What’s Happening: Analysts surveyed by Refinitiv expect Friday to learn that about 450,000 jobs were added to the economy in October as concerns about the Delta variant of coronavirus eased. That would be more than in September and August.
But increasingly, economists are beginning to wonder: As the shortage of workers continues, has the labor market changed forever? If the answer is yes, the consequences for policy makers could be enormous.
Degradation: Companies are still struggling to attract and retain enough staff to keep up with an explosion of demand. Employers had hoped that improved access to childcare and reduced fear of Covid-19 would increase the number of people seeking work in the fall. Instead, the number of people actively seeking jobs was flat in September and October, according to Indeed, which recently surveyed 5,000 people in the United States.
Churn is also still a problem. In August, the most recent month in which data is available, a record 4.3 million workers quit their jobs.
Joseph Brusuelas, chief economist at RSM US, told me that he is closely monitoring what is happening in the coming months with two demographic groups: women aged 25 to 54 and baby boomers who may have retired early.
“In previous cycles, when unemployment tended to fall below 5%, retirees tended to show up,” Brusuelas said. US unemployment fell to 4.8% in September. “We should start watching this now.”
And if these workers do not return? It could indicate a deeper shift.
“It can signal what lasting structural damage there is to the workforce from the pandemic,” Brusuelas said.
Big picture: If a 4.5% unemployment rate now means “full employment” in the US, and not 3.5%, as before the pandemic, it could encourage the Federal Reserve to roll back the crisis-era policy even faster than expected.
So far, the Fed has said it is waiting for the employment situation to improve before raising interest rates from historic lows.
See this place: Central banks are trying to telegraph their next steps to investors to avoid troubling markets. But data on jobs and inflation are still hard to read. The Bank of England surprised investors on Thursday as it chose not to raise interest rates, citing uncertainty over the effects of ending the country’s holiday program.
OPEC does not give in to US demands
“Our view is that the global recovery should not be jeopardized by a mismatch between supply and demand,” a spokesman for the U.S. National Security Council said in a statement. “OPEC + seems reluctant to use the capacity and power they now have in this critical moment of global recovery for countries around the world.”
The price of Brent crude, the global benchmark, has roughly doubled over the past year to $ 81 per barrel. Bank of America predicts prices could reach $ 120 per barrel by June 2022.
Rising oil prices are fueling inflation, damaging vulnerable households and dampening the global economic recovery at a crucial time. The US, Japan and India have all called on OPEC + to open taps wider to help bring prices down.
Step back: Elevated gasoline prices could have political consequences for Democrats heading into next year’s midterm elections. US gas prices have risen to their highest level in seven years at $ 3.40 per gallon. gallons at national level. Gasoline and diesel prices have also hit record highs in parts of Europe and the UK.
But OPEC + showed on Thursday that it was not in a hurry to listen to Biden’s call for increased production.
On the radar: The United States could ease the situation on its own by tapping the strategic petroleum reserve, which can hold up to 714 million barrels of crude oil and is the world’s largest reserve oil supply. Will it do that?
Vaccine stocks have risen. They are not bulletproof
Most recent: Revenue rose to more than $ 24 billion, up 134% from a year earlier. Pfizer’s vaccine business accounted for more than 60% of the company’s sales, and Covid-19 sales generated $ 13 billion. Shares rose more than 4% on the news.
Step back: Both companies are cashing in. Pfizer shares have risen 19% this year. Modern’s share has risen more than 170% after making big gains in 2020. The Coronavirus vaccine is the company’s first major product.
But their stocks are not made of Teflon when expectations are so high.
Also today: The US job report arrives at 8:30 ET.
Coming next week: For the first time in almost two years, the United States will welcome fully vaccinated visitors from all countries. It could give the travel industry a much-needed boost.