🇺🇸#Productivity strength💥 means non-inflationary growth!

👏Productivity unrevised at +3.2% q/q in Q4 '23
✅Output +3.5% q/q
✅Hours +0.3% q/q

💲Unit labor costs +0.4% q/q
💵Compensation +3.6% q/q

📈Trend:
✅Productivity +2.6% y/y
✅Unit labor costs +2.5% y/y 📊 Nonfarm business sector labor #productivity posted another solid advance in Q4 2023, +3.2%, as economic output +3.5% and hours worked increased a more modest +0.3%.

👏3rd consecutive quarterly gain of more than 3% – a feat that occurred once in the pre-Covid decade (in 2019)

🇺🇸October #jobsreport: "Slight autumn chill"

🟡Payrolls +150k
🟡Private +99k
🔻Goods -11k
🟡Svc +110k
🟢Gov +51k

🔻Revisions: -101k
🔻Diffusion: 52%
🔻Hours -0.3%

👎#Unemployment 3.9% (+0.1pt)
🔻Participation 62.7%

💵Wages +0.2% m/m
⤵️Growth 4.1% y/y (-0.2pt) ⚠️This isn't a retrenchment, but a slowdown for now

📉Job growth continues to moderate with the October +150k gain being 2nd weakest since Dec '20

🔻Rolling 3-mo average cooled to 204k jobs when factoring notable 101k downward revisions to Aug (-62k) & Sep (-39k) payrolls

🇺🇸Thoughts on the economy via @EY_US @EY_Parthenon

Economic momentum through Q3 has been impressive, but while these signs of economic strength will fuel speculations that the economy is reaccelerating, we do not expect such strong momentum will be sustained.

🧵 While the consensus has swung much more optimistic, we believe cooler days are on the horizon.
Cost fatigue, rising debt servicing costs & slowing job growth will be felt more widely by consumers & businesses. The broad-based pullback in biz investment in Q3 is a cautionary tale

#Fed Chair #Powell start the press conference with a strong message on banking

"Conditions in the banking sector have broadly improved since early March and the US banking system is sound and resilient. We will continue to monitor conditions in the sector" "Committed learning the right lessons from this episode and we will work to prevent these events from happening again. VC Barr's review underscores need to address our rules & supervisory practices to make for stronger & + resilient banking system & I'm confident we will do so"

🇺🇸@ism #Manufacturing +0.8pt to 47.1 in April -- still near low since May 2020

"Softening at slower pace"

❌New Orders 45.7 (+1.4pt)
❌Production 48.9 (+1.1pt)
✅Employment 50.2 (+3.3pt)
❌Supplier Deliveries 44.6 (-0.2pt)
❌Backlogs 43.1 (-1.2pt)
⬆️Inflation 53.2 (-2.1pt) "We seem to be in a season of contradictions. Business is slowing, but in some ways, it isn’t. Prices for some commodities are stabilizing, but not for others. Some product shortages are over, others aren’t. Trucking is more plentiful, except when it isn’t..."

“JPMorgan Chase Bank to assume all of the deposits and substantially all of the assets of First Republic Bank.”

fdic.gov/news/press-rel… “All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.”

🇺🇸 Five key points about the US labor market via @EYnews @EY_US @EY_Parthenon

🧵 1⃣ Job growth is slowing

The November jobs report was better-than-expected with +263k jobs, but the 3-month average is 272k. While this is still solid, it's much lower than 600k at start of the year & weakness in real estate, retail, prof biz services are important signals

🇺🇸 #Jobsreport: Springs forward in March
🟢Payrolls +431k
🟢Private +426k
▶️Gds +60k
▶️Services +366k
🟢Gov +5k

🟢Revision: +95k

✅#Unemployment 3.6% (-0.2pt)
✅Part rate 62.4% (+0.1pt:post #Covid high)

⬆️Wages +0.4% m/m & +5.6% y/y

❌Jobs shortfall🆚pre-#Covid: 1.6mn While jobs growth moderated in April, this report continues to show a very robust and historically tight labor market.

#Consumer spending +0.2% in Feb but fell 0.4% in real terms.

🟡Disposable income +0.4%
🟡Inflation-adj -0.2%

⤴️Savings +0.2pt to 6.3%: near 2013 low

PCE prices +0.6%
🔥#Inflation 6.4% (+0.4pt) high since '82

Core prices +0.4%
🔥Core inflation 5.4% (+0.2pt) high since '82 US consumer spending expenditures adjusted for inflation slipped 0.4% in February

🟡Consumers pulled back their outlays on goods (-2.1%) led by a 2.5% plunge in durable goods and a 1.9% contraction in nondurable goods.

🟢Spending on services posted a healthy 0.6% jump

🇺🇸We expect easing #labor supply constraints & historically tight labor market conditions will draw people back into the US workforce in the coming quarters

We see the US labor force participation (LFPR) rate gradually rising from 61.6% to around 62.6% by the end 2022

Short 🧵 While the LFPR recovery is expected to undershoot the pre-pandemic rate (over 63%), the shortfall mostly reflects an aging population.

We find that the drag from baby boomers retiring (or exiting early) has offset the boost from sidelined workers re-entering the labor force.

🇺🇸 Economic impact of the infrastructure & #BuildBackBetter plans.

Our November baseline forecast includes both the bipartisan #infrastructure package and a $1.8tn BBB bill consisting of spending on social programs and climate initiatives via @OxfordEconomics The $1.2tn #Infrastructure and Investment Jobs Act (IIJA) provides $550bn in new spending over the next 10 years.

