The case for a soft landing in the economy just got another boost

Old_Joe

Following is a transcription of a current NPR article:

Odds of a soft landing may have just gotten a little better.

The latest employment report from the Labor Department shows job growth held steady last month, boosting hopes that the Federal Reserve may be able to curb inflation without triggering a sharp jump in unemployment. U.S. employers added 187,000 jobs in July. While job growth has moderated, it hasn't come close to stalling, even after the Fed raised interest rates to the highest level in 22 years.

Here are five takeaways from the report.

Keeping up with population growth

Over the last three months, employers have added an average of 217,000 jobs per month. That's down from an average of 312,000 jobs in the first three months of the year, but it's still a healthy pace of growth.

Employers are still adding more than enough jobs each month to keep pace with population growth. Health care, hospitality and construction were among the industries adding jobs in July, while factories and transportation saw modest job cuts.

Historically low unemployment

The unemployment rate dipped to 3.5% in July from 3.6% the month before. The jobless rate has hovered in a narrow range for more than a year, hitting a half-century low of 3.4% in April.

Unemployment among African Americans hit a record low of 4.7% that month before rebounding to 6% in June — raising some concerns. In a relief, the African American jobless rate dipped again in July to 5.8%.

It's best to take those numbers with a grain of salt. The figures can be noisy because of the relatively small sample size.

People are earning more

Here's another bit of positive news: Wages are finally outpacing inflation, boosting workers' buying power. Average wages in July were up 4.4% from a year ago. Wage gains have moderated in the last year, but inflation has cooled as well, so workers' paychecks now stretch farther.

For the twelve months ending in June wages rose 4.4%, while prices climbed just 3%. (The inflation rate for the year ending in July will be released next week.)

Coming off the sidelines

The number of people working, or looking for work, increased by 152,000 last month. Importantly, the share of people in their prime working years (ages 25-54) who are in the labor force is growing. After hitting a two-decade high in June, it fell just slightly last month. That's important, because a growing workforce allows the economy to expand without putting upward pressure on inflation.

And it's good news for women

Before the pandemic, women briefly outnumbered men on U.S. payrolls. The ranks of working women fell sharply in 2020, when schools and restaurants were shuttered and many women were forced to leave work to look after family members or for other reasons. Women's share of jobs has been slowly recovering, however, thanks in part to job growth in health care and education — fields where women outnumber men. (In contrast, the male-dominated manufacturing industry lost 2,000 jobs last month.)

As of July, women held 49.9% of all payroll jobs, up from 49.8% the month before.

hank

Thanks @Old_Joe. Nice summation.

Rick Rieder of Blackrock went a step further on Bloomberg this morning saying, ”I’m in the no landing camp.”

(How sweet it is!)

davidrmoran

This may require some creativity to read

https://www.nytimes.com/2023/08/08/opinion/inflation-us-groceries-economy.html?smid=nytcore-ios-share&referringSource=articleShare

Baseball_Fan

@davidmoran

So what's the overall message of the article (hiiden behind paywall etc)?

Noting that Kraft-Heinz and Kellog's prices have risen by 25-30% over the past two years....you might scoff at this but I can tell you that cost increase inputs continue...I haven't seen any cost reductions at the grocery store....

Best Regards,

Baseball Fan

hank

Baseball_Fan said:

Noting that Kraft-Heinz and Kellog's prices have risen by 25-30% over the past two years....you might scoff at this but I can tell you that cost increase inputs continue...I haven't seen any cost reductions at the grocery store....

I can’t say. Pretty much grab what I want / need off the store shelves or out of the cooler. Fortunate in that regard perhaps. Not to ignore the tremendous strain inflation must cause for many with low income & large families. Maybe I’m repeating something already mentioned … but there’s a glut of chicken now whereas a year ago there was a shortage. Prices of chic and pork have fallen from what I hear. Point being - Don’t read too much into these individual products that rise and fall … normal supply & demand shifts.

Corn flakes? How much of a dollar’s worth is in the corn? LOL - Probably less than a dime. Most of the cost is in labor, processing, packaging, distribution, advertising, retail, etc.

