in one respect. Coverage of the downgrade was immediately swamped by the third criminal indictment of former President Donald J. Trump.It was an extension of a trend that has both helped and hurt Mr. Biden so far this year: Over the past six months, according to a Stanford University database, television networks have focused as much on news about his predecessor as on news about Mr. Biden.Also helping Mr. Biden was that investors largely shrugged off the Fitch Ratings move. Researchers at Goldman Sachs wrote on Wednesday that “the downgrade should have little direct impact on financial markets.”The downgrade came just after 5 p.m. on Tuesday. Fitch released a statement that attributed the move to “the expected fiscal deterioration over the next three years, a high and growing general government debt burden and the erosion of governance” in the United States over the past two decades.Most notably, Fitch officials cited a series of high-stakes showdowns over raising the nation’s borrowing limit. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” they wrote.The agency also expressed concerns over the rising costs of Medicare and Social Security benefits as more Americans retire, which are predicted to be the largest drivers of rising federal debt in the decade to come. Fitch predicted that the nation was headed for a mild recession by the end of the year. It was the second credit downgrade in American history, both directly linked to debt limit fights.Moments after the release, Biden administration officials hit back.Janet L. Yellen, the Treasury secretary, said in a statement that she strongly disagreed with a ratings change that she called “arbitrary and based on outdated data.”Soon after, administration officials organized a call with reporters to criticize the move in more detail. They questioned why Fitch had not downgraded the rating when Mr. Trump was president, based on Fitch’s own ratings models, and why it had done so now, soon after a compromise with Republicans in Congress that had averted a fiscal crisis.They rejected the agency’s recession prediction, citing strong recent economic data. They said the president was committed to further spending cuts — along with tax increases on corporations and the wealthy — to further reduce budget deficits in the future.Officials also pointed reporters to a range of outside economists and analysts who criticized the decision.Republicans quickly used the downgrade to criticize Mr. Biden.“With annual deficits projected to double and interest costs expected to triple in just 10 years, our nation’s financial health is rapidly deteriorating and our debt trajectory is completely unsustainable,” said Representative Jodey C. Arrington of Texas, the chairman of the House Budget Committee. “This is a wake-up call to get our fiscal house in order before it’s too late.”Fiscal hawks have been warning for more than a decade that America’s debt could grow unsustainable. Those calls grew as lawmakers borrowed trillions to help people, businesses and governments endure the Covid-19 pandemic. The cost of federal borrowing rose sharply over the past year as the Federal Reserve raised interest rates to combat inflation. More

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    Is Good News Finally Good News Again?

    Economists had been wary of strong economic data, worried that it meant inflation might stay high. Now they are starting to embrace it.Good news is bad news: It had been the mantra in economic circles ever since inflation took off in early 2021. A strong job market and rapid consumer spending risked fueling further price increases and evoking a more aggressive response from the Federal Reserve. So every positive report was widely interpreted as a negative development.But suddenly, good news is starting to feel good again.Inflation has finally begun to moderate in earnest, even as economic growth has remained positive and the labor market has continued to chug along. But instead of interpreting that solid momentum as a sign that conditions are too hot, top economists are increasingly seeing it as evidence that America’s economy is resilient. It is capable of making it through rapidly changing conditions and higher Fed interest rates, allowing inflation to cool gradually without inflicting widespread job losses.A soft economic landing is not guaranteed. The economy could still be in for a big slowdown as the full impact of the Fed’s higher borrowing costs is felt. But recent data have been encouraging, suggesting that consumers remain ready to spend and employers ready to hire at the same time as price increases for used cars, gas, groceries and a range of other products and services slow or stop altogether — a recipe for a gentle cool-down.“If you go back six months, we were in the ‘good news is bad news’ kind of camp because it didn’t look like inflation was going to come down,” said Jay Bryson, chief economist at Wells Fargo. Now, he said, inflation is cooling faster than some economists expected — and good news is increasingly, well, positive.

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    Year-over-year percentage change in the Personal Consumption Expenditures index
    Source: Bureau of Economic AnalysisBy The New York TimesMarkets seem to agree. Stocks climbed on Friday, for instance, when a spate of strong economic data showed that consumers continued to spend as wages and price increases moderated — suggesting that the economy retains strength despite cooling around the edges. Even the Fed chair, Jerome H. Powell, has suggested that evidence of consumer resilience is welcome as long as it does not get out of hand.“The overall resilience of the economy, the fact that we’ve been able to achieve disinflation so far without any meaningful negative impact on the labor market, the strength of the economy overall, that’s a good thing,” Mr. Powell said during a news conference last week. But he said the Fed was closely watching to make sure that stronger growth did not lead to higher inflation, which “would require an appropriate response for monetary policy.”Mr. Powell’s comments underline the fundamental tension in the economy right now. Signs of an economy that is growing modestly are welcome. Signs of rip-roaring growth are not.In other words, economists and investors are no longer rooting for bad news, but they aren’t precisely rooting for good news either. What they are really rooting for is normalization, for signs that the economy is moving past pandemic disruptions and returning to something that looks more like the prepandemic economy, when the labor market was strong and inflation was low.As the economy reopened from its pandemic shutdown, demand — for goods and services, and for workers — outstripped supply by so much that even many progressive economists were hoping for a slowdown. Job openings shot up, with too few unemployed workers to fill them.

