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Three questions for the labor market’s near future

In the past two months, the U.S. economy has added a total of 826,000 jobs, according to the latest Bureau of Labor Statistics (BLS) numbers for May and…

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By Makada Henry-Nickie, Anthony Barr, Regina Seo

In the past two months, the U.S. economy has added a total of 826,000 jobs, according to the latest Bureau of Labor Statistics (BLS) numbers for May and upwardly revised numbers for April. During that same period, overall unemployment has held steady at 3.6%. Black unemployment is still almost double that (at 5.9% in April and 6.2% in May), but the Black labor force participation rate has increased, as has the overall number of Black workers currently employed. 

Despite solid job gains, inflation has reached a 41-year high of 8.6%, and households are reeling from unrelenting increases in the price of gas, rent, and food. June’s preliminary Index of Consumer Sentiment plummeted 8 points from May, to 50.2—the lowest rate since the 1980 recession, revealing that households are deeply worried about their financial circumstances. 

In this blog, we highlight three key economic concerns for the summer, including women leaving the labor force, economic contraction erasing job gains by Black workers, and the heightened risk of food insecurity. 

Will more women leave the workforce this summer than usual? 

In the past three months, 465,000 women aged 20 and over have entered the labor force. In May alone, 397,000 women entered the workforce, 44% of whom were Black. This surge of women into the workforce is helping regain jobs lost during the pandemic, but labor force participation rates for women—including white, Black, and Latino or Hispanic women—are still below pre-pandemic levels.  

Despite the recovering trend in women’s employment, research by the National Women’s Law Center found that almost one-third of the jobs women regained since the start of the pandemic are in the leisure and hospitality sector—a finding consistent with our prior analysis on recent job creation. These jobs are low-paying, have volatile schedules, and are vulnerable to economic downturns. 

In addition, female labor force participation typically drops every summer as school closings push many mothers to reduce hours or quit their jobs. A recent paper found an average summer drop of 1.1% in the employment-to-population ratio among prime-age women. This drop is pronounced among mothers of school-age children who do not have affordable or reliable access to child care. The ongoing pandemic will likely continue to exacerbate this cyclical trend, consistent with our prior research, including our recent survey data revealing that child care concerns and inflexible work schedules continue to hurt female workers. 

Will economic anxieties erase gains for Black workers? 

Runaway inflation pushed the Federal Reserve to adopt a 75-point interest rate hike at its June meeting to regain the confidence of investors. If the Fed follows the recommendation of some commentators to induce a 1980s-style recession through a series of steep interest rate hikes in order to reduce consumer spending and stabilize prices, Black workers will bear the brunt as companies downsize—just as they did in 1983, when the unemployment rate reached 20% for Black men and 16.7% for Black women. 

But even if the Fed remains a stabilizing force for the broader economy, the market itself may not remain calm. Major companies such as Redfin, Twitter, and Coinbase have rescinded job offers, while several leading tech companies such as Robinhood and Netflix have announced layoffs as a cost-saving strategy. But if industry leaders and investors take this as a broader signal and panic based on negative feelings about the current economy, it could create a ripple effect of fear across sectors and lead to layoffs and a recession. 

Another worrying indicator is that BLS’ broader measure of labor market weakness, the U-6 unemployment rate, rose to 7.1% in May, driven by frictional unemployment and a 295,000-person increase in part-time workers. This coincided with the retail sector shedding 51,700 jobs. Major retailers have noted that cutbacks in household spending left them with bloated inventories; for example, Target cut profit expectations twice in a single month and surprised investors with a mass sales campaign aimed at trimming inventory. This is a leading indicator that the sector will shed additional jobs. Additionally, big-box retail chains, including Amazon, hired more workers than normally needed to avoid hiring delays and COVID-19 illness disruptions amid the tight labor market. But Walmart’s CEO recently explained that this strategy has led to overstaffing concerns—suggesting that even without diminished spending, job cuts will continue. 

