Consumer prices were unchanged in July, as plunging prices for gasoline dragged the Consumer Price Index down to zero. Core inflation, which excludes energy and food, rose only 0.3%, below what analysts expected.
Driving the news: The Labor Department reported that overall consumer prices rose 0% last month, and are up 8.5% over the past year. That compares to a 9.1% year-over-year reported in June.
Why it matters: Falling gasoline prices are clearly giving American consumers some inflation relief, and the broader inflation picture was more favorable in July than economists had expected.
By the numbers: Gasoline prices fell 7.7% in July, dragging down headline inflation. Other items with falling prices included used cars and trucks (-0.4%) and airfares (down 7.8%).
But rents kept rising, a major factor in stubbornly high underlying inflation. Renters faced a 0.7% rise in costs.
What’s next: The Federal Reserve has indicated it intends to keep raising interest rates until there is clear evidence inflation is waning. After two straight months of extremely hot inflation readings, this report will be welcome news.
The U.S. added 431,000 jobs and the unemployment rate dropped to 3.6 percent in March, according to data released Friday by the Labor Department.
Job growth fell slightly short of expectations, as consensus estimates from economists projected a gain of roughly 490,000 jobs in March and a decline in the jobless rate to 3.7 percent.
But resilient consumer spending and historically strong demand for workers helped power the U.S. economy to another study job gain.
The Labor Department also revised the January and February job gains up by a combined 95,000, bringing the total of jobs added by the U.S. economy in 2022 up to 1,685,000 million.
More Americans who left the workforce during the pandemic appeared to be returning to the job hunt in March, a promising sign as businesses struggle to fill a record number of openings. The labor force participation rate ticked higher to 62.4 percent and the employment-population ratio—the proportion of working-age adults in the labor force—rose to 60.1 percent.
Wage growth also accelerated in March with average hourly earnings rising 5.6 percent over the past 12 months, up from 5.1 percent in February.
The wage growth comes as inflation batters the Biden administration and Democrats politically, contributing to the president’s approval ratings being stuck in the low 40s. This has contributed to the anxiety in his party in a midterm election year, as Democrats are worried they could lose both the House and Senate majorities in this fall’s elections.
Gas prices have risen further with the Russian war in Ukraine and the international sanctions on Moscow. President Biden on Thursday announced he would be released 1 million barrels of oil a day from the nation’s strategic reserves to try to offer some help to lower gas prices.
The administration has touted the strength of the job market and the overall economy in the face of attacks from Republicans on inflation. And the March report offered more good news.
Overall, job-seekers continued to enjoy ample opportunities to find work at businesses across the economy even in the face of the highest annual inflation in 40 years. And businesses hit hardest by the pandemic-driven recession were among the top job-gainers in March.
The leisure and hospitality industry added 112,000 jobs in March, with restaurants and bars adding 61,000 jobs and accommodation businesses adding 25,000. Employment in the sector is still down 1.5 million from the onset of the pandemic.
Professional and business services companies gained 102,000 jobs in March and retailers added 49,000 employees, pushing both sectors well above their pre-pandemic employment levels.
The manufacturing, construction, and financial sectors also saw strong jobs gains last month.
The strong March job haul is the latest in a string of stellar employment reports. The U.S. has gained an average of 562,000 jobs each month in 2022—the same rate as in 2021, when the country added a record-breaking 6.8 million jobs
Even so, steady monthly job growth has done little to bolster Biden’s approval ratings and voters’ views about his handling of the economy. While job growth, consumer spending, the stock market and property values rebounded rapidly from the recession, a 7.9 percent annual increase in prices has wiped out the political benefit of a strong economy otherwise.
Initial jobless claims, week ended March 19: 187,000 vs.210,000 expected and a revised 215,000 during prior week
Continuing claims, week ended March 12: 1.350 millionvs.1.400 million expected and a revised 1.417 million during prior week
At 187,000, new jobless claims improved for a back-to-back week and reached the lowest level since September 1969. Continuing claims also fell further to reach 1.35 million — the least since January 1970.
The labor market has remained a point of strength in the U.S. economy, with job openings still elevated but coming down from record levels as more workers rejoin the labor force from the sidelines.
