The summer of subvariants

As this summer heats up, so has the spread of the hot new version of COVID-19.

Why it matters: This subvariant of Omicron called BA.5 — the most transmissible subvariant yet — quickly overtook previous strains to become the dominant version circulating the U.S. and much of the world.

BA.5 is so transmissible — and different enough from previous versions — that even those with immunity from prior Omicron infections may not have to wait long before falling ill again.

What they’re saying: “I had plenty of friends and family who said: ‘I didn’t want to get it but I’m sort of glad I got it because it’s out of the way and I won’t get it again’,” Bob Wachter, chairman of the University of California, San Francisco Department of Medicine told Axios. “Unfortunately that doesn’t hold the way it once did.”

  • “Even this one bit of good news people found in the gloom, it’s like, ‘Sorry’,” Wachter said.

State of play: This week, the CDC reported BA.5 became the dominant variant in the U.S., accounting for nearly 54% of total COVID cases. Studies show extra mutations in the spike protein make the strain three or four times more resistant to antibodies, though it doesn’t appear to cause more serious illness.

  • Hospital admissions are starting to trend upward again, CDC data shows, though they’re still well below what was seen during the initial spread of Omicron.
  • It’s unclear whether that could be indicating an increase in patients in for COVID, or patients who happen to have COVID, Wachter said. “We’re up in hospitalizations around 20% but with a relatively small number of ICU patients,” Wachter said about COVID cases at UCSF.
  • In South Africa, the variant had no impact on hospitalizations while Portugal saw hospitalizations rise dramatically, Megan Ranney, academic dean at the Brown University School of Public Health told Axios.
  • “So the big unknown is what effect it’s going to have on the health care system and the numbers of folks living with long COVID,” she said.

Yes, but: “I’m certainly hearing about more reinfections and more fairly quick reinfections than at any other time in the last two and a half years,” Wachter said.

Zoom in: That is also largely the experience of the surge seen firsthand in New York City by Henry Chen, president of SOMOS Community Care, who serves as a primary care physician across three boroughs of the city.

  • With this particular variant, he said: “The symptoms are pretty much the same but a little bit more severe than the last wave. It’s more high fever, body ache, sore throat and coughing,” Chen said, adding his patient roster is mostly vaccinated.
  • But it is occurring among patients who’d gotten the virus only three or four months ago, he said.

The big picture: Another summertime wave of cases could prolong the pandemic, coming after many public health precautions were lifted and with available vaccines losing their efficacy against the ever-evolving virus.

The bottom line: The messaging isn’t to panic, but to understand the virus is likely spreading in local communities much more than individuals realize due to shrinking testing programs  and without the level of protection they might assume they have.

  • “If you don’t want to get sick, you still need to be taking at least some precautions,” Ranney said. “[COVID] is still very much among us.”

U.S. adds 372,000 jobs as labor market stays robust

The U.S. economy added 372,000 jobs last month, while the unemployment rate held at 3.6%, close to the lowest level in a half-century, the government said on Friday.

Why it matters: Jobs growth remains healthy, even as the Federal Reserve tries to slam the brakes on the economy to contain decades-high inflation.

  • Forecasts called for 270,000 payrolls to have been added in June.

By the numbers: Job gains in April and May were 74,000 lower than initially estimated.

  • The labor force participation rate — the share of the population employed or looking for a job — ticked down slightly to 62.2%.
  • Wages grew 5.1% from the prior year, compared to 5.2% in May.

The backdrop: There has been a spate of companies announcing layoffs, rescinding job offers and pausing hiring, though these developments have largely been concentrated in sectors like housing and technology.

Ex-Theranos president Sunny Balwani found guilty of fraud

Sunny Balwani, the former president and chief operating officer of bankrupt blood-testing company Theranos, on Thursday was found guilty of 12 counts of conspiracy and fraud against certain investors and patients.

  • It’s a similar verdict to one handed down in January to Theranos founder and ex-CEO Elizabeth Holmes, who once dated Balwani.

Why it matters: Balwani isn’t a household name like Holmes, but he was instrumental in building a billion-dollar house of cards that duped both investors and patients.

Courtroom drama: Balwani’s attorneys tried to pin the blame for Theranos’ failures on Holmes, much as her attorneys had tried to blame Balwani.

  • As we wrote when the trial began: Holmes tried to thread an incredibly narrow rhetorical needle, denying the existence of fraud while also redirecting blame. Balwani seems to be attempting something similar; claiming he was a savvy executive with lots of past success, but also a naif who was bamboozled by Holmes.
  • But prosecutors, who originally wanted to try the pair together, often used Balwani’s own words against him. For example, they presented a text message from Balwani to Holmes that read: “I am responsible for everything at Theranos.”
  • One big difference between the trials, however, was that Balwani didn’t testify in his own defense.

Details: Balwani was convicted on all 12 counts brought against him, after nearly five days of jury deliberations. This includes a wire fraud charge related to a $100 million investment in Theranos from the family of former U.S. Education Sec. Betsy DeVos.

  • Holmes had been convicted on four of seven counts, each one related to investors and carrying a maximum sentence of 20 years in prison.

Look ahead: Expect Balwani to appeal the verdict, as has Holmes already has done.

Job openings, quits rate fell slightly in May

Job openings fell slightly in May as demand for workers remained near record highs, according to data released Wednesday by the Labor Department, even amid growing concerns of a potential recession.

The number of open jobs listed in the U.S. on the final business day of May totaled 11.3 million, dropping from 11.7 million in April after seasonal adjustments. Though job openings fell in May, hires, layoffs and quits stayed roughly even with their April numbers, according to the May Job Openings and Labor Turnover Survey (JOLTS) report.

