Trumponomics Fails To Deliver As Truckers Cut Payrolls, Job Openings Fall & Tech Hiring Cools (#GotBitcoin?)
Job openings fell in February to the lowest level in nearly a year, a sign that demand for workers eased modestly during a month when hiring fell sharply. Trumponomics Fails To Deliver As Truckers Cut Payrolls, Job Openings Fall & Tech Hiring Cools (#GotBitcoin?)
Job Openings Fell by More Than 500,000 in February
Available jobs declined to lowest level since March 2018.
There were a seasonally adjusted 7.09 million unfilled jobs on the last business day of February, the Labor Department said Tuesday. That was down by more than 500,000 from January’s near record, to the lowest level of available jobs since March 2018.
“Like the rest of the economy, the labor market is not perfectly steady on its feet—it’s prone to the occasional wobbly month,” said Josh Wright, chief economist at iCIMS Inc., a maker of employee-recruiting software. “As the economy slows, we should see a few more wobbles over the course of 2019.”
Many economists expect the economy to gradually cool as the effects of last year’s tax cuts and stronger government spending fade, and the U.S. faces global headwinds. However, iCIMS, which separately tracks job opening figures, sees a healthy rebound in available positions in March.
The smaller number of openings came during a month when hiring slowed to a crawl. U.S. employers added 33,000 jobs to payrolls in February, revised data released last week showed. That was the smallest net job gain since September 2017, and one of the weakest months in the 102 straight months of improvements, dating back to 2010.
Any easing of demand for workers, however, may be only temporary. Employers added a solid 196,000 jobs to payrolls last month. February’s weakness may have reflected bad weather in parts of the country, slowing hiring and recruitment activities in some sectors, and a cooling after robust gains in both jobs and openings the prior month.
Openings declined in construction, local schools and leisure and hospitality, three categories that can be impacted by weather and temporary closures. Manufacturing openings also declined. Openings increased in professional and business services and held steady in health care.
There were 7.625 million job openings in January, revised data in a Tuesday report showed. That was just 1,000 fewer openings than November, the peak for available jobs on records back to 2000.
Despite February’s decline, jobs remain plentiful compared with the number of Americans who are unemployed but actively seeking work. There were 876,000 more available jobs than unemployed people.
Such a gap has occurred for 12 straight months, but never previously in nearly two decades of monthly records.
The report showed the rate at which workers quit their jobs held steady at 2.3% for the ninth straight month—the longest the rate has ever held at the same figure. That is a historically high rate, just below a record set in early 2001, but some economists have expected quits—a proxy of workers’ confidence in the job market—to move higher with the unemployment rate trending near 49-year lows.
Hiring Growth Slows Sharply As U.S. Adds Just 20,000 Jobs
The unemployment rate edged down to 3.8%.
Hiring growth slowed sharply in February, a sign that weakening global economic growth could be touching the U.S. economy, though strong wage growth and robust job gains in earlier months suggest the U.S. still has significant momentum.
U.S. nonfarm payrolls rose a seasonally adjusted 20,000 in February, the Labor Department said Friday, marking the slowest pace for job growth since September 2017, when hurricanes skewed the data, and falling well below economists’ expectations for 180,000 new jobs.
Jobs were lost in construction, mining and retail last month. Manufacturers added workers but at a slower pace.
“The sharp slowdown in payroll employment growth in February provides further evidence that economic growth has slowed in the first quarter,” wrote Michael Pearce, Capital Economics economist, in a note.
Still, economists warned against reading too much into February’s weaker-than-expected hiring. The three-month average for job gains clocked in at 186,000, a strong rate at this point in the economic expansion.
Slower hiring could also be a sign that employers are struggling to find workers.
A tighter labor market, in theory, should translate into faster wage growth, as employers compete for scarce labor. Friday’s report showed that is materializing: Wages rose 3.4% from a year earlier in February, a pace last matched in April 2009.
Average hourly earnings for all private-sector workers increased 11 cents last month to $27.66.
The labor-force participation rate, or the share of Americans working or looking for a job, held steady at 63.2% in February. That was up slightly from 63.0% a year earlier.
Participation generally had fallen since the early 2000s, as the wave of women entering the labor force slowed and baby boomers began to retire in greater numbers. But the rate has plateaued in recent years, as baby boomers are staying in the labor market longer and more workers are coming off the sidelines, defying expectations of demographic-driven declines.
The average workweek was 34.4 hours in February, down from 34.5 a month earlier.