Going forward, however, some economists warned that new cases of the fast-spreading sub-variant of Omicron, known as BA.2, could at least temporarily disrupt mobility and economic activity across the country. As of this week, about one-third of COVID-19 cases in the U.S. have been attributed to the sub-variant, though overall new infections have still been trending down from January’s record high. The impact on the labor market — and on demand in the service sector especially — remains to be seen.
“Right now, U.S. cases are in the sweet spot between the bottom of the initial Omicron wave and the impending explosion in BA.2 cases, but this probably won’t last long,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note this week. “Our bet … is that the coming BA.2 wave will trigger a modest but visible pull-back in the discretionary services sector, thereby dampening consumption in the first month of the second quarter.”
Still, many economists and policymakers have pointed out that the labor market withstood prior disruptions due to the Omicron wave earlier this year. Non-farm payrolls grew more than expected in each of January and February despite the outbreak.
“The labor market has substantial momentum. Employment growth powered through the difficult Omicron wave, adding 1.75 million jobs over the past three months,” Powell said in a speech Monday. “By many measures, the labor market is extremely tight, significantly tighter than the very strong job market just before the pandemic.”
The tightness of the labor market has also strongly informed the Fed’s decisions in pressing ahead with tightening monetary policy, with the economy showing clear signs of strength and the ability to handle less accommodative financial conditions. Last week, the Fed raised interest rates by 25 basis points in its first rate hike since 2018. And St. Louis Fed President Jim Bullard, the lone dissenter of that decision who had called for a more aggressive 50 basis point rate hike last week, justified his vote in part given the strength of the U.S. labor market even in the face of decades-high rates of inflation.
“U.S. labor markets are today already stronger than they have been in a generation,” Bullard said in a statement.
Good morning. Here’s Axios chief economic correspondent Neil Irwin and markets correspondent Emily Peck with what you need to know about today’s surprising jobs numbers.
After days of doom-and-gloom talk about how bad the January jobs numbers would be due to the Omicron variant, they turned out to be, um, great?
Employers added 467,000 jobs last month, despite millions out sick.
Why it matters: It’s rare for any jobs numbers to be stunning, but these were. They leave little doubt that this remains a tight job market in which employers are doing everything they can to hold on to their workers.
The big picture: Some of the biggest job gains were in categories that have strong seasonal patterns, normally adding workers in the fall and then cutting those temporary workers in January.
But employers, desperate for staff, appear to have held onto those workers in greater numbers than in a normal year.
Due to the statistical process of seasonal adjustment, “cutting fewer workers than usual for this time of year” gets translated as “adding lots of jobs.”
By the numbers: Leisure and hospitality added 151,000 jobs; retail added 61,000; and transportation and warehousing added 54,000.
Between the lines: The report offered more evidence that this is an exceptionally tight labor market with inflationary pressures brewing, giving the Federal Reserve the green light for interest rate increases.
Average hourly earnings rose a robust 0.7%, and are up 5.7% over the last year. Employers are being forced to pay up to fill their job openings.
Yes, but: Omicron really did have an effect. The report said 6 million people were unable to work because their employers were closed or lost business due to the pandemic, up from 3.1 million in December.
What they’re saying: “Had the prior relationship between Covid cases and employment held true, 800k daily new Covid cases would have led to 2.3 million job losses,” Julia Pollak, chief economist at ZipRecuiter, tweeted. “Instead, we saw 467,000 job GAINS!”
The bottom line: This is an incredibly strong labor market that is poised to strengthen further as Omicron fades.
Many Americans, even those who don’t pay much attention to investing and the markets, know the name Warren Buffett.
Buffett, of course, is the billionaire philanthropist who created one of the greatest investment fortunes in history. Far fewer, however, know the name of his longtime business partner Charlie Munger.
And that’s a shame, because Munger is at least half the brains behind Berkshire Hathaway BRK.ABRK.B, the holding company he runs with Buffett and which manages billions and billions of investor dollars.
Munger turned 98 on Jan. 1. To celebrate his wit and market wisdom, here is a collection of quips from various interviews and question-and-answer sessions over the years.
On business education
Those of you who are about to enter business school, or who are there, I recommend you learn to do it our way. But at least until you’re out of school you have to pretend to do it their way.