All of this bodes poorly for Black workers, particularly Black men. In the past three months, Black men have gained 56,000 jobs, and their current labor force participation rate of 68.9% is now higher than it was prior to the pandemic. While some of these job gains reflect a slight uptick in the number of Black men entering the labor force, most represent men who had previously been in the labor force and have now been rehired. As Figure 2 shows, Black men only benefited from the labor market recovery at the tail end of it.  

Black men are re-entering the labor force

Even a slight economic contraction could imperil these recent job gains for Black workers, especially workers crowded into low-wage cyclical sectors like retail. The current labor market—in which there are more job openings than there are job seekers—has pushed firms to tap into Black talent that they would otherwise overlook due to discrimination. But if the labor market weakens, additional Black workers will be less likely to be hired, and Black workers who were recently hired will be among the first to be let go during layoffs. 

Will depleted savings and the end of the school year heighten food insecurity? 

As household savings are quickly depleted due to inflation, the risk of food insecurity is heightened. In April, the personal savings rate for Americans hit a low of 4.4% (compared to 33.8% in April 2020 and 12.6% in April 2021). At the same time, according to the Federal Reserve Board’s Consumer Credit report, revolving debt (such as credit card debt) increased by an annualized rate of 19.6%, while non-revolving debt (such as car loans and mortgage loans) rose at a slower rate of 7.1%. Overall household debt increased at an annual rate of 8.3% in the first quarter of 2022. Taken together, these metrics suggest that inflation is making it harder for families to sustain current levels of consumption while also putting money away, even as they face markedly lower savings to pay for necessities. 

It is likely that without the advanced Child Tax Credit payments or any other form of income stimulus, many low-income families will face a harsh summer. Low-income parents are caught in an impending storm of precarious retail jobs, over-representation in part-time jobs, and a weakened child care economy. This is especially true for families with school-aged children who benefited from free meals during the school year. 

Even a ‘soft landing’ poses economic risks 

In the last few months, Federal Reserve Chairman Jerome Powell has told reporters that he believes the Federal Reserve can engineer a “soft landing”—in other words, curbing inflation without throwing the economy into freefall. But even if the Fed can pull this off, it will not fully address the three concerns we identified in this piece. 

Beyond the Fed’s monetary policy actions, we need robust fiscal policies such as stronger unemployment insurance and a renewed monthly Child Tax Credit to ensure no one will slip through the cracks. Ultimately, responding to food and housing needs will require a collaborative effort from the federal government, states, philanthropy, and local community-based organizations to support vulnerable families in the coming months. 

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China Shortens Travel Quarantine In COVID Zero Shift

China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one…

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China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one week, which suggests Beijing is easing COVID zero policies. The nationwide relaxation of pandemic restrictions led investors to buy Chinese stocks.

Inbound travelers will only quarantine for ten days, down from three weeks, which shows local authorities are easing draconian curbs on travel and economic activity as they worry about slumping economic growth sparked by restrictive COVID zero policies earlier this year that locked down Beijing and Shanghai for months (Shanghai finally lifted its lockdown measures on May 31). 

"This relaxation sends the signal that the economy comes first ... It is a sign of importance of the economy at this point," Li Changmin, Managing Director at Snowball Wealth in Guangzhou, told Bloomberg

At the peak of the COVID outbreak, many residents in China's largest city, Shanghai, were quarantined in their homes for two months, while international travelers were under "hard quarantines" for three weeks. The strict curbs appear to have suppressed the outbreak, but the tradeoff came at the cost of faltering economic growth. 

The announcement of the shorter quarantine period suggests a potentially more optimistic outlook for the Chinese economy. Bullish price action lifted CSI 300 Index by 1%, led by tourism-related stocks (LVMH shares rose as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3%). 

"The reduction of travel restrictions will be positive for the luxury sector, and may boost consumer sentiment and confidence following months of lockdowns in China's biggest cities," Barclays analysts Carole Madjo wrote in a note. 

CSI 300 is up 19% from April's low, nearing bull market territory. 

