Economy

What on earth is going on in the minds of American consumers right now? That is a question many investors want the answer to. After all, those US shoppers have long been an important driver of the global economy, since private consumption accounts for two thirds of America’s gross domestic product. But recently their behaviour has looked very odd.For more than a year, polls have consistently painted a picture of profound popular pessimism. A survey of 3,000 adults in the second quarter by TransUnion, for example, suggests that 75 per cent of consumers think we will be in recession soon — and 44 per cent think we are already in one. Meanwhile, the Michigan survey of consumer confidence went to just over 60 in June — better than the ultra gloomy level of 50 seen a year ago, but well below the levels that hovered at just under 100 for several years before the pandemic.Yet, even amid this gloom, the US economy continues to grow at a strong(ish) pace, partly because retail sales have remained surprisingly resilient. And household economic fundamentals look surprisingly healthy in the official statistics.The San Francisco Federal Reserve recently analysed the impact of the US government’s $5tn-odd Covid-19 stimulus and concluded that American households had an eye-watering $2.1tn excess savings in 2021, due to that largesse.Consumers have subsequently run down this cushion. But the research notes that “there is still a large stock of aggregate excess savings in the economy [of] some $500bn . . . households on average, including those at the lower end of the distribution, continue to have considerably more liquid funds at their disposal compared with the pre-pandemic period.” Moreover, it predicts that “these excess savings could continue to support consumer spending at least into the fourth quarter of 2023.” Meanwhile, if you look at the so-called “misery index” — a metric that tracks consumer stress — the picture looks more cheerful than “in 83 per cent of the months since 1978”, according to David Kelly, a strategist at JPMorgan. That is because one key component of this index is inflation, which is now falling, after surging last year; the other is unemployment, which is at a 50-year low.More striking still, another composite sentiment index that JPMorgan tracks, using “inflation, unemployment, stock prices, gasoline prices and payroll job gains”, is displaying a “reading for June 2023 [that] at 64.4 is the biggest outlier of all, more than . . . 3.8 standard errors below its predicted value of 98.6.” In plain English, consumers are telling pollsters they are gloomy; the data, however, says they are not.Why? One potential explanation is that the data is wrong or, more accurately, incomplete. It is possible that the aggregate calculations of surplus savings in the San Francisco Fed research, for example, fail to capture the pain now being felt by some socio-economic groups, or is simply out of date. Indeed, research by economists at the Washington Fed that uses a different methodology, implies that excess savings might already be depleted.Similarly, it is also entirely possible that the lived experience of consumers is worse than official employment and inflation data imply. Research by the Ludwig Institute for Shared Economic Prosperity, a Washington think-tank, suggests that poor people face a real inflation rate of 5.8 per cent — not the official 4.7 per cent — because the goods they consume are rising faster in price than the average. It also argues that functional unemployment rate is above 20 per cent — not the official 3.7 per cent — because so many “jobs” are deeply insecure and low-paying. If so, that might explain the gloom.However, a second potential explanation is that it is the polls — not the data — that are skewed. More specifically, it is possible that consumers are extrapolating a wider fear of rising interest rates, geopolitical risks and/or political gridlock on to their assessment of the economy, creating biases. One clue that this skew might be happening is that the Michigan survey shows that consumers are more cheerful about their personal finances than the macroeconomy. Another is that Republicans are dramatically more pessimistic than Democrats, even when they hail from the same socio-economic group. If nothing else, this shows the folly of creating economic models around the concept of the consistently “rational man”.Of course, it is also entirely possible — and indeed probable — that both explanations are correct, namely that the polls and data are both incomplete. That is my guess. But as the mystery bubbles on, there are two tangible lessons. The first is that a hefty dose of humility is currently needed when judging the future trajectory of America’s economy; the past is not necessarily a good guide to future trends, given the Covid shock. Second, this uncertainty also shows why the Fed (and others) need to conduct far more on-the-ground, ethnographic research to see how consumer culture is changing, and whether this gloomy sentiment will damp animal spirits later this year. There are hints it might: recent data on restaurant spending and durable purchases has softened, from previous highs. But right now those shoppers are a baffling tribe. So much for America being the land of optimism. [email protected] More

The Job Openings and Labor Turnover Survey showed that listings in May fell to 9.82 million, down 496,000 from April and below the 9.9 million estimate.
Quits, often an indication of a tight labor market where workers feel confident they can leave their current jobs for better opportunities, increased by 250,000.
The ISM services index for June posted an unexpected increase to 53.9.