On common sense
If people weren’t so often wrong, we wouldn’t be so rich.
On company earnings
Yeah, I think you would understand any presentation using the word EBITDA, if every time you saw that word you just substituted the phrase “bullsh** earnings.”
On a changing economy
So no, I’m optimistic about life. If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.
On public spending
Everybody wants fiscal virtue but not quite yet. They’re like that guy who felt that way about sex. He was willing to give it up but not quite yet.
Well, you don’t want to be like the motion picture executive in California. They said the funeral was so large because everybody wanted to make sure he was dead.
On stock buybacks
I think some people just buy it to keep the stock up. And that, of course, is insane. And immoral. But apart from that, it’s fine.
Warren: Charlie is big on lowering expectations.
Munger: Absolutely. That’s the way I got married. My wife lowered her expectations.
On the purpose of money
Sure, there are a lot of things in life way more important than wealth. All that said…some people do get confused. I play golf with a man. He says: “What good is health? You can’t buy money with it.”
On money managers
The general system for money management requires people to pretend that they can do something that they can’t do, and to pretend to like it when they really don’t. I think that’s a terrible way to spend your life, but it’s very well paid.
On systematic investing
Well, I can’t give you a formulaic approach, because I don’t use one. If you want a formula you should go back to graduate school. They’ll give you lots of formulas that won’t work.
On human nature
As Samuel Johnson said, famously: “I can give you an argument, but I can’t give you an understanding.”
On financial innovation
It’s perfectly obvious, at least to me, that to say that derivative accounting in America is a sewer. is an insult to sewage.
On business competition
Competency is a relative concept. And what a lot of us needed to get ahead was to compete against idiots. And luckily there’s a large supply.
I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, “I can’t be left out.”
On investment bankers
Once I asked a man who just left a large investment bank, and I said, “How does your firm make its money?” He said, “Off the top, off the bottom, off both sides, and in the middle.”
Over the past two years, historians and analysts have compared the coronavirus to the 1918 flu pandemic. Many of the mitigation practices used to combat the spread of the coronavirus, especially before the development of the vaccines, have been the same as those used in 1918 and 1919 — masks and hygiene, social distancing, ventilation, limits on gatherings (particularly indoors), quarantines, mandates, closure policies and more.
Yet, it may be that only now, in the winter of 2022, when Americans are exhausted with these mitigation methods, that a comparison to the 1918 pandemic is most apt.
The highly contagious omicron variant has rendered vaccines much less effective at preventing infections, thus producing skyrocketing caseloads. And that creates a direct parallel with the fall of 1918, which provides lessons for making January as painless as possible.
In February and March 1918, an infectious flu emerged. It spread from Kansas, through World War I troop and material transports, filling military post hospitals and traveling across the Atlantic and around the world within six months. Cramped quarters and wartime transport and industry generated optimal conditions for the flu to spread, and so, too, did the worldwide nature of commerce and connection. But there was a silver lining: Mortality rates were very low.
In part because of press censorship of anything that might undermine the war effort, many dismissed the flu as a “three-day fever,” perhaps merely a heavy cold, or simply another case of the grippe (an old-fashioned word for the flu).
Downplaying the flu led to high infection rates, which increased the odds of mutations. And in the summer of 1918, a more infectious variant emerged. In August and September, U.S. and British intelligence officers observed outbreaks in Switzerland and northern Europe, writing home with warnings that went largely unheeded.
Unsurprisingly then, this seemingly more infectious, much more deadly variant of H1N1 traveled west across the Atlantic, producing the worst period of the pandemic in October 1918. Nearly 200,000 Americans died that month. After a superspreading Liberty Loan parade at the end of September, Philadelphia became an epicenter of the outbreak. At its peak, nearly 700 Philadelphians died per day.
Once spread had begun, mitigation methods such as closures, distancing, mask-wearing and isolating those infected couldn’t stop it, but they did save many lives and limited suffering by slowing infections and spread. The places that fared best implemented proactive restrictions early; they kept them in place until infections and hospitalizations were way down, then opened up gradually, with preparations to reimpose measures if spread returned or rates elevated, often ignoring the pleas of special interests lobbying hard for a complete reopening.