We estimate it’ll boost #GDP growth by 0.1ppt in 2022 and 0.3ppt in 2023, with a cumulative 150,000 new jobs by the end of 2023.

🇺🇸August #Jobsreport: "It's a softie"

🟡Payrolls +235k
🤏Private +243k
🤏Goods +40k
🤏Services +203k
🔴Gov -8k

🟢Revisions⬆️134k

✅#Unemployment 5.2% (-0.2pt)
🟡Participation rate 61.7% (flat)
✅Wages +0.6%

🔴Job loss vs Feb'20: 5.3mn
⬆️Share regained:76% The US labor market is exiting the summer with much less momentum then when it entered with only a 235k advance in August

▶️Only 1/3 of 3-month trailing average of 750k
▶️Well short of our under-consensus 675k call

🇺🇸#Jobsreport: An early blossom for employment

🟢Total +379k in Feb
💪Private +465k
Goods -48k
Services +513k
👎Gov -86k

🟡Revisions +38k
🛑Job loss relative to Feb'20: 9.5mn
🛑Share of #COVID19 loss regained only 58%

#Unemployment rate: 6.2% (-0.1pt)
LFP 61.4% (flat) Many elements of positive news:

1. Upward revisions to Dec/Jan: +38k

2. The 3-month averages are perking up

Total +80k
Private +94k
Goods +7k
Services +87k
Gov -14k

3. Private payroll diffusion bounced to 57%

🇺🇸 #GDP thread

There are only so many ways to spin old data in a rapidly evolving #COVID19 environment.

The economy grew an upwardly revised 7.5% (⬆️0.1ppt) or, 33.4% annualized (⬆️0.3ppt) in Q3 – recouping 2/3 of Covid output loss.

Still, remained 3.4% smaller than end 2019 The strong Q3 #GDP performance gives a false impression of the economy’s true health.

Much of Q3 gain came from carry-over effects from fast progress in May-July while real GDP remained down 2.9% y/y in Q3.

#Fed #FOMC statement largely unchanged

- NEW qualitative outcome-based forward guidance for QE program that links the horizon to max employment + price stability goals

- no change to composition or size of QE, but a floor of "at least" $120bn per month The latest economic projections:

- Stronger near-term growth expectations
- Quite strong #GDP expectations for 2021
- Lower unemployment projections: below 4% in 2023
- #Inflation only a tad firmer: below 2% till 2023
- #Fed funds rate at zero through 2023

🇺🇸 #Jobsreport +245k in Nov 👎

- Private +344k
- Goods +55k
- Services +289k
- Gov -99k w/ -93k #Census

- Job loss since Feb: 9.8mn☹️
- Share of #COVID19 loss regained: 56%

- #Unemployment rate: 6.7% (-0.2pt)
- LFP 61.5% (-0.2pt)👎
- Share LT unemployed (>27wks): 37%🚨 The "ok" news was that private payrolls +344k

- #transportation +145k led by +82k couriers!
- professional & biz services +60k
- #healthcare +60k
- #manufacturing +27k
- #construction +27k

#Fed Beige Book:
👍Modest to moderate activity
👎Some regions slowing
👎Recovery incomplete
👎 Employment growth slowing (at best)
👎Labor supply issues
👍Outlooks remained positive
👎Optimism has waned
👎 Concerns: #Covid fear, lockdowns, fiscal policy cliffs
👍Modest inflation Initial signs of financial sector stress and expectations of rising delinquencies:

"...deterioration of loan portfolios, particularly for commercial lending into the retail and leisure and hospitality sectors. An increase in delinquencies in 2021 is more widely anticipated..."

🇺🇸 #GDP thread

The strongest GDP advance on record rings hollow.

The economy grew 7.4% (or, 33.1% annualized) in Q3 – recouping two thirds of the #Covid output loss – but it remains 3.5% smaller than at the end of 2019. The strong #GDP performance gives a false impression of the economy’s true health.

Much of the Q3 gain came from carry-over effects from fast progress in May-July while real GDP remained down 2.9% y/y in Q3.

Mixed feeling from May #jobsreport: optimism, skepticism & anguish:

- Optimism as payrolls +2.5mn – largest increase on record.

- Skepticism as gain contrasts sharply w/ new unemployment benefit since April.

- Anguish as the cumulative 19.6mn job losses from GCR is 2* GFC Encouraging 2.5mn job gains concentrated in:
- leisure and hospitality (+1.2mn)
> with food services & drinking place (+1.4mn) making up 1/2 total gains
- construction (+464k)
- health services (+312k)
- #retail trade (+368k)
- #manufacturing (+225k)

#Coronavirus recovery scenarios – one decent, none great

via @OxfordEconomics

oxfordeconomics.com/my-oxford/publ… Putting the #COVID19 shock in the context of US #recessions of the last 100 years

The 2.1% #GDP print gives "optical illusion" of an economy chugging along at moderate 2% clip at end-2019, but composition of growth reveals softer picture.

More than 70% of Q4 advance came from temporary collapse in imports, business investment subdued & consumers + cautious Average 2.3% GDP advance in 2019 is marginally weaker than 2.4% print in 2017 but this is another optical illusion as most recent 3 Qs mark economy’s worst performance since the 2016 slump.
Even momentum headed into 2020 is softer than the 2.3% y/y print would indicate