There were about half a million fewer job openings in May than the previous month, providing at least a modest sign that the ultra-tight labor market could be loosening a bit, the Labor Department reported Thursday.
The closely watched Job Openings and Labor Turnover Survey showed that listings fell to 9.82 million, down 496,000 from April and below the 9.9 million consensus estimate from FactSet. Openings outnumbered the available labor pool by 1.6 to 1 for the month, a level that had been closer to 2 to 1 just a few months ago.

The decline would have been even more had there not been an increase of some 61,000 in government-related positions. Openings tumbled in health care and social assistance (-285,000) as well as finance and insurance (-139,000).
The report comes amid conflicting signs of where the labor market is heading.
Earlier Thursday, payroll services firm ADP reported a stunning 497,000 new private sector jobs in June, more than double the 220,000 Dow Jones estimate.
That report raised fears that the Federal Reserve would have to stay tough on inflation and continue to push up interest rates.
In a speech Thursday morning, Dallas Fed President Lorie Logan said she is concerned that inflation is not coming down rapidly enough and that more restrictive monetary policy will be necessary, particularly to address labor market imbalances.

“Job openings remain far above the 2019 level. Layoffs remain low. There is no indication of an abrupt deterioration in labor market conditions,” Logan said in remarks delivered at Columbia University in New York.
“The continuing outlook for above-target inflation and a stronger-than-expected labor market calls for more restrictive monetary policy,” she added.
The JOLTS report showed a rise in the quits level, often an indication of a tight labor market where workers feel confident they can leave their current jobs for better opportunities. Quits increased by 250,000, taking the rate up to 2.6%, a 0.2 percentage point increase.
Hires rose slightly while layoffs and discharges nudged lower.
In a separate report Thursday morning, the ISM services index for June posted an unexpected increase to 53.9, representing the share of businesses that reported expansion. That was up from 50.3 in May and above the 51.3 estimate. A reading above 50 indicates expansion.
The employment index rose back into expansion, climbing 3.9 points to 53.1. However, the prices index fell back 2.1 points to 54.1. Business activity and production jumped to 59.2, an increase of 7.7 points. More

Dressed in double denim, thick-rimmed black glasses and shiny leather boots, Mujinga Tshikuta Asamoah bears few signs of the hardship he endured as a child. From as young as 14 years old, he went down narrow holes as deep as 25 metres, carried 50kg bags and washed ore to produce the cobalt essential to the batteries used in the world’s laptops, phones and electric cars.“I was bound and obliged as I had no options,” Asamoah says, shuffling three mobile phones powered by the very material responsible for both the death of some of his closest friends and his escape from poverty.Now 30, a teacher and interpreter, Asamoah says he is one of the lucky few in the surreal, almost otherworldly, reddish-brown landscapes of the Democratic Republic of the Congo’s copper and cobalt capital Kolwezi, in the south of the country.But his fresh start was not through his own toil. It was his aunt’s husband working nearby at global natural resource powerhouse Glencore’s vast Mutanda mine who paid for him to go to university and leave the mines behind.Mujinga Tshikuta Asamoah, a teacher and interpreter, was once a child labourer in a cobalt mine in Kolwezi © Harry Dempsey/FTCobalt, the silver metal so abundant in the DRC that miners can dig it out with basic tools, is essential for the world’s transition to clean energy. Demand for the resource is projected to triple by 2035, mainly for electric vehicle batteries, according to the Cobalt Institute, an industry body.Asamoah’s story encapsulates the uneasy coexistence of the two faces of the DRC’s cobalt industry: on one side, the industrial mines run by multinationals like Glencore that are sealed off by concrete walls and wire fences and, on the other, the informal mines with hellish, unsafe conditions that feed underground Chinese trading networks. The practice is known as “artisanal” mining; a name that belies its rudimentary and hazardous nature. Yet this small-scale mining generates about 15 to 30 per cent of the DRC’s cobalt supply, which in turn produces about 70 per cent of global output. “Demand growth for battery metals is intensifying,” says James Nicholson, head of social responsibility at Trafigura, one of the world’s largest commodity traders. “Large-scale mines are going to be under significant pressure to produce, so the mid-tier as well as small-scale and artisanal producers will increasingly be depended upon.”If the world is to meet its need for cobalt — and do so in a sustainable and equitable way — then the artisanal mining sector will have to be cleaned up to meet international standards. While artisanal mining extends far beyond the DRC, supporting the livelihoods of almost 1 in 20 people on the planet, and includes commodities such as copper, gold, tin and lithium, it was in 2016 that Amnesty International drew attention to child labour and inhumane working conditions in the country’s informal cobalt mining sector. Since then, Washington and Brussels have become more serious about bolstering the security of raw material supply — and loosening China’s stranglehold on critical mineral supply chains. They are also introducing due diligence and human rights legislation in the global supply chain.