Tech Hiring Cools In March
U.S. employers across all industries cut 155,000 IT jobs last month, while tech-sector employment rose by 16,000, CompTIA says.
Employers across the U.S. economy cut 155,000 information-technology jobs last month, following a sharp upturn in IT hiring in February, according to an analysis of the latest federal employment data by CompTIA Inc.
A total of 11.8 million people held tech jobs in 2018, up 2.3% from 2017. Tech positions accounted for 7.6% of the total U.S. workforce, up from 7.2%, CompTIA estimates.
Despite employment declines in March, the unemployment rate for IT occupations dropped to 1.9%, from 2.3% in February, the technology trade group said.
Hiring by U.S. businesses for all jobs in March increased a seasonally adjusted 196,000, up from 33,000 the previous month, while the overall unemployment rate inched up to 3.8%, the Labor Department reported Friday.
Postings for core IT positions by employers across all industries in March rose an estimated 62,433, after falling by nearly 40,000 in February, CompTIA said.
The highest demand was for software developers, followed by computer-user support specialists, computer-systems engineers and architects, computer-systems analysts and IT project managers.
Employment at companies within the tech sector rose by 16,000 jobs in March, up from 7,500 in February, with IT occupations accounting for roughly 44% of total tech-sector employment. The total also includes sales, marketing and other nontech positions at tech companies.
The sharpest gains at tech firms were led by IT and software services businesses, and computer, electronics and semiconductor manufacturers, driven by demand for technology-services staff, custom-software developers and computer-systems designers, the group said.
Tim Herbert, CompTIA’s senior vice president for research and market intelligence, said demand for these and other IT skills aligns with recent investments in technology.
“Technology services and software account for nearly half of spending in the U.S. tech market,” he said, citing continued growth in cloud computing, edge computing, 5G wireless networks and other infrastructure technologies.
He expects to see ongoing demand for tech workers in the software development and IT services and application fields.
Truckers Cut Payrolls As Freight Demand Softens
Hiring in broader logistics slows as red-hot growth pace of 2018 cools down.
Trucking companies pulled back from hiring in March as freight demand softened and job growth across the logistics sector slowed.
Carriers cut payrolls by 1,200 jobs last month, according to preliminary figures the Labor Department reported Friday, halting a nearly yearlong expansion amid signs a hot streak that boosted transportation companies’ profits in 2018 is cooling.
Trucking company Covenant Transportation Group Inc. last month lowered its first-quarter profit forecast, citing weaker than expected freight volumes from late January through mid-March.
“We attribute the softer demand to factors such as late 2018 inventory growth in advance of the perceived impact of tariffs, the effects of the partial government shutdown on spending and extended periods of inclement weather,” the company said in a statement.
Warehousing and storage companies added 1,700 jobs in March. It was the slowest month of growth since December in a sector where hiring has grown rapidly as more people shop online. Courier and messenger firms that deliver packages to homes and businesses added 1,800 jobs last month, recovering from a February slide when payrolls shrank by nearly 10,000.
Overall, U.S. employers added 196,000 jobs last month, bouncing back from weak hiring in February as unemployment held steady at 3.8%.
Sectors that feed goods into freight transport networks looked weaker, however. Factories cut 6,000 jobs, the first decline in the sector since July 2017, even though a separate report shows U.S. manufacturing activity expanding. Retail payrolls plunged by 11,700 as the service-sector expansion slowed.
The overall pace of logistics hiring slowed during the first quarter. Trucking companies, parcel-delivery firms and warehouse operators together added 144,500 jobs over the 12-month period ending in March, down from 167,200 in the 12 months through February and 191,200 through January.
The slowdown comes as other signs suggest the freight market is retrenching.
North American heavy-duty truck orders plunged 66% last month compared with March 2018. The Cass Information Systems Inc. Freight Index for U.S. domestic shipments declined year-over-year in February for the third straight month.
Demand for logistics workers is still outstripping supply, however, especially for skilled positions such as truck drivers and forklift operators, said Doug Hammond, zone president at Randstad US, a subsidiary of Dutch recruiting firm Randstad Holding NV.
“We are seeing a number of clients, especially in the retail and retail distribution space, making significant moves in their base wages,” with increases of between 8% and 10%, Mr. Hammond said.
U.S. Budget Gap Widened in First Four Months of Fiscal Year
U.S. tax revenues declined 1.5% over past 12 months, Treasury says.
The U.S. budget gap widened in the first four months of the fiscal year as tax collections fell and federal spending increased.
The government ran a $310 billion deficit from October through January, compared with $176 billion during the same period a year earlier, a 77% increase, the Treasury Department said Tuesday.