In places in the United States where officials gave in to public fatigue and lobbying to remove mitigation methods, winter surges struck. Although down from October’s highs, these surges were still usually far worse than those in the cities and regions that held steady.
In Denver, in late November 1918, an “amusement” lobby — businesses and leaders invested in keeping theaters, movie houses, pool halls and other public venues open — successfully pressured the mayor and public health officials to rescind and then revise a closure order. This, in turn, generated what the Rocky Mountain News called “almost indescribable confusion,” followed by widespread public defiance of mask and other public health prescriptions.
In San Francisco, where resistance was generally less successful than in Denver, there was significant buy-in for a second round of masking and public health mandates in early 1919 during a new surge. But opposition created an issue. An Anti-Mask League formed, and public defiance became more pronounced. Eventually anti-maskers and an improving epidemic situation combined to end the “masked” city’s second round of mask and public health mandates.
The takeaway: Fatigue and removing mitigation methods made things worse. Public officials needed to safeguard the public good, even if that meant unpopular moves.
The flu burned through vulnerable populations, but by late winter and early spring 1919, deaths and infections dropped rapidly, shifting toward an endemic moment — the flu would remain present, but less deadly and dangerous.
Overall, nearly 675,000 Americans died during the 1918-19 flu pandemic, the majority during the second wave in the autumn of 1918. That was 1 in roughly 152 Americans (with a case fatality rate of about 2.5 percent). Worldwide estimates differ, but on the order of 50 million probably died in the flu pandemic.
In 2022, we have far greater biomedical and technological capacity enabling us to sequence mutations, understand the physics of aerosolization and develop vaccines at a rapid pace. We also have a far greater public health infrastructure than existed in 1918 and 1919. Even so, it remains incredibly hard to stop infectious diseases, particularly those transmitted by air. This is complicated further because many of those infected with the coronavirus are asymptomatic. And our world is even more interconnected than in 1918.
That is why, given the contagiousness of omicron, the lessons of the past are even more important today than they were a year ago. The new surge threatens to overwhelm our public health infrastructure, which is struggling after almost two years of fighting the pandemic. Hospitals are experiencing staff shortages (like in fall 1918). Testing remains problematic.
And ominously, as in the fall of 1918, Americans fatigued by restrictions and a seemingly endless pandemic are increasingly balking at following the guidance of public health professionals or questioning why their edicts have changed from earlier in the pandemic. They are taking actions that, at the very least, put more vulnerable people and the system as a whole at risk — often egged on by politicians and media figures downplaying the severity of the moment.
Public health officials also may be repeating the mistakes of the past. Conjuring echoes of Denver in late 1918, under pressure to prioritize keeping society open rather than focusing on limiting spread, the Centers for Disease Control and Prevention changed its isolation recommendations in late December. The new guidelines halved isolation time and do not require a negative test to reenter work or social gatherings.
Thankfully, we have an enormous advantage over 1918 that offers hope. Whereas efforts to develop a flu vaccine a century ago failed, the coronavirus vaccines developed in 2020 largely prevent severe illness or death from omicron, and the companies and researchers that produced them expect a booster shot tailored to omicron sometime in the winter or spring. So, too, we have antivirals and new treatments that are just becoming available, though in insufficient quantities for now.
Those lifesaving advantages, however, can only help as much as Americans embrace them. Only by getting vaccinated, including with booster shots, can Americans prevent the health-care system from being overwhelmed. But the vaccination rate in the country remains a relatively paltry 62 percent, and only a scant 1 in 5 have received a booster shot. And as in 1918, some of the choice rests with public officials. Though restrictions may not be popular, officials can reimpose them — offering public support where necessary to those for whom compliance would create hardship — and incentivize and mandate vaccines, taking advantage of our greater medical technology.
As the flu waned in 1919, one Portland, Ore., health official reflected that “the biggest thing we have had to fight in the influenza epidemic has been apathy, or perhaps the careless selfishness of the public.”
The same remains true today.
Vaccines, new treatments and century-old mitigation strategies such as masks, distancing and limits on gatherings give us a pathway to prevent the first six weeks of 2022 from being like the fall of 1918. And encouraging news about the severity of omicron provides real optimism that an endemic future — in which the coronavirus remains but poses far less of a threat — is near. The question is whether we get there with a maximum of pain or a minimum. The choice is ours.