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Down in the dusty tracks of Kamilombe, an artisanal mining site near Kolwezi, home to hundreds of precarious man-made holes and trading depots there is little sign of those changes. A hundred or so miners start the morning brawling over a scant number of hard hats. No children appear to be present — although they can be seen washing ore and carrying soaked red sacks through a nearby stream. Extreme danger and exploitation remains: most miners wear nothing beyond sandals, jeans and T-shirts, some shafts sink 100 metres deep — three times the legal limit — and the prices paid by Chinese traders are unfair.After witnessing Congolese people in Kamilombe going through the same ordeal he once did, Asamoah is decisive about what should happen next: “These mines should be formalised.”The glacial pace of change is also seen at the end of the supply chain. The $7.7tn club of miners, car manufacturers and electronics makers — including Glencore, Volkswagen, Microsoft and Apple — who belong to the Responsible Minerals Initiative continue to rigidly exclude artisanally mined cobalt from what they consider “responsible” sources.Some in the industry say this exclusion helps the companies protect their supply chains and indeed their reputations, but does little to improve conditions for those risking their lives in unregulated mines or bring development to one of the world’s poorest nations.Governments and multinational corporations are under increasing pressure to do more to improve safety at informal mines and find a way to incorporate them into ethical supply chains. A chastening but unsuccessful attempt by families of children killed or injured while mining to sue Apple, Google, Microsoft, Dell and Tesla in 2019 has added further scrutiny. In February, Microsoft called for “a coalition” to advance formalisation of artisanal mining, which would involve a collective effort to enforce standards such as eliminating deep tunnels, alcohol abuse and child labour. But given the challenge ahead, some critics wonder why safeguarding artisanal mining is taking so long.Blurred linesDriving through Tenke Fungurume, on track to be the world’s largest cobalt mine, a child can be seen carrying a sack of ore on their back in the rubble between a dirt road and a vast open pit mine cut out of the ground. On top of huge man-made mountains of crushed ore, children and young men are sifting with their bare hands for rocks containing valuable metal.These are not employees of CMOC, the Chinese operator that bought the mine from US rival Freeport-McMoran in 2016. They belong to the local community that has swollen from 30,000 to 400,000 people in 15 years. Some came looking for a well-paid job with CMOC, while others were lured by the 10 active giant open pits that signal there is plenty of cobalt to be found nearby. The collision of those two worlds poses reputational, legal and operational risks to miners and their customers. It also threatens to grant China, which has looser human-rights standards than western rivals, the upper hand in securing critical minerals, while keeping the populations of resource-rich nations hostage to kleptocrats and international criminal gangs.Mining companies such as Glencore and CMOC, which churned out 43,800 and 20,300 tonnes of cobalt last year, respectively, insist that their products do not get mixed with artisanal supplies during transportation or at processing sites and smelters in the DRC, China or elsewhere. Some experts dispute that the separation is so clear cut. Michael Posner, director of the Centre for Business and Human Rights at NYU’s Stern School of Business, says that “the idea that you can separate artisanal mining from industrial mining nicely and neatly is a fiction”.The reality on the ground is that mining companies tolerate artisanal mining as long as it does not disrupt their operations but stop short of attempting to regulate it or improve safety as the practice is technically illegal.

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One of the ways large miners have attempted to curb the pervasiveness of artisanal mining is to create alternative jobs by building schools, hospitals and infrastructure. “The ultimate solution is to convince the [artisanal] miners that there’s something better outside of the mine,” says a CMOC executive.That pushes the onus on the government but leadership in the DRC is too weak for that to be an immediate path forward. Plus, the incentives to mine are high. Men can earn upwards of $400 a month digging for cobalt compared with $100 a month for a teacher. Chloris, a 22-year-old digger at Kamilombe, reluctantly gave up his teacher training to earn more money in the mines in order to support seven family members. “I want to do something else. It doesn’t matter what,” he says. In a local village near Mutanda, another of the country’s largest mines, its owner Glencore doubles take-home pay for teachers and pays hundreds of millions of dollars in tax payments to DRC authorities annually. Anne-Marie Fleury, cobalt responsible sourcing director at Glencore, says that the complexity and scale of the challenge means that formalising artisanal mining would be helpful, but not sufficient to solve the problem.