ISTM the food staples (stocks) like the ones mentioned have held up pretty well recently - though I haven’t tracked the ones mentioned. Some have run up nicely on big down days in the S&P.
(Mentioned that because this is an investing forum)

Old_Joe

Following are excerpts from that article, edited for brevity:

The "overall message" is that food prices have greatly increased globally due to a number of reasons, and that the US is actually doing better than most:

Given that huge rise in global prices, how could prices in the United States not have gone up a lot? Indeed, there have been big food price rises around the world, for example, in Europe:

So food inflation is mainly a global story. But what caused that global food spike? It seems to have been a perfect storm of adverse events (including actual storms).

Now, the prices U.S. consumers pay for food haven’t closely tracked the global price index, and in general have gone up by less. But that’s not surprising, because the indexes are measuring somewhat different things. The World Bank is estimating the prices of raw foodstuffs, while the Bureau of Labor Statistics is measuring the prices of purchased foods

The bottom line is that even though many people would like someone to blame for high grocery prices, it’s really hard to find domestic villains. Despite what the American right claims, Joe Biden didn’t do this. Despite what some on the left would like to believe, neither, at least for the most part, did greedy corporations.

Sometimes, as the bumper stickers don’t quite say, stuff just happens.

davidrmoran

tyvm, oj

davidrmoran

Baseball_Fan said:

@davidmoran

So what's the overall message of the article (hiiden behind paywall etc)?

Noting that Kraft-Heinz and Kellog's prices have risen by 25-30% over the past two years....you might scoff at this but I can tell you that cost increase inputs continue...I haven't seen any cost reductions at the grocery store....

Baseball Fan

- did you try privacy / incognito browser sessions using various browsers?

- I see many price drops. Costco meats, MarketBasket (big NE discount chain) cereals, milk everywhere, fresh produce (corn locally picked; blueberries)

Tarwheel

I’m noticing many price drops at the grocery store. Things like eggs, bread and yogurt have dropped a lot at my store. However, prices are still high for sodas, cereal, meats, beer, etc. I have no qualms about buying generic brands or skipping items when prices get too high for me. I have totally quit buying name brand cereals for that reason. I am not paying $7 for a box of Cheerios, particularly when the store brand is only $2.50. Likewise, we seldom eat beef nowadays. There are healthier options for less money.

Old_Joe

Cheerios!!! I hate those things. When I was a little kid I badgered my mother to buy a box because the guys on the radio claimed they were like "little doughnuts".

What a lie! They tasted like cardboard, and my mother made me finish the whole box. I sure learned my lesson about advertising, though.

Old_Joe

Additional information regarding inflation data can be found at MFO post: MARKETPLACE- Is shelter inflation data the most timely measure of housing costs?

davidrmoran

more data

https://threadreaderapp.com/thread/1690047183909752832.html

BenWP

@davidrmoran: the article made (im)perfect sense up until this line: "The obvious answer is the end of Long Transitory, ie recombobulation...." Do you really read this crap and understand it? I did read it and I don't understand it. Are you putting us on?

Old_Joe

@BenWP - You quit just a sentence too soon. After recombobulation came this: "when do we ever know that anything in economics is true?" Now that sure makes sense.

You do raise an interesting point, though... if somebody or something is discombobulated (which is in the dictionary), then for sure they must have been combobulated prior to the discombobulation, and could potentially be recombobulated. Yes?

davidrmoran

BenWP said:

@davidrmoran: Do you really read this crap and understand it? ... Are you putting us on?

Yes partly, and no:

… what we actually got was a lot of disinflation, even in measures that tried to extract "underlying" inflation excluding volatile components

... with the employment situation improving rather than worsening

The simplest explanation consistent with the standard model … was and is a rightward shift [ = increase] in aggregate supply

Where might such a shift come from? The obvious answer is … the economy sorting out lingering pandemic-related disruptions

Thinking you should skip my Krug reposts, then ?

Old_Joe

Maybe just the ones with recombobulation?

davidrmoran

not sure anything would help

BenWP

@davidrmoran: I get Krugman with my NY Times subscription, but if you link him, then it takes on a whole new meaning. Keep it up!

davidrmoran

learning from oops

https://www.nytimes.com/2023/08/14/opinion/columnists/economists-disinflation-interest-rates.html