Jane Foley, a strategist at Rabobank in London, commented that "this news suggests that perhaps the authorities will not be as stringent with Covid controls as has been expected." 

"The news also coincides with reports that the PBOC is pledging to keep monetary policy supportive," Foley pointed out, referring to Governor Yi Gang's latest comment. 

She said, "this suggests a potentially more optimistic outlook for the Chinese economy, which is good news generally for commodity exporters such as Australia and all of China's trading partners." 

Even though the move is the right step in the right direction, Joerg Wuttke, head of the European Chamber of Commerce in China, said, "the country cannot open its borders completely due to relatively low vaccination rates ... This, in conjunction with a slow introduction of mRNA vaccines, means that China may have to maintain a restricted immigration policy beyond the summer of 2023." 

Alvin Tan, head of Asia currency strategy in Singapore for RBC Markets, also said shortening quarantine time for inbound visitors shouldn't be a gamechanger, and "there's nothing to say that it won't be raised tomorrow." 

Tyler Durden Tue, 06/28/2022 - 07:38

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Economics

Energy Stocks Are Down, But Remain Top Sector Performer

High-flying energy shares have hit turbulence in recent weeks but remain, by far, the leading performer for US equity sectors so far in 2022, as of yesterday’s…

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High-flying energy shares have hit turbulence in recent weeks but remain, by far, the leading performer for US equity sectors so far in 2022, as of yesterday’s close (June 27), based on a set of ETFs. But with global growth slowing, and recession risk rising, analysts are debating if it’s time to cut and run.

The broad-based correction in stocks has weighed on energy shares lately. Energy Sector SPDR (XLE) has fallen sharply after reaching a record high on June 8. Despite the slide, XLE remains the best-performing sector by a wide margin year to date via a near-36% gain in 2022.

By contrast, the overall US stock market is still in the red via SPDR S&P 500 (SPY), which is down nearly 18% year to date. The worst-performing US sector: Consumer Discretionary Sector SPDR (XLY), which is in the hole by almost 29% this year.

The case for, and against, seeing energy’s recent weakness as a buying opportunity can be filtered through two competing narratives. The bullish view is that the Ukraine war continues to disrupt energy exports from Russia, a major source of oil and gas. As a result, pinched supply will continue to exert upward pressure on prices in a world that struggles to quickly find replacements for lost energy sources. The question is whether growing headwinds from inflation, rising interest rates and other factors will take a toll on global economic growth to the point the energy demand tumbles, driving prices down.

The market seems to be entertaining both possibilities at the moment and is still processing the odds that one or the other scenario prevails, or not. Meanwhile, energy bulls predict that the pullback in oil and gas prices is only a temporary run of weakness in an ongoing bull market for energy.

Goldman Sachs, in particular, remains bullish on energy and advises that the potential for more prices gains in crude oil and other products “is tremendously high right now,” according to Jeffrey Currie, the bank’s global head of commodities research. “The bottom line is the situation across the energy space is incredibly bullish right now. The pullback in prices we would view as a buying opportunity,” he says. “At the core of our bullish view of energy is the underinvestment thesis. And that applies more today than it did two weeks, three weeks ago, because we’ve just seen exodus of money from the space… investment continues to run from the space at a time it should be coming to the space.”

Meanwhile, a bit of historical perspective on momentum for all the sector ETFs listed above reminds that the trend direction remains bearish overall. But contrarians take note: the downside bias is close to the lowest levels since the pandemic first took a hefty bite out of market action back in March 2020 (see chart below). This may or may not be a long-term buying opportunity, but the odds for a bounce, however, temporary, look relatively strong at the moment.


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By James Picerno


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Five things you can do to help you have a more positive birth experience

Becoming a parent can be nerve-wracking – but there are many things you can do to feel more in control.

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Don't be afraid to make your preferences clear to your care provider. Syda Productions/ Shutterstock

Whether you’re a first time parent or have had children before, you’re probably willing to try anything to ensure you have the most positive birth experience you can. After all, the kind of birth experience you have can not only affect your own mental health, but can have an affect on parent-child bonding, as well as partner-to-partner relationships for years after giving birth.