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“To address artisanal mining, a number of factors need to be considered, including root causes, livelihood development and improved co-ordination of support and development efforts,” she says.How far companies like Glencore should go in formalising artisanal mining raises tough questions about the extent to which, and for how long, they should take on government responsibilities in a so-called failed state. The Swiss commodity trader’s role in the DRC is also complicated by the fact that it is under investigation by Dutch authorities for potential corruption in the country. “If mining companies develop new projects in places where needs aren’t being met, then responsibility and pressures will fall on them,” says Rohitesh Dhawan, chief executive of the International Council of Mining and Metals, a global industry association. “But it’s not a healthy or sustainable model for mining companies to become shadow service providers and can create tension with other stakeholders including investors.”The upshot is mining companies are more comfortable improving safety standards at artisanal mines the further away they are from their own pits and machinery. Artisanal miners must sometimes navigate holes as deep as 100 metres © Olivier Delafoy/Fair Colbalt AllianceKamilombe is one such project. Led by the Fair Cobalt Alliance, an NGO funded by Tesla, Google, Glencore and CMOC, the pilot offers protective equipment and child labour remediation services. Similar schemes have come and gone. Trafigura and UAE miner Chemaf ran a pilot project involving 5,000 miners at Mutoshi that used machines to create open pits and eliminate dangerous tunnels. The project, widely hailed as a success, ceased in 2020 due to the coronavirus pandemic. While a blueprint may have been left, the legacy at the site has faded.“We’ve been working bottom-up for a long time with the donor community but we’re not getting sustained results,” said Martin Lokanc, senior mining specialist at the World Bank. “A top-down approach is needed.”Curbing Chinese interestsWhat needs to be done to formalise artisanal mining is clear: offer an alternative trading structure to break the dominance of an exploitative network of intermediaries. This alternative, such as a national buyer, would pay vulnerable miners more in return for putting up fences and installing security guards to keep children out of sites as well as banning deep tunnels and providing protective equipment.Four years ago, the DRC created Entreprise Générale du Cobalt to buy all cobalt supplies from informal mining sites, but action has been snail’s pace as evidenced by the vacant Musompo Trading Centre in Kolwezi. Almost 100 pastel blue warehouses have been ready since early last year to take artisanal cobalt supplies for an entity such as EGC, which would then use lab equipment to measure the weight, purity and humidity of the ore, three properties on which diggers are often cheated.Artisanal miners carry sacks of ore at the Shabara mine near Kolwezi © Junior Kannah/AFP/Getty ImagesDown Kamilombe’s litter-strewn warren of tracks, rows of Congolese workers stand outside a dozen corrugated shacks in coloured uniforms. Behind them in the shadows, Chinese traders linger, waiting to aggregate and launder ore alongside that produced from some large-scale mines.Bruno, a 35-year-old grizzled miner, shrugs off the dangers at Kamilombe, calling his job “the best”. But like everyone there, he wants the current sales system to change. “The Chinese steal from us,” he shouts through the crowd.Eric Kalala, the newly appointed boss of EGC, says it is “more than urgent” to roll out the agency’s action plan, but many doubt much progress will be made before the country’s general election expected in December.EGC’s stalling start can be attributed to local political factions and powerful Chinese interests behind the co-operatives and trading networks.That does not stop the DRC government from calling on the west to rethink its approach and make bigger commitments if it is serious about bringing lasting change and competing with China. “When you guys are coming with a pilot project, it’s just a drop in the ocean,” says Paul Mabiola Yenga, adviser to the DRC Ministry of Mines. “When the Chinese come and say ‘we are going to build’, this is a big investment. The Europeans come and say ‘we need to have good governance and then we will come’. The issue is we see the government but we don’t see the private companies.”Between the DRC government, mining companies, their end customers and NGOs, there is constant finger pointing over who is responsible for the failure to reform and safeguard artisanal mining.Some experts argue that companies talk a good game on responsible sourcing, but turn a blind eye to the knock-on effects of their policies. “There’s a way and not the will,” says Dorothée Baumann-Pauly, director of the Geneva Center for Business and Human Rights. “The peak of cynicism is to put in your contract, as all the car companies do, that we don’t source from artisanal mines.” Many say pragmatism is sorely needed. The London Bullion Market Association, an industry body, has recognised that responsible sourcing standards for gold have marginalised smaller producers from international markets. Its chief executive, Ruth Crowell, says deeper engagement is needed from consumers and investors.Floods add to the hazards of artisanal mining for local people in Kamilombe © David Sturmes/the Impact facility“The bigger challenge is people in the west not wanting to get into the detail of how you will make a difference to peoples’ lives by sourcing the metal, instead just wanting it to be issue-free,” she adds.For the DRC’s cobalt, car manufacturers, electronics producers and mining firms’ efforts to improve artisanal mining and the communities involved are done at arm’s length through various platforms, which have been criticised as smokescreens. The Fair Cobalt Alliance — Tesla, Google and Glencore’s flagship initiative that supports Kamilombe — has a paltry $1.8mn of annual funding. Similarly, BMW, Volkswagen and others help fund Cobalt for Development.Formalising artisanal mining may appear as irresolvable as sweatshops did for garment manufacturers in the 1990s, says Posner of NYU. But he adds that there are encouraging differences. Back then, the White House convened Nike and other apparel giants to get them to start dealing with exploitation and establish standards that led to some improvement. Tackling sweatshops, Posner argues, is “relatively more complicated” than artisanal mining in one part of the DRC. “If western governments start to say, ‘these are our expectations’ and we have supply chain laws to back it up, then that would certainly be better than today’s free-for-all,” he adds.For men and women at Kamilombe like Françoise, who washes ore for $5 to $10 a day to support six children and three brothers, that change would make a world of difference. “I cannot simply stop this work today”, she says, “because this is all I have.”Data visualisation by Chris Campbell More