First-time unemployment filings fell by 8,000 claims from the previous week’s reading, marking the second lowest print during the pandemic and signaling continued recovery in the labor market as high demand for workers pours into the new year.
The Labor Department released its latest report on initial and continuing claims on Thursday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Dec. 25: 198,000 vs. 206,000 expected and upwardly revised to 206,000 during prior week
Continuing claims, week ended Dec. 18: 1.716 million vs. 1.875 million expected and downwardly revised to 1.856 million during prior week
The newest print brings the four-week moving average to 199,300 in the week ending Dec. 25, Bloomberg data reflected. Continuing claims dropped to a fresh pandemic low of 1.716 million. Forecast for this week’s jobless claims release ranged from 190,000-225,000 from 22 economists surveyed by Bloomberg.
First-time filings for unemployment remained below the 2019 average of 218,000, when the unemployment rate was at a half-century low of 3.5%, according to Bloomberg. The current unemployment rate is also expected to edge down to 4.1% in December as the labor market continues to tighten.
At 205,000, last week’s initial unemployment claims were on par with economist forecasts and below pre-pandemic levels yet again. Earlier in December, jobless claims fell sharply to 188,000, the lowest level since 1969. The prints serve an early indication of the relative strength expected to show in December’s jobs report, though the economic impact of the virus remains unclear.
“Fortunately, there’s no evidence in this data of a new wave of fresh job loss,” Bankrate senior economic analyst Mark Hamrick said, commenting on last week’s figures. “New claims are only slightly above the lowest point in decades notched a couple of weeks ago.”
“With so much uncertainty now and the high level of concern about the Omicron variant, we’ll take stability when we can get it,” Hamrick added.
“It’s stunning to see how much the rate has fallen in the last five months,” he told Yahoo Finance Live. “We expect that pace of decline to slow, but it doesn’t take much to get below 4%, even with a tick up in the labor participation rate, which has been depressed over the last year and a half.”
Record cases of COVID-19 may discourage workers from looking for work as U.S. households continue to cite fear of COVID or virus-related caretaking needs as reasons for staying out of the job market.
“The pandemic’s resurgence is affecting the economy,” Hamrick said in a note last week. “The question is for how long and how much, and it is too early to know the answers.”
Initial jobless claims, week ended Dec. 18: 205,000 vs. 205,000 expectedand a downwardly revised 205,000 during prior week
Continuing claims, week ended Dec. 11: 1.859 million vs. 1.835 million expected and an upwardly revised 1.867 million during prior week
This week’s new jobless claims report coincides with the survey week for the December monthly jobs report from the Labor Department, offering an early indication of the relative strength expected in that print due for release in early January.
At 205,000, initial unemployment claims were expected to come in below even pre-pandemic levels yet again, with jobless claims having averaged around 220,000 per week throughout 2019. Earlier this month, first-time unemployment filings fell sharply to 188,000, or the lowest level since 1969. And based on the latest report, the four-week moving average for new claims was near its lowest in 52 years, ticking up by 2,750 week-over-week to reach 206,250.
Continuing claims have also come down sharply from pandemic-era highs, albeit while remaining slightly above the 2019 average of about 1.7 million. This metric, which counts the total number of individuals claiming benefits across regular state programs, came in below 2 million for a fourth straight week and reached the lowest level since March 2020.
“The claims data indicate strong demand for workers and a reluctance by businesses to lay off workers,” Rubeela Farooqi, chief economist for High Frequency Economics, wrote in a note. “However, disruptions around Omicron and Delta could be a headwind if businesses have to close for health-related reasons.”
“Overall, the direction in the labor market recovery remains positive, with demand still strong,” she added. “Labor shortages are persisting, preventing a stronger recovery, although these appeared to ease somewhat in November.”
Many Americans have also cited solid labor market conditions, especially as job openings hold at historically high levels. In the Conference Board’s latest Consumer Confidence report for December, 55.1% of consumers surveyed said jobs were “plentiful.” While this rate was down slightly from November’s 55.5%, it still represented a “historically strong reading,” according to the Conference Board.