Pre-market shares: The labor market may never be the same again

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.

Women with young children left the workforce disproportionately during the pandemic, and many have not returned. Meanwhile, new research from the Federal Reserve Bank of St. Louis that Covid-19 pushed an estimated 3 million older Americans to retire faster than expected.
These groups should begin to rejoin the workforce in greater numbers. The approval of vaccines for children ages five to 11 in the United States could alleviate some concerns about the virus that kept parents at home. And this is the point of the recovery when some retirees should start reconsidering their decisions when wages rise, Brusuelas noted.

“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

The White House has accused OPEC and its allies of endangering the global economic recovery by refusing to pump more oil. It sets in motion a geopolitical showdown that could trigger more market volatility and cause the United States to release crude oil from its strategic reserves, reports my CNN Business colleague Charles Riley.
The White House says OPEC and Russia are jeopardizing the global recovery
The latest: The Biden administration said it would “consider the full range of tools at our disposal to strengthen resilience and public confidence” after the OPEC + coalition, which includes Saudi Arabia and Russia, ignored US calls to increase production by more than planned in December.

“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

When Pfizer (PFE) reported earnings this week, the results were unequivocal: Sales of coronavirus vaccines generated tons of money to the drugmaker.

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.

Then there is Modern (MRNA), which deals with production and shipping issues. On Thursday, the company missed revenue and earnings expectations for its most recent quarter, warning that year-round Covid vaccine shipments would not live up to its forecasts.
Moderna now expects full-year revenue of between $ 15 billion to $ 18 billion. Three months ago, a turnover of DKK 20 billion had been predicted. The stock fell 18 percent.

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.

Next

Canopy growth (CGC), Cinemark (CNK) and Groupon (GRPN) report results before US markets open.

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.

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