The furious pace of job-switching in recent years has led to big gains for low-wage workers. But the pendulum could be swinging back toward employers.Tens of millions of Americans have changed jobs over the past two years, a tidal wave of quitting that reflected — and helped create — a rare moment of worker power as employees demanded higher pay, and as employers, short on staff, often gave it to them.But the “great resignation,” as it came to be known, appears to be ending. The rate at which workers voluntarily quit their jobs has fallen sharply in recent months — though it edged up in May — and is only modestly above where it was before the pandemic disrupted the U.S. labor market. In some industries where turnover was highest, like hospitality and retail businesses, quitting has fallen back to prepandemic levels.Quits Are High, But Falling

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Voluntary quits per 100 workers
Note: Data is seasonally adjustedSource: Labor DepartmentBy The New York TimesNow the question is whether the gains that workers made during the great resignation will outlive the moment — or whether employers will regain leverage, particularly if, as many forecasters expect, the economy slips into a recession sometime in the next year.Already, the pendulum may be swinging back toward employers. Wage growth has slowed, especially in the low-paying service jobs where it surged as turnover peaked in late 2021 and early 2022. Employers, though still complaining of labor shortages, report that it has gotten easier to hire and retain workers. And those who do change jobs are no longer receiving the supersize raises that became the norm in recent years, according to data from the payroll processing firm ADP.“You don’t see the signs saying $1,000 signing bonus anymore,” said Nela Richardson, ADP’s chief economist.Ms. Richardson compared the labor market to a game of musical chairs: When the economy began to recover from pandemic shutdowns, workers were able to move between jobs freely. But with recession warnings in the air, they are becoming nervous about getting caught without a job when fewer are available.“Everyone knows the music is about to stop,” Ms. Richardson said. “That is going to lead people to stay put a bit longer.”Aubrey Moya joined the great resignation about a year and a half ago, when she decided she had had enough of the low wages and backbreaking work of waiting tables. Her husband, a welder, was making good money — he, too, had changed jobs in search of better pay — and they decided it was time for her to start the photography business she had long dreamed of. Ms. Moya, 38, became one of the millions of Americans to start a small business during the pandemic.Today, though, Ms. Moya is questioning whether her dream is sustainable. Her husband is making less money, and living costs have risen. Her customers, stung by inflation, aren’t splurging on the boudoir photo sessions she specializes in. She is nervous about making payments on her Fort Worth studio.“There was a moment of empowerment,” she said. “There was a moment of ‘We’re not going back, and we’re not going to take this anymore,’ but the truth is yes, we are, because how else are we going to pay the bills?”But Ms. Moya isn’t going back to waiting tables just yet. And some economists think workers are likely to hold on to some of the gains they have made in recent years.“There are good reasons to think that at least a chunk of the changes that we’ve seen in the low-wage labor market will prove lasting,” said Arindrajit Dube, a University of Massachusetts professor who has studied the pandemic economy.The great resignation was often portrayed as a phenomenon of people quitting work altogether, but the data tells a different story. Most of them quit to take other, typically better-paying jobs — or, like Ms. Moya, to start businesses. And while turnover increased in virtually all industries, it was concentrated in low-wage services, where workers have generally had little leverage.For those workers, the rapid reopening of the in-person economy in 2021 provided a rare opportunity: Restaurants, hotels and stores needed tens of thousands of employees when many people still shunned jobs requiring face-to-face interaction with the