![]() | |||||||||
HOME | SN-BRIEFS |
SYSTEM OVERVIEW |
EFFECTIVE MANAGEMENT |
PROGRESS PERFORMANCE |
PROBLEMS POSSIBILITIES |
STATE CAPITALS |
FLOW ACTIVITIES |
FLOW ACTORS |
PETER BURGESS |
SiteNav | SitNav (0) | SitNav (1) | SitNav (2) | SitNav (3) | SitNav (4) | SitNav (5) | SitNav (6) | SitNav (7) | SitNav (8) |
Date: 2025-05-01 Page is: DBtxt001.php txt00022654 |
MEDIA HEADLINE NEWS
CNBC AFTERNOON NEWS AND MARKET ACTION CNBC reporting for June 30th 2022 Original article: https://link.cnbc.com/public/28227106 Peter Burgess COMMENTARY Peter Burgess | ||
CNBC ... YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION
AS OF THU, JUN 30, 2022 • 11:02 ET
DJIA 30625.66
-1.30% -403.65
S&P 500 3765.12
-1.41% -53.71
NASDAQ 10965.32
-1.90% -212.57
EDITOR'S NOTE
In this very confusing and unusual macroeconomic environment, I offer one piece of advice: just follow the labor market. We can't be in a recession if the labor market is strong, no matter what the GDP number is. And we also can't beat inflation and have the Fed back off tightening until the labor market cools significantly.
It does not matter if 'real' GDP ends up negative in the first and second quarter of this year, in terms of the business cycle. Those reads look terrible because of inflation, not because of weak demand. Nominal GDP has been surging for almost two years now, to such a degree that it's outpacing the economy's capacity and resulting in higher prices instead of greater real output. Real GDP is tanking because the economy has been overheating.
The clearest evidence of this is in the labor market. We added 1.6 million jobs in the first quarter, while inflation-adjusted 'real' GDP declined by an annualized 1.6%. Normally in true economic downturns, we are shedding hundreds of thousands of jobs each month. Instead, even in April and May hiring has proven remarkably strong, with gains of around 400,000 per month--stronger than almost any months we'd seen in the entire expansion before the pandemic hit.
And all of this has occurred while the Fed has sucked a massive amount of liquidity and wealth out of the financial system; $8.5 trillion from the S&P 500 since January, and a couple trillion more from crypto. And yet what did we learn this morning? Weekly new jobless claims actually fell last week, to 231,000--a historically healthy and normal level. Nothing here suggests the layoffs we've started to see in tech and crypto are emblematic of a broader labor market slowdown.
And we actually need a labor market slowdown to finally stop the economic overheating that's resulted in price spikes, supply shortages, and labor issues that are crippling the travel sector now as it was supposed to have its best summer ever. Inflation in 2023 will not be a story of commodity prices, but the cost of services-- especially essential, unavoidable services like healthcare, where labor costs are fast accelerating.
Inflation in that sense risks becoming more pernicious, more regressive, and less obvious to the naked eye than in food and energy costs if it continues to spread throughout the service sector on the back of the tight labor market. Remember, we still have more than 11 million job openings against six million unemployed workers. Fed Chair Powell is basically trying to destroy openings (instead of actual jobs), in an effort to slow the wage gains that are pushing up the cost of everything.
The distinction might seem subtle, but there's a huge difference in getting wage pressures to fall to around 4% from the upwards-of-5% figures we've been seeing in the first half of the year. Four percent puts us more on track to hit the Fed's inflation target, and suggests the economy is normalizing. Still, it won't be the readings this month or next that settle the issue, but rather where we are three to six months out.
In a nutshell: jobless claims, job openings, hours worked, average hourly earnings...these are the most critical business-cycle metrics to follow in the back half of 2022. Beating inflation has to mean some kind of labor market slowdown (or else it will require even more Fed tightening), and the magnitude of the slowdown will be the real tell on the recession question in the months ahead.
