Daily update
Daily update
- It is US employment report Friday. This is your monthly reminder that average hourly earnings are not wages, and certainly not wage costs. The averaging process makes this data sensitive to changes in the composition of the workforce. The central story of the US labor market today is of a society getting over a collective mid-life crisis.
- The pandemic meant that a lot of people were sitting at home, rethinking their life choices. When life resumed lots of people decided to change jobs (especially the “temporarily unemployed”). This increased churn in the labor force (showing up as increased vacancies), and caused employers to complain about the increased hassles of having to hire people. Now things are settling down, and people are staying with their employers. Job stability and job security help stabilize middle-income consumer spending, supporting the softer landing scenario.
- China has been drip-feeding support to the economy. There is both support and stimulus—for instance, lowering mortgage rates for existing borrowers (supporting spending power) and cutting deposits for homebuyers (more a stimulus). Overnight, the People’s Bank of China changed foreign exchange reserve requirements to try and support the currency.
- There are European and US businesses sentiment polls. The relationship of sentiment to reality has become more strained.
