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Daily Business Briefing
September 3, 2021 at 05:07 ET
September 3, 2021 at 05:07 ET
The health of the American economy – and the impact of the latest coronavirus surge – will be in sharper focus on Friday morning, when the government released hiring and employment data for August.
The Department of Labor is expected to report 725,000 job gains, slightly slower than the roaring rate of more than 900,000 recorded in June and July, but a healthy gain by most measures, according to economists polled by Bloomberg.
Still, a slowdown is possible in some of the fastest growing industries such as entertainment and hospitality, as the Delta variant of the coronavirus imposes new restrictions in many parts of the country. As Americans emerged from more than a year of quarantine and experts watched a retreat, there was an explosion of eating out and traveling in early summer.
“Delta is a game changer,” said Diane Swonk, chief economist at Grant Thornton, an accounting firm in Chicago. “People are not laying off workers in response to Delta. But people are pulling back on travel and tourism and going out to eat, and that has consequences.”
Restaurant reservations on OpenTable were close to normal levels in early summer, but are now 10 percent below pre-pandemic prices. Hours worked at restaurants and entertainment venues also fell sharply, according to data from Homebase, which provides time management software to small businesses.
Data reported on Friday were collected in the second week of August, so it may not reflect the full extent of the Delta spread or the impact of Hurricanes Henri and Ida in the second half of the month.
Supply chain interruptions and a shortage of parts such as semiconductors have disrupted production for automakers and other manufacturers. At the same time, employers complained about the scarcity of job candidates, and wages among low-paid workers rose. Walmart announced on Thursday hourly wage increase for over half a million workers.
For the nearly nine million unemployed Americans, solid hiring is essential for unemployment to drop from 5.4 percent in July to 3.5 percent before the pandemic. status of the unemployed, termination of federally funded unemployment benefits It will affect an estimated 7.5 million people after this week.
Federal Reserve officials will eagerly watch for new jobs data, released later on Friday, as they try to assess whether the job market has improved enough for the central bank to begin to move away from full monetary support to the economy.
The Fed purchases $120 billion in government-backed bonds each month to keep long-term interest rates low and to support spending to keep many types of borrowing cheap, lending and helping the economy recover. Officials are debating when and how to cut back on these bond purchases, and investors are awaiting an announcement about the planned start of the so-called cut at one of the Fed’s upcoming meetings.
But central bankers have pinned policy avenues to the labor market, arguing that the economy has not yet made the “significant progress” they had hoped to see on the employment front. Officials, including Fed Chairman Jerome H. Powell, have signaled that they want to see continued employment gains before they are confident in removing support, even as the central bank has taken enough steps toward its inflation target to justify the economy’s slowdown in bond-buying. .
“They believe we’ve made significant progress on inflation,” said Matthew Luzzetti, Deutsche Bank’s chief US economist. “We expect to meet that threshold for the labor market.”
Mr. Powell said during a speech: last week’s speech As of the Fed’s July meeting, he and most of his colleagues said they thought the Fed could begin to slow the pace of asset purchases this year if the economy was performing as they expected.
“The intervening month has brought further progress in the form of a strong jobs report for July, but it has also allowed the Delta variant to spread further,” Powell said, adding that the Fed will “carefully consider incoming data and emerging risks.” ”
The Fed has other tools to support the economy even after it begins to slow its bond purchases. The central bank’s main policy rate, which drives short-term borrowing costs and affects consumer rates from home loans to auto loans, is at the bottom and will likely stay there for months or even years.
But slowing bond purchases will be the first step towards a more normal policy and a sign that the Fed thinks the economy is going through a turbulent pandemic lockdown and is making strong progress towards a full recovery.
The central bank is wary of removing policy support compared to past recessions: the unemployment rate is expected to drop to 5.2 percent in the August report, and likely to drop significantly, according to the median estimate in the Bloomberg poll. It’s lower when the Fed raises interest rates. After the 2008 recession, the Fed had finished cutting and raising interest rates in late 2015, when unemployment was around 5 percent.
The slower response this time is partly due to the rapid development of economic conditions. But on top of that, many policymakers have come to see the Fed’s decision to start raising interest rates in 2015 – before the labor market is in full swing or inflation has stabilized – as a mistake. The Fed formally overhauled its policy approach last year, laying out a more patient game plan, and characterize the employment target as a “broad-based and inclusive goal”
The best indicator of the health of the economy is the Department of Labor’s monthly employment report. Here’s how to solve it:
What is the job report based on?
The job report is based on two surveys.
One counts people, the other counts things. They often point to parallel trends, but there are some notable differences.
The household survey counts how many people in the workforce are employed or actively looking for work.
Recently this is still less than before the pandemic, around 161 million.
The most notable number – the overall increase or decrease in jobs – comes from a survey of employers. Before the pandemic, a gain of 100,000 to 200,000 was considered solid. But with the economy still missing nearly six million jobs from before the pandemic, a larger increase is needed for a report to qualify as good news.
So far this year, monthly earnings have averaged around 600,000.
What is the unemployment rate?
The unemployment rate is the percentage of the unemployed. Earlier last year, that rate was at its lowest point in decades – 3.5 percent. When the pandemic hit, it jumped to 14.8 percent. It has fallen steadily since then, to 5.4 percent in July.
If the unemployment rate rises, it’s not always all bad news.
Sometimes, the number decreases as people stop looking for work, so they are not counted as part of the workforce.
And sometimes the unemployment rate rises because more people decide to look for a job but can’t find a job yet. This may indicate economic optimism.
How accurate is the job report?
In a fast-moving economy, the numbers behind the monthly jobs report are a bit old. The household survey is usually conducted during the calendar week of the 12th month, and the employer survey is conducted during the pay period of the 12th.
An employer survey with a larger sample is considered more reliable. However, self-employed, unpaid family workers, domestic help or farm workers are not considered.
In general, the figures are seasonally adjusted. This means that the effects of normal weather changes, major holidays and school schedules are removed so that the underlying trends are more pronounced.
If there’s such a thing as an It Girl in venture capital these days, Li Jin fills the bill. It sits at the intersection of startup investments and a fast-growing ecosystem of online creators, both of which are extremely hot.
He founded his own venture firm, Workshop Initiatives, which raised a relatively small $13 million for a fund last year and Ms. Jin was among the first investors in Silicon Valley to take influencers seriously and has written about and supported creators for years, Taylor Lorenz reports. for the New York Times.
Jin, 31, a Harvard graduate inspired by the ideas of Friedrich Engels and Karl Marx, is also aggressively pro-worker. He made it clear in podcasts and the Substack newsletter that creators should have the same rights as other employees. Among the ideas he advocated “universal creative income”, which guarantees creators a basic amount of money to live on.
big now Venture capital firms flock to impressive start-upsand as Facebook, YouTube and others promote $1 billion creator fundMs. Jin’s track record has made her a business guru for many digital stars trying to navigate the rapidly changing landscape.
Hank Green, 41, one of the top creators on YouTube and TikTok, said he often exchanged ideas with him on the phone. Markian Benhamou, 23, a YouTuber with more than 1.4 million subscribers, thanked him for understanding what the creators were going through. Marina Mogilko, 31, a YouTube creator in Los Altos, California, said Ms. Jin “started the entire creator economy movement in Silicon Valley.”
“For years, he was talking about the creative economy before anyone else,” said Jack Conte, co-founder and CEO of Patreon, a crowdfunding site for creators. “He really sees the future before other people.”
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