Layoffs And Another ‘Since The 70s’ Moment
I'm not sure I'd call it "cause for concern," but initial US jobless claims rose above 250,000 for the first time since November in the week to July 16, Thursday's weekly report showed.
It marked the third consecutive increase and pushed the four-week moving average up to 240,500, the highest since December 4.
Consensus expected 240,000 from Thursday's headline claims print. Continuing claims for the week ended July 9 were likewise higher than expected.
As the simple figure (above) shows, t
These numbers would suggest that the JOLTs numbers for job openings are suspiciously high. Instead of 1.9 opening for every job seeker maybe the number is substantially closer to 1. But as you suggest the FOMC is getting what it wants- job market cooling off, housing cooling off, consumer spending over all cooling off. The 2 yr US Treasury bond suggests the terminal rate on Fed funds is something like 3% so assuming another 75 that gives you another 50-75 bps in hikes. Given the rate of change, a rate of 3% may end up being too high. Anyway, the FOMC is back to inflation targeting so if inflation does not come down quickly enough there is a severe risk of an overshoot by the FOMC….
Half full.
Late bloomers, near to or already retired in my affluent area whom I talk to on my bike rides remember the inflation game from when they were young and poor and have curtailed spending with the idea that it’ll be a few years till the pressure is off. The older boomers seem to talk about the price of gasoline.
Your housing affordability article reminds me of when I was at the house buying age of how unreachable it seemed in the late 80s. At that time it was more of a function of ~ 10% mortgage rates. It does come down to the monthly. Barry Ritholtz has been saying for years that we don’t build enough homes. I am in many ways glad I am not young now because I believe that there is plenty of land to build houses in the middle of nowhere but there are no jobs there.
The young could start deciding the future if they all registered and voted. I am no Marxist but at some point the rentier economy may be forced to change by the young and it will affect the old and the investments they live on.
“Ford is slashing 8,000 jobs, most of which are salaried positions, to help fund its EV ambitions…”
I’m confused. How does eliminating jobs help fund investments in a new product?
Reducing ICE development to focus more on EV development – internal combustion engineering maybe not so transferable to battery electric engineering – and fund the capex needed for battery plants.
More generally, I’d think F may face a profit squeeze if demand for $70,000 F-series trucks falters, consumers switch to economy cars (F hardly makes any), subprime auto loans get shaky, and input cost inflation eats away at gross margins. F is 10X levered, +LSD EBIT margin, not the biggest safety margin going into a recession.
https://www.bloomberg.com/news/articles/2022-06-15/ford-says-mustang-mach-e-profit-wiped-out-by-commodity-costs
Each recession eliminates a couple OEMs, EV transition is going to eliminate others, F needs to get lean and focused, its existence in a decade is not certain.
Thank you for your well thought out comments.