Daily update
Daily update
- The US employment report looms—for all its flaws (which are many), it still evokes excitement. Investors have two questions. Is the economy slowing? Will wage pressures create a fourth inflation wave? Payrolls data hints at the former—if the economy is not slowing the Federal Reserve might feel justified in allowing real interest rates to rise. The answer to the wage question is “no,” and average hourly earnings do not measure wages. Every time you use a self-service checkout, you push up average hourly earnings; your voluntary unreported labor replaces a low-paid worker.
- Elsewhere in the employment report look for the number of people holding multiple jobs—a possible sign of stress for lower income households. Participation rates and (appropriately for International Women’s Day) female participation rates also matter economically.
- Yesterday’s European Central Bank meeting did nothing, but it did nothing reasonably well. Inflation forecasts were revised lower, albeit mainly because of energy prices and with some wage caveats. The economic scene is set for a second quarter easing, and any delay would be more down to cumbersome decision making processes and weak leadership.
- Japan’s January household spending was weaker than expected. Supply issues in the auto sector are part of the reason, but other sectors also disappointed.