public. And even as concerns about the coronavirus faded, demand for workers continued to outstrip supply, partly because many people who had left the service industry weren’t eager to return.The result was a surge in wages for workers at the bottom of the earnings ladder. Average hourly earnings for rank-and-file restaurant and hotel workers rose 28 percent from the end of 2020 to the end of 2022, far outpacing both inflation and overall wage growth.In a recent paper, Mr. Dube and two co-authors found that the earnings gap between workers at the top of the income scale and those at the bottom, after widening for four decades, began to narrow: In just two years, the economy undid about a quarter of the increase in inequality since 1980. Much of that progress, they found, came from workers’ increased ability — and willingness — to change jobs.Pay is no longer rising faster for low-wage workers than for other groups. But importantly in Mr. Dube’s view, low-wage workers have not lost ground over the past two years, making wage gains that more or less keep up with inflation and higher earners. That suggests that turnover could be declining not only because workers are becoming more cautious but also because employers have had to raise pay and improve conditions enough that their workers aren’t desperate to leave.The strong labor market gave Danny Cron, a restaurant server, the confidence to keep changing jobs until he found one that worked for him.Yasara Gunawardena for The New York TimesDanny Cron, a restaurant server in Los Angeles, has changed jobs twice since going back to work after pandemic restrictions lifted. He initially went to work at a dive bar, where his hours were “brutal” and the most lucrative shifts were reserved for servers who sold the most margaritas. He quit to work at a large chain restaurant, which offered better hours but little scheduling flexibility — a problem for Mr. Cron, an aspiring actor.So last year, Mr. Cron, 28, quit again, for a job at Blue Ribbon, an upscale sushi restaurant, where he makes more money and which is more accommodating of his acting schedule. The strong postpandemic labor market, he said, gave him the confidence to keep changing jobs until he found one that worked for him.“I knew there were a plethora of other jobs to be had, so I felt less attached to any one job out of necessity,” Mr. Cron wrote in an email.But now that he has a job he likes, he said, he feels little urge to keep searching — partly because he senses that the job market has softened, but mostly because he is happy where he is.“Looking for a new job is a lot of work, and training for a new job is a lot of work,” he said. “So when you find a good serving job, you’re not going to give that up.”The labor market remains strong, with unemployment below 4 percent and job growth continuing, albeit more slowly than in 2021 or 2022. But even optimists like Mr. Dube concede that workers like Mr. Cron could lose leverage if companies start cutting jobs en masse.“It’s very tenuous,” said Kathryn Anne Edwards, a labor economist and policy consultant who has studied the role of quitting in wage growth. A recession, she said, could wipe away gains made by hourly workers over the past few years.Still, some workers say one thing has changed in a more lasting way: their behavior. After being lauded as “essential workers” early in the pandemic — and given bonuses, paid sick time and other perks — many people in hospitality, retail and similar jobs say they were disappointed to see companies roll back benefits as the emergency abated. The great resignation, they say, was partly a reaction to that experience: They were no longer willing to work for companies that didn’t value them.Amanda Shealer, who manages a store near Hickory, N.C., said her boss had recently told her that she needed to find more ways to accommodate hourly workers because they would otherwise leave for jobs elsewhere. Her response: “So will I.”“If I don’t feel like I’m being supported and I don’t feel like you’re taking my concerns seriously and you guys just continue to dump more and more to me, I can do the same thing,” Ms. Shealer, 40, said. “You don’t have the loyalty to a company anymore, because the companies don’t have the loyalty to you.” More