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    }

    Monthly job openings per unemployed worker
    Note: Data is up to June 2023 and is seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesBut now the economy is coming into better balance, even though growth hasn’t ground to a standstill.“There’s a difference between things decelerating and normalizing versus actually crashing,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a liberal research organization. “You could cheer for a normalization coming out of these crazy past couple years without going the next step and cheering for a crash.”That is why many economists seem to be happy as employers continue to hire, consumers splurge on Taylor Swift and Beyoncé concert tickets, and vacationers pay for expensive overseas trips — resilience is not universally seen as inflationary.Still, Kristin Forbes, an economist at the Massachusetts Institute of Technology, said it was too simple to argue that all signs of strength were welcome. “It depends on what the good news is,” she said.For instance, sustained rapid wage growth would still be a problem, because it could make it hard for the Fed to lower inflation completely. That’s because companies that are still paying more are likely to try to charge customers more to cover their growing labor bills.And if consumer demand springs back strongly and in a sustained way, that could also make it hard for the Fed to fully stamp out inflation. While price increases have moderated notably, they remain more than twice the central bank’s target growth rate after stripping out food and fuel prices, which bounce around for reasons that have little to do with economic policy.“We are closer to normal now,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “It makes it seem like good news is good news again — and that’s certainly how investors feel. But the more that good news becomes good news, the higher the likelihood of a recession.”Mr. Strain explained that if stocks and other markets responded positively to signs of economic strength, those more growth-stoking financial conditions could keep prices rising. That could prod the Fed to react more aggressively by raising rates higher down the road. And the higher borrowing costs go, the bigger the chance that the economy stalls out sharply instead of settling gently into a slower growth path.Jan Hatzius, the chief economist at Goldman Sachs, thinks the United States will pull off a soft landing — perhaps one so soft that the Fed might be able to lower inflation over time without unemployment having to rise.But he also thinks that growth needs to remain below its typical rate, and that wage growth must slow from well above 4 percent to something more like 3.5 percent to guarantee that inflation fully fades.“The room for above-trend growth is quite limited,” Mr. Hatzius said, explaining that if growth does come in strong he could see a scenario in which the Fed might lift interest rates further. Officials raised rates to a range of 5.25 to 5.5 percent at their meeting last month, and investors are watching to see whether they will follow through on the one final rate move that they had earlier forecast for 2023.Mr. Hatzius said he and his colleagues weren’t expecting any further rate moves this year, “but it wouldn’t take that much to put November back on the table.”One reason economists have become more optimistic in recent months is that they see signs that the supply side of the supply-demand equation has improved. Supply chains have returned mostly to normal. Business investment, especially factory construction, has boomed. The labor force is growing, thanks to both increased immigration and the return of workers who were sidelined during the pandemic.Increased supply — of workers and the goods and services they produce — is helpful because it means the economy can come back into balance without the Fed having to do as much to reduce demand. If there are more workers, companies can keep hiring without raising wages. If more cars are available, dealers can sell more without raising prices. The economy can grow faster without causing inflation.And that, by any definition, would be good news. More

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    The Fitch U.S. ratings cut is here to stay, says analyst who worked on the S&P downgrade in 2011

    Global stock markets fell sharply on Wednesday after ratings agency Fitch downgraded the United States’ long-term foreign currency issuer default rating from AAA to AA+.
    Hentov was part of the Standard & Poor’s team that famously downgraded the U.S. government’s credit rating in 2011, at the time citing political polarization after a prolonged and fraught squabble in Washington over raising the debt ceiling.
    “It does not take a grand sovereign and analytics genius to understand that the fiscal profile of the U.S. is much worse than it has been,” said Hentov.

    Fitch Ratings in New York, United States.
    Cem Ozdel | Anadolu Agency | Getty Images

    Growing political instability means the U.S. will not regain its AAA rating with Fitch for the foreseeable future, according to Elliot Hentov, head of macro policy research at State Street Global Advisors.
    Global stock markets fell sharply on Wednesday after ratings agency Fitch downgraded the United States’ long-term foreign currency issuer default rating from AAA to AA+, citing “expected fiscal deterioration over the next three years” and an erosion of governance in light of “repeated debt-limit political standoffs and last-minute resolutions.”

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    Big-name bank bosses and economists dismissed the decision, saying it “doesn’t really matter,” and Hentov agreed that he did not think it was a “material development.”

    “The ratings are basically a slow-moving signal,” he told CNBC’s “Squawk Box Europe” on Thursday.
    “I think it does not take a grand sovereign and analytics genius to understand that the fiscal profile of the U.S. is much worse than it has been, the governance in charge of public debt is much worse than it has been, and it’s frankly not comparable to any of the other AAAs out there.”
    Hentov was part of the Standard & Poor’s team that famously downgraded the U.S. government’s credit rating in 2011, citing political polarization after a prolonged and fraught squabble in Washington over raising the debt ceiling.
    In May of this year, another standoff between the White House and opposition Republicans over raising the U.S. debt limit once again pushed the world’s largest economy to the brink of defaulting on its bills, before President Joe Biden and House Speaker Kevin McCarthy struck a last-minute deal.

    Asked if the U.S. was likely to regain its “risk-free” AAA rating from Fitch anytime soon, Hentov responded with a flat “no.”

    “That’s the short answer, unless you imagine that U.S. politics takes a turn for a much more stable, predictable path.”
    Jim Reid, head of global economics and thematic research at Deutsche Bank, said that despite the debt ceiling dispute parallels, the August 2011 downgrade from S&P came against a very different political backdrop.
    “The debt ceiling fight and downgrade happened concurrently. In addition the S&P was the first to downgrade the U.S. from AAA and the immediate shock was far more profound than it could be with a second agency doing it 12 years later,” he said.
    Meanwhile, the Federal Reserve had been cutting rates and committed at its August policy meeting to keep rates at an “exceptionally low level until at least mid-2023,” Reid highlighted in an email Wednesday. More