The JOLTS report showed a labor market still stacked strongly for workers in May, a month when the U.S. added 390,000 jobs and saw the jobless rate hold strong at 3.6 percent. Despite the decline in job openings, there were still almost two open gigs for each unemployed American.

That mismatch can give workers many opportunities to find new jobs with better compensation and career opportunities than their current ones.

“This is not what a recession looks like. The May 2022 JOLTS data obviously lags what’s happening in the labor market presently, but all signs are that it remains strong,” wrote Nick Bunker, research director at Indeed.com, in a Wednesday analysis.

“If the labor market were quickly and suddenly taking a downturn, we would see employers’ demand for new hires drop and their willingness to let workers go increase. For now, we aren’t seeing a sudden move in either direction.”

Businesses hired roughly 6.5 million workers and lost 6 million in May, both in line with April totals. The percentage of the workers who quit their jobs in May fell to 2.8 percent, just 0.1 percentage points from a record high of 2.9 percent set earlier this year.

With ample jobs available and people still eager to leave in search of better work, businesses have avoided laying off employees over fears they could be hard to replace. Roughly 1.4 million workers were laid off in May, slightly higher than April’s total of 1.3 million. But the percentage of the workforce laid off by their employers held even at 0.9 percent, which is below pre-pandemic levels.

“Despite continued headlines about layoffs, particularly in the tech sector, the layoff rate remains low,” Bunker explained. “This is the 15th straight month that the layoff rate has been below its pre-pandemic bottom.”

The steady strength of the U.S. job market helped propel a rapid recovery from the depths of the COVID-19 recession through much of 2020 and 2021. The U.S. is fewer than 1 million new jobs away from replacing the 21 million jobs lost to the onset of the pandemic, and the speed of the pandemic recovery has helped fuel rapid wage growth, particularly for low-earning workers.

Even so, many economists — including Federal Reserve officials — fear the strength of the job market could add further fuel to inflation already at four-decade highs. While steady job gains are good for the economy, the intense competition for workers has made it difficult for many firms to stay adequately staffed and keep up with both higher wage demands and rising prices.

Fed Chairman Jerome Powell and many economists are hopeful that higher interest rates and the fading effects of fiscal stimulus can help reduce job openings — and the pressure they put on wages — without wiping out job gains.

The Fed has boosted its baseline interest rate range by 1.5 percentage points from near-zero levels in January and is expected to hike by another 2 percentage points by the end of the year. Higher interest rates are meant to reduce inflation by slowing the economy enough to force businesses to stop raising prices and wages.

Even so, he has acknowledged it will be difficult for the Fed to avoid slowing down the labor market into a standstill as the central bank boosts interest rates to fight inflation.

“The labor market conditions [Powell] has described as ‘extremely, historically’ tight and ‘unsustainably hot’ persisted in May,” wrote Julia Pollak, chief economist at ZipRecruiter, in a Wednesday analysis.

“Employers are hanging onto the workers they have in a tight labor market where replacing them is unusually costly.”

The June jobs report, set to be released Friday, will give a most recent view into how well the labor market has held up amid Fed rate hikes. Economists expect the U.S. to have added roughly 268,000 jobs last month, according to consensus estimates.

“There will be a time when the US labor market takes a downturn, jobs are shed at a higher rate, and workers stop quitting their jobs. But that time has yet to come. The labor market remains very tight and very hot. That may change, but it hasn’t yet,” Bunker wrote.

Healthcare sees most job cuts of any industry in 2022

U.S.-based employers announced 32,517 cuts in June 2022, a 58.8 percent increase from 20,476 cuts announced in the same month last year, according to a new job report from  Challenger, Gray & Christmas.

June marks the highest month since February 2021, when 34,531 cuts were announced. It is the second time this year that cuts were higher in 2022 than the corresponding month a year earlier. 

Healthcare/products manufacturers and providers announced the most job cuts this year with 19,390, which is up 54 percent from the 12,620 announced through June 2021. The automotive industry posted the second-highest cuts with 15,578, a number that is up from the 6,111 cuts in the previous year. 

Andrew Challenger, senior vice president of executive search firm Challenger, Gray & Christmas, said the numbers demonstrate increasing economic strain. 

“Employers are beginning to respond to financial pressures and slowing demand by cutting costs. While the labor market is still tight, that tightness may begin to ease in the next few months,” Mr. Challenger said. 

Locations suffering the highest losses include California with 28,692, New York at 15,952, and Pennsylvania at 9,310. 

Companies expand CFOs’ role to retain them amid high demand

The pressure is on for boards to hold onto chief financial officers as firms face the prospect of an economic slowdown and intense competition for talent.

Demand for finance chiefs continues to be high in U.S. businesses, according to a July 4 report from The Wall Street Journal. Data from Russell Reynolds Associates indicates that CFO turnover at companies in the S&P 500 rose to 18 percent in 2021, compared to 15 percent in 2020 and 14 percent in 2019. 

Some new strategies call for broadening CFO responsibilities or elevating their positions altogether to retain top executives, according to Joel von Ranson, head of recruitment firm Spencer Stuart’s global functional practices. 

“Companies create these broader roles and titles to engage and recognize and motivate the very best of the best,” Mr. von Ranson said. 

CFOs at companies in the S&P 500 and Fortune 500 average about five years in their job, according to executive search firm Crist Kolder Associates. Expanding the CFO role allows organizations to create opportunities to retain key talent past the five-year mark. 

In 2021, just under 8 percent of chief executive officers at companies in the S&P 500 and Fortune 500 came from the CFO seat.