It can be confusing to know what to expect or where to turn to for advice, especially as maternity services have changed due to falling staff numbers and the continued impact of COVID-19. But here are a few things you can do yourself as you navigate your maternity care, which may help you have a more positive birth experience:

1. Get educated

Studies have shown that signing up for antenatal classes can help reduce fear, depression and anxiety – both during pregnancy and after birth.

Typically, antenatal classes will help you understand what’s happening to your body during pregnancy and explain the birth process. They may also teach you coping strategies to help relax during labour, alongside guidance on caring for your new baby. Antenatal classes can also be a great way of meeting other parents going through the same thing as you.

Another option is creating a personalised care and support plan, which is offered by most NHS trusts in the UK. This is a tool you can use with your care providers to explore what’s important to you – and discuss what your range of options are, such as your preferred place of birth, or whether you prefer skin-to-skin contact with your baby immediately after birth.

Understanding what your body’s going through, and making a personalised plan for your birth, may help you feel more prepared and less anxious about what to expect.

2. Know your carers

Being cared for by one nominated midwife, or being assigned to a team of familiar midwives, is shown to be associated with better outcomes for you and your baby – including decreased chance of having a premature labour and lower likelihood of needing interventions (such as birth with the help of forceps). You’re also more likely to be satisfied with your overall experience.

When an allocated midwife is not an option this makes choosing the right birth partners crucial. They can not only offer you reassurance, encouragement and support but can be your advocate, help you try different positions in labour and help provide you with snacks and drinks. Most typically these would be trusted loved ones. But be aware that research shows birth partners may also feel anxious or overwhelmed at taking on this role, and may struggle with seeing a loved one in pain – so it’s important to be realistic about your expectations, and choose the right person. It may be the best birth partner for you is a close friend or relative.

3. Challenge care recommendations if you aren’t happy

There are likely to be many other options available to you – such as where you might give birth, or how you want to be cared for during labour.

During antenatal appointments be sure to pause, think and ask about benefits, risks and alternatives to the care being proposed. Research shows how important choice and personalised care are for expectant parents who want their voices and preferences to be acknowledged, and to receive consistent advice.

Expectant couple speak with female doctor in doctor's office.
Bringing a loved one or partner with you can make it easier to voice any concerns you may have. wavebreakmedia/ Shutterstock

If you have concerns over a suggestion your care providers have made or have questions, don’t be afraid to ask. Take your birth partner with you if you prefer, who can empower you to ensure your voice is heard. After all, care providers are duty bound to ensure you make fully informed choices.

4. Don’t always listen to your friends and family

Once people hear you have a baby on the way it seems everyone feels the need, without asking, to tell you the full (and often graphic) details of their own children’s birth.

But it’s perfectly acceptable to politely change the subject if you don’t want to listen, or if hearing these stories makes you nervous or worry. It’s also worth remembering that each person has a different labour and birth, even with their own children – so what was true for someone else is likely not to be the same for you. While it can be helpful for some people to debrief after the birth, it’s okay to avoid hearing this yourself if it makes your nervous, and maybe suggest they speak with a professional about their experience instead of telling you.

5. Visit your preferred place of birth

Many maternity units are now opening up their doors again to tours and informal visits – and those that aren’t are doing this virtually.

Becoming familiar with where you might give birth – even down to where you might park on the day – can help you feel more confident about giving birth. It may also remove some of the unknown, helping you regain a sense of control – which in itself is linked to a more positive birth experience.

For those planning a homebirth, speak to your midwife about how you can improve your space to facilitate the most safe and positive experience. For one of the most important days of your life, visualising where this will take place ahead of time can help you feel more confident and in control.

Ultimately, it’s important to remember that no one can predict exactly how your labour and birth journey will go. Even after heeding the above steps – there’s always a chance you may need to consider a plan B, C or even D. But no matter what, remember you’ve done your very best, and you’re not likely to repeat this exact experience the next time.

Claire Parker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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