🐢 Slow cooldown

Plus: One sigh of relief | Wednesday, November 30, 2022

Open in app View in browser   Presented By Walmart   Axios Macro By Neil Irwin and Courtenay Brown · Nov 30, 2022 Welcome to your Wednesday Macro! Today's main event comes this afternoon, as Fed chair Jerome Powell will speak about the economic outlook at the Brookings Institution at 1:30 ET. Follow our coverage on Axios.com, and we'll be back tomorrow with a full analysis. For now, we look at the snail-paced path of labor market cooling. Plus, an early sign of inflation easing in Europe. 📈 Situational awareness: The U.S. economy grew at a 2.9% annualized rate last quarter, modestly better than the initial estimate of 2.6%. An alternate measure of growth, gross domestic income, says the economy expanded at a much slower 0.3% annual rate. Today's newsletter, edited by Javier E. David and copy edited by Katie Lewis, is 592 words, a 2-minute read.     1 big thing: Super-slow job market cooldown Illustration: Shoshana Gordon/Axios   The state of the U.S. labor market can be summed up with a simple text search of the labor market churn report out this morning. The phrase "changed little" appears eight times in the report, not counting the two times the phrase "little changed" shows up. Why it matters: We've spent months looking for evidence that the ultra-hot job market is giving way to a more balanced situation for employers and workers. And while the transition is happening, it's taking place at a glacial pace. Driving the news: There were 10.3 million job openings in October, the Labor Department said in its latest Job Openings and Labor Turnover data, down 353,000 from September but still above August's level. The Fed is closely watching openings and other aspects of the JOLT report to ascertain if the job market cooldown it seeks is materializing. The rate at which Americans were hired ticked down slightly, while the number who were laid off or discharged ticked up. Between the lines: In terms of direction, the labor market seems to be showing the cooldown the Fed wants. But in terms of level, it's still hotter than it has been in recent history. For example, the 1% rate of layoffs and discharges in October — essentially the rate at which employers were firing people — is well below the average of 1.3% in 2019, which was itself the strongest labor market in decades. Similarly, Americans still have the confidence to quit their jobs at elevated rates — 2.6% in October, versus 2.3% in 2019. What they're saying: "These data represent modest progress in reducing the excess demand for labor from the Fed's perspective," said Conrad DeQuadros, senior economic adviser at Brean Capital. "But there is still a long way to go before [Fed officials] would see this report as indicating a labor market with supply and demand in balance." What's next: The November jobs report comes out Friday. These headline numbers have also pointed to an exceptionally strong and stable labor market. The unemployment rate, for example, has hovered between 3.5% and 3.7% for eight straight months. Forecasters surveyed by Bloomberg expect that rate to be unchanged at 3.7% in November, and for employers to add a healthy (but not blockbuster) 200,000 jobs. The bottom line: It will take more labor market pain than we're seeing thus far for the Fed to relent on rate hikes.     A message from Walmart Bringing convenience, value and experience this holiday season     Walmart just announced new price investments for even deeper savings, three new and expanded returns options, a broader assortment with new top gifts, a new community giving platform and an enhanced omni-channel shopping experience to deliver for its customers all season long. Learn more.     2. 🇪🇺 Europe's inflation relief Data: EuroStat; Chart: Axios Visuals For the first time in 18 months, inflation in Europe is moderating. The bloc's consumer price index rose 10% in the 12 months ended in November, according to preliminary figures released today — a far bigger cooldown than economists expected from a 10.6% inflation rate for the year ended in October. Why it matters: It's impossible to get excited when inflation remains painfully high, fueling a historic cost-of-living crisis. The November inflation figure is five times the central bank's 2% target. Still, inflation is beginning to move in the right direction — with signs the worst could be behind Europeans. That could give officials cover to downshift to a still-big interest rate increase of 0.5 percentage points. In this respect, officials at the European Central Bank and the Fed find themselves in a similar spot. One key difference, however, is the bloc's acute exposure to fallout from Russia's invasion of Ukraine and any unforeseen shocks that may bring to its economy. Energy prices were up 35% over the past year, compared with 42% in October. Food prices, however, continued to rise faster: up 13.6% over last year, versus 13.1% the prior month.     A message from Walmart Walmart's new investments bring deeper savings for holiday shopping     More than 80% of customers who plan to shop at Walmart this holiday season are doing so because of Walmart's low prices. Walmart is making significant price investments in key categories to ensure that it can deliver amazing value for its customers during a time when they need it most. Learn more.   Are you a fan of this email format? Your essential communications — to staff, clients and other stakeholders — can have the same style. Axios HQ, a powerful platform, will help you do it.   Axios thanks our partners for supporting our newsletters. 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