For decades, the economics consensus has been that fiscal and monetary policy should be largely separate. Governments should provide public services, foster an acceptable distribution of resources and ensure the sustainability of their public finances. Central banks should then set interest rates to maintain price stability. It is a neat and tidy model. The principle of separation between fiscal and monetary policy always had an important exception, of course, which is triggered in a serious economic downturn. When interest rates fall so low that monetary policy becomes ineffective, central banks need the power of fiscal stimulus to prevent a depression. The global financial crisis of 2008-09 and the initial Covid crisis of 2020 showed these were not mere theoretical possibilities. That thinking feels very passé. Now that interest rates in most advanced economies have risen towards normal levels, calls for governments to act in concert with central banks are louder than ever. In the past three months, the IMF, the OECD and the Bank for International Settlements have each demanded countries raise taxes or limit public spending to curtail demand and reduce inflationary pressures, thereby helping monetary policy to do its job. The economic logic is compelling. Fiscal policy can be powerful and rapid in bringing demand down to meet the reduced supply capacity wrought by the Covid pandemic and the energy crisis. Higher taxes allow governments to spread the burden of interest rate rises more widely — rather than watching those with the highest debts pay the largest price. Getting governments involved in price stability is therefore more effective and fairer. The BIS last month picked up on an additional benefit of tighter fiscal and looser monetary policy: the current scenario, it said, was testing the boundaries of “the region of stability”, with high interest rates making a financial crisis much more likely. Last year’s turmoil in UK pension funds and this year’s among US regional and Swiss banks was a warning of what might arise if governments did not step up to the plate, it added. So far, so clear. Governments should help their central banks by borrowing less at a time of high inflationary pressure. But as the IMF acknowledged last week, it’s not quite that simple. In an important paper at the European Central Bank’s annual forum, fund staff presented evidence that the substantial energy subsidies implemented across Europe last year appear to have both lowered peak rates of headline inflation and kept future price rises closer to the ECB’s 2 per cent target. The research results directly contradicted the IMF’s own advice; it was brave of its chief economist, Pierre-Olivier Gourinchas, to present the findings himself. Having studied the experience of energy subsidies, the fund now believes that their direct effect in bringing down headline inflation and taking the heat out of a European wage price spiral outweighs the fiscal stimulus involved in capping petrol, gas and electricity prices.Gourinchas was clear that this was a specific result caused by slack in eurozone labour markets, rather than marking the IMF’s conversion to the benefits of price controls or subsidies. He added that the jury was out on the inflationary effects of the UK’s energy price subsidies because the labour market there was so tight. Regardless of the precise estimates, the important thing to note is that we are living in a new, much messier era. Governments clearly have a role in managing inflation — in a slump, this means stimulus; when inflation is high, it means higher taxes or austerity, and very occasionally price-distorting subsidies. Central banks are still ultimately in control of inflation with monetary policy but the idea that governments can pass the buck is past its sell-by [email protected] More

A top official at the US central bank has called on the Federal Reserve to immediately resume raising interest rates after forgoing an increase last month, citing scant evidence that inflationary pressures are easing as needed.Lorie Logan, president of the Dallas Fed and a voting member this year on the Federal Open Market Committee, disclosed on Thursday that she was among the officials who thought a quarter-point interest rate rise at the June meeting was “entirely appropriate” in light of strong incoming data as she laid out the case for the central bank to further squeeze the US economy.At the most recent meeting, officials unanimously supported a pause in the Fed’s historic monetary tightening campaign after 10 consecutive interest rate rises, but signalled that half a percentage point more worth of increases would be necessary in order to damp demand sufficiently.In prepared remarks delivered at a Central Bank Research Association event, Logan said it was “important” for the Fed to “follow through” given her concerns about “whether inflation will return to target in a sustainable and timely way” amid what she described as “clearly pretty hot” data.“If we lose ground in our effort to restore price stability, we will need to do more later to catch up,” she warned.Logan expressed scepticism that the bulk of the impact of the Fed’s previous rate increases has yet to filter through the economy, instead arguing that “we have already had a fair amount of time to see the overall effects of monetary tightening”. The central bank has raised the federal funds rate more than 5 percentage points since early 2022.One concern is that the housing market has “bottomed out”, Logan said, and if recent signs of improvement gather momentum, it could pose “upside risk to inflation down the road”.

Logan also pushed back on the idea that the banking stress that erupted earlier this year was having an outsized effect on credit availability across the economy.Officials, including chair Jay Powell, have cited these factors as reasons why the Fed should move more gradually at this stage in terms of further interest rate increases, although he recently conceded that “consecutive” moves should not be ruled out.Speaking on Wednesday, John Williams, president of the New York Fed and a close ally of Powell, said a June pause was the right decision but acknowledged that there was “more to do” with regard to interest rate rises. More

Private sector jobs surged by 497,000 in June, well ahead of the 267,000 gain in May and much better than the 220,000 estimate.
Leisure and hospitality led with 232,000 new hires, followed by construction with 97,000, and trade, transportation and utilities at 90,000.
The unexpected jump in payrolls comes despite more than a year’s worth of Federal Reserve interest rate increases.