As a side note, it makes sense that ADP, which issues its own monthly private-sector jobs report, is taking this moment to halt releases in order to 'retool' its survey, which has a woeful track record in predicting the official jobs release from the U.S. government. With so much at stake on the labor market, it's a make-or-break moment for the company to determine the best usage of its own data, or risk irrelevance.
So yes, it was encouraging to see smaller monthly increases in the Fed's preferred inflation gauge this morning, and the reset of commodity prices and inflation breakevens since late spring. But now, it's up to the labor market to fill in the rest of the story.
See you at 1 p.m!
Kelly
Kelly Evans
Twitter: @KellyCNBC
Instagram: @realkellyevans
Watch our live stream for all you need to know to invest smarter.
Watch our live stream for all you need to know to invest smarter.
KEY STORIES
Fed’s preferred inflation measure rose 4.7% in May, around multi-decade highs
Core personal consumption expenditures prices, excluding food and energy, rose 4.7% from a year ago, slightly less than expected.
Biden calls on Congress to ease Senate rules to codify Roe v. Wade
Biden said he would support suspending the Senate filibuster rule to codify abortion rights established in Roe v. Wade.
Supreme Court limits EPA authority to set climate standards for power plants
The Supreme Court ruled that Congress, not the EPA has authority to set standards on climate-changing greenhouse gas emissions for existing power plants.
Bitcoin falls below $19,000 again as pressure mounts on crypto firms
Cypto hedge fund Three Arrows Capital fell into liquidation, adding further pressure on bitcoin on top of concerns about inflation and interest rate hikes.
North Korea is likely culprit behind $100 million crypto heist, researchers say
There are 'strong indications' that North Korea-run hacking group Lazarus orchestrated the attack, according to blockchain analytics firm Elliptic.
Walgreens profits squeezed as Covid vaccines wane, company invests in health-care business
The drugstore reiterated its forecast for the year after seeing online purchases jump and retail sales bounce back in the quarter.
GOP megadonors turn on Trump after Jan. 6 hearings, set sights on DeSantis, Pence and other 2024 hopefuls
Republican megadonors are moving further away from Donald Trump and moving to consider other potential 2024 contenders after the latest Jan. 6 hearings.
OPEC+ sticks with planned oil production hike as supply concerns weigh on energy markets
OPEC+ has been slowly returning the nearly 10 million barrels per day it agreed to pull from the market in April 2020.
Nikola tries again to win shareholder support to issue new stock – over objections of its disgraced founder
The company has spent the past month rallying shareholders to vote for the proposal in sufficient numbers to overcome objections from founder Trevor Milton.
IMF-Sri Lanka bailout talks end without a deal
The International Monetary Fund has ended talks with Sri Lanka, failing to conclude a deal for a bailout package for the near-bankrupt nation after 10 days.
IN CASE YOU MISSED IT
Image
Apple merges software and hardware unlike any other companies, says Piper Sandler's Harsh Kumar
Image
Inflation will break around September or October, says Matrix's David Katz
Image
Matrix Asset Advisors' David Katz details his second-half playbook for stocks
Unsubscribe Manage Newsletters Terms of Service Join the CNBC Panel
Digital Products Feedback Privacy Policy
© 2022 CNBC LLC. All rights reserved. A property of NBCUniversal.
900 Sylvan Avenue, Englewood Cliffs, NJ 07632
Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis.
Data also provided by THOMSON REUTERS
| The text being discussed is available at | https://link.cnbc.com/public/28227106 and |
SITE COUNT< Blog Counters Reset to zero January 20, 2015 | TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends. TVM is a 'big idea' that has the potential to be a game changer. The goal is for it to remain an open access initiative. |
WE WANT TO MAINTAIN AN OPEN KNOWLEDGE MODEL | A MODEST DONATION WILL HELP MAKE THAT HAPPEN | |
The information on this website may only be used for socio-enviro-economic performance analysis, education and limited low profit purposes
Copyright © 2005-2021 Peter Burgess. All rights reserved. |