Federal outlays climbed 9% the first four months of fiscal 2019, which began Oct. 1, and total receipts declined 2%.
Part of the percentage increase in the deficit was attributable to a shift in the timing of certain payments, which made the deficit appear smaller in the first four months of fiscal year 2018, Treasury said. If not for those timing shifts, the deficit would have risen 40.2% so far this fiscal year.
The tax code overhaul that took effect last year has constrained federal revenues over the past year, while a two-year budget deal has boosted government spending, particularly on defense. On a 12-month basis, revenues declined 1.5%, while outlays have risen 4.4%.
The budget deficit rose to $913.5 billion for the 12 months ended January, or 4.4% of gross domestic product. The last time the 12-month deficit exceeded 4.4% of GDP was in May 2013.
U.S. Posts Record Annual Trade Deficit
The shortfall grew last year despite President Trump’s aim to reduce it.
The international trade deficit in goods and services widened 19% in December from the prior month to a seasonally adjusted $59.8 billion, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a $57.3 billion gap.
The shortfall grew last year despite President Trump’s aim to reduce it.
Over the course of 2018, Mr. Trump imposed tariffs on a range of goods that the U.S. imports from other countries, particularly China, in hopes of giving American producers a competitive edge. He publicly lambasted companies that outsourced jobs, renegotiated pacts with major U.S. trade partners like Mexico, Canada and South Korea, and rankled longtime European allies by deeming their steel and aluminum exports a threat to national security.
Still, the trade gap swelled 12% from 2017 to $621 billion. Excluding services that the U.S. sells to foreigners, such as tourism, intellectual property and banking, the deficit grew 10% to $891.3 billion, the largest level on record.
Economists say the shortfall was fueled, ironically, by another Trump administration policy: tax cuts and spending increases that juiced demand from U.S. consumers and businesses at a time when growth in the rest of the world was slowing. Concern that the U.S. economy could overheat prompted the Federal Reserve to raise interest rates four times in 2018, contributing to a strong dollar in the second half of the year that made foreign goods relatively
As a result, U.S. imports grew 7.5%, while exports increased just 6.3%.
“Higher take-home incomes for households have definitely proven to be very conducive to imports,” said Pooja Sriram, an economist at Barclays. “The outcome has been in almost the opposite direction of what the administration has wanted.”
U.S. imports of consumer goods last year jumped 7.7% to $647.9 billion, fueled in part by a 22% rise in inbound shipments of drugs. Industrial supplies like fuel and crude oil were another driver of the trade gap, with imports rising 13% from 2017 to $575.7 billion.
Highlighting the limitations of Mr. Trump’s trade policies, the goods deficit widened most with China, the U.S.’s largest commercial partner and the main focus of White House efforts. That is partly because Chinese authorities responded to tariffs by drastically scaling back their country’s purchases of key U.S. exports like soybeans, cars and metals, production of which is concentrated in states that Mr. Trump won in the 2016 election.
U.S. goods exports to China fell 7.4% in 2018 to $120.3 billion, while imports from China grew 6.7% to $539.5 billion as Americans increased their purchases of electronics, furniture, toys and other products.
But the deficit in goods also widened in other countries where Mr. Trump aimed his trade war, including the European Union and Mexico.
Most economists disagree with Mr. Trump’s strategy of targeting a reduction in the trade deficit, saying it merely reflects underlying economic forces. But deficits do subtract from gross domestic product, and the widening of the trade shortfall at the end of 2018 was a factor in slower U.S. growth in the fourth quarter.
Andrew Hunter, an economist at Capital Economics, said that’s likely to continue in early 2019 with imports set to grow while weaker global demand weighs on exports.
“Trade now looks set to be a more serious drag in the first quarter,” Mr. Hunter said in a note to clients. He estimates annualized GDP growth will slow to just 1.5% in the first three months of 2019, down from 2.6% in the fourth quarter.
The Idiocy Behind Trumponomics
U.S. deficits may not matter so much after all—and it might not hurt to expand them for the right reasons.
As the national debt swells, some economists are making a once-heretical argument: The U.S. needn’t be so worried about all of its red ink.
The 2017 Republican tax cuts and this year’s Democratic spending proposals have reignited long-simmering worries that the debt is getting too big. Annual deficits are set to top $1 trillion starting in 2022 and the Congressional Budget Office projects debt will total 93% of gross domestic product by the end of the next decade.