A Now hiring sign at McDonald”u2019s restaurant in Yorba Linda, CA, on Monday, Sept. 13, 2021 offering pay from $15 an hour for new employees as signs around the region are getting the cold shoulder from workers reluctant to resume service-industry jobs.”
Jeff Gritchen | Medianews Group | Getty Images

The U.S. labor market showed no signs of letting up in June, as companies created far more jobs than expected, payroll processing firm ADP reported Thursday.
Private sector jobs surged by 497,000 for the month, well ahead of the downwardly revised 267,000 gain in May and much better than the 220,000 Dow Jones consensus estimate. The increase resulted in the biggest monthly rise since July 2022.

From a sector standpoint, leisure and hospitality led with 232,000 new hires, followed by construction with 97,000, and trade, transportation and utilities at 90,000.
Annual pay rose at a 6.4% rate, representing a continued slowing that nonetheless still is indicative of brewing inflationary pressures.
“Consumer-facing service industries had a strong June, aligning to push job creation higher than expected,” said Nela Richardson, chief economist at ADP. “But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”
The unexpected jump in payrolls comes despite more than a year’s worth of Federal Reserve interest rate increases aimed in large part to cool a jobs market in which there are still nearly two open positions for every available worker.
ADP’s count comes a day ahead of the more closely watched nonfarm payrolls report from the Department of Labor. That is expected to show an increase of 240,000 after a 339,000 gain in May. While the two reports can differ broadly, the ADP numbers pose some upside risk for Friday’s report.

Other industries seeing solid gains included education and health services (74,000), natural resources and mining (69,000), and the “other services” classification (28,000).
Manufacturing lost 42,000 jobs, while information was off 30,000 and financial activities saw a decline of 16,000.
Broadly speaking, service providers contributed 373,000 of the total, while goods producers added 124,000.
Companies with fewer than 50 employees were responsible for most of the job growth, adding 299,000 positions. Firms with more than 500 workers lost 8,000 jobs, while mid-size companies contributed 183,000. More

A surge in orders for cars and other vehicles boosted German manufacturers in May, but analysts warn that the sector remains under pressure from slowing domestic and global demand. Manufacturing orders in the eurozone’s largest economy were up 6.4 per cent in May from a month earlier, data by the national statistics office Destatis showed on Thursday. The expansion was stronger than the 1.2 per cent forecast by economists polled by Reuters.Growth in orders the previous month was also revised up to a 0.2 per cent expansion from preliminary estimates of a 0.4 per cent contraction and follows a 10.9 per cent plunge in March. Orders for new cars were up 8.6 per cent in May.Christian Fuertjes, economist at HSBC, said that “today’s strong upside surprise was merely some kind of normalisation from an exceptionally weak level rather than a genuine turn of the tides with respect to the overall demand situation”. Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the result was “solid” but driven by one-off items, with vehicle orders for ships and trains rising by 137 per cent.In contrast, orders for electrical equipment and consumer goods declined 15 per cent and 0.8 per cent respectively compared with April.Vistesen expects new orders to decline 1.5 to 2 per cent in the three months to June compared with the previous quarter. In the less volatile three-month comparison, incoming orders from March to May were 6.1 per cent lower than in the previous period. Monthly orders were also 4.3 per cent below the levels in May last year.Strong demand for military equipment to boost Ukraine’s defence against Russian forces was also boosting orders, Fuertjes noted. However, he expects higher interest rates combined with still low real wages, as well as continued challenges in the transition from combustion engines to electric vehicles, to weigh on car production in the months ahead. “The demand situation for the German industrial sector as a whole remains challenging,” he said.German gross domestic product has contracted for the last two consecutive quarters, with output falling below the level in the first quarter of 2019.In June, economists polled by Consensus Economics expected the German economy to contract 0.2 per cent this year, a downward revision from the marginal expansion forecast in the previous month.Mateusz Urban, economist at Oxford Economics, has trimmed growth expectations for Germany this year. With “demand dragged down by a tightening of monetary policy — especially in the US”, he now expected industrial output in the eurozone’s biggest economy to keep shrinking until the first quarter of 2024. More