Yet borrowing costs are still historically low, despite a surge in deficits and debt in the years following the financial crisis. Debt as a share of GDP rose from 34% before the recession, to 78% at the end of 2018. Treasury yields, on the other hand, have fallen from over 4% before the recession to 2.7%.
That suggests investors aren’t worried about holding large volumes of credit.
In theory, high debt levels should cause interest rates to rise. That’s because investors will demand higher returns to compensate for the risk they take on when the government borrows at unsustainable levels or because they worry that so much debt could trigger inflation. The need to finance such high levels of debt also makes less money available for other investments.
In practice, investors are happy to keep lending to the U.S. in good times and bad, regardless of how much it borrows. In 2009, for instance, when the Obama administration’s stimulus efforts sent federal deficits rising to almost 10% of GDP, the highest since World War II, the interest on 10-year Treasury securities remained below where it had been before the recession.
Many Republicans warned the U.S. was pushing itself to the brink of a fiscal crisis and pressed Mr. Obama to rein in spending. Economists debated how much debt a nation could hold before it crimped growth. In one paper, Harvard University economics professor Carmen Reinhart and Kenneth Rogoff, a former chief economist at the International Monetary Fund, found that countries with debt loads greater than 90% of GDP tended to have slower growth rates.
Now, some prominent economists say U.S. deficits don’t matter so much after all, and it might not hurt to expand them in return for beneficial programs such as an infrastructure project.
“The levels of debt we have in the U.S. are not catastrophic,” said Olivier Blanchard, an economist at the Peterson Institute for International Economics. “We clearly can afford more debt if there is a good reason to do it. There’s no reason to panic.”
Mr. Blanchard, also a former IMF chief economist, delivered a lecture at last month’s meeting of the American Economic Association where he called on economists and policymakers to reconsider their views on debt.
The crux of Mr. Blanchard’s argument is that when the interest rate on government borrowing is below the growth rate of the economy, financing the debt should be sustainable.
Interest rates will likely remain low in the coming years as the population ages. An aging population borrows and spends less and limits how much firms invest, holding down borrowing costs. That suggests the government will not be faced with an urgent need to shrink the debt.
Mr. Blanchard stops short of arguing that the government should run up its debt indiscriminately. The need to finance higher government debt loads could soak up capital from investors that might otherwise be invested in promising private ventures.
Mr. Rogoff himself is sympathetic. “The U.S. position is very strong at the moment,” he said. “There’s room.”
Some left-wing economists go even further by arguing for a new way of thinking about fiscal policy, known as Modern Monetary Theory.
MMT argues that fiscal policy makers are not constrained by their ability to find investors to buy bonds that finance deficits—because the U.S. government can, if necessary, print its own currency to finance deficits or repay bondholders—but by the economy’s ability to support all the additional spending and jobs without shortages and inflation cropping up.
Rather than looking at whether a new policy will add to the deficit, lawmakers should instead consider whether new spending could lead to higher inflation or create dislocation in the economy, said economist Stephanie Kelton, a Stony Brook University professor and former chief economist for Democrats on the Senate Budget Committee.
If the economy has the ability to absorb that spending without boosting price pressures, there’s no need for policy makers to “offset” that spending elsewhere, she said. If price pressures do crop up, policy makers can raise taxes or the Federal Reserve can raise interest rates.
“All we’re saying, the MMT approach, is just to point out that there’s more space,” she said. “We could be richer as a nation if we weren’t so timid in the use of fiscal policy.”
So far the runup in government debt has not led to steep price increases. Inflation has stayed at or below the Federal Reserve’s target for most of the past quarter century.
Still, many other economists aren’t ready to embrace these ideas.
Alan Auerbach, an economist at the University of California at Berkeley, says the MMT view “is just silly” and could lead to unwanted or unexpected inflation.
Meantime, Greece and Italy are two recent examples of countries that appear to have hit thresholds where high debt loads lead to higher interest rates and economic pain. The U.S. may have such a threshold too, just not yet seen.
Goldman Sachs Group Inc. economists found that countries with higher debt-to-GDP ratios heading into recessions have smaller fiscal responses, and subsequently worse growth outcomes, though countries that issue debt in their own currency—such as the U.S.—appear to be less affected.
By continuing to run large deficits, says Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, the U.S. is slowing wage growth by crowding out private investment, increasing the amount of the budget dedicated to financing the past and putting the country at a small but increased risk of a future fiscal crisis.
Market interest rate signals can be misleading and dangerous. By blessing the U.S. with such low rates now, he says, financial markets just might be “giving us the rope with which to hang ourselves.”
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