The U.S. Economy Created 263,000 Jobs in November, Unemployment Was Unchanged at 3.7%…The jobs number came in solidly above the 200,000 estimate.
What it means— Well, that’s going to leave a mark on all of the investors, who were certain that a weak employment report would drive the Fed to a harder pivot. Not only did the jobs number surprise most people, but also average earnings popped 0.6% last month. Chair Powell has mentioned possible wage inflation in a strong jobs market as a potential driver for inflation. This report brought that possibility to the fore. While tech companies are “right sizing,” health care along with hospitality and leisure are still adding jobs and looking for workers. In the weeks ahead, it will be interesting to see if some people who lost their jobs in tech take positions in other fields. We’ll find out whether that’s the case if the number of people filing continued jobless claims rises in the weeks ahead. For now, investors have given back a little less than half the gains from Wednesday.
Federal Reserve Chair Jay Powell Confirmed the Central Bank Will Raise Rates at a Slower Pace…Following other Fed officials and expectations from the minutes of the last meeting, Powell all but told everyone that the bankers will raise rates 0.50% at the December meeting, down from the 0.75% of the last several meetings.
What it means— Powell’s comments echoed what many central bankers have said in recent weeks and what the minutes from their most recent meeting reflected. The Fed intends to raise rates at a slower pace but likely will do so longer than investors anticipate, just to make sure that inflation is dead. You might think this would be a nothingburger, but trading algorithms treated it like a Fed pivot and sent markets up like a rocket ship. Perhaps they expect the central bankers to fold when inflation eases in early 2023 or when the economy flags early next year. Whatever the reason, Powell must be wondering if he gave the wrong speech, the one that said, “Just kidding, the next move in rates is down.” The herd is usually right, but this time it looks like it got ahead of itself. We should go lower before we move higher.
Personal Consumption Expenditures Index (PCE) Eases From 6.3% to 6.0%, Core Down From 5.2% to 5.0%… The Fed’s preferred inflation measures both fell from their highs in September.
What it means— Before we break out the bubbly, let’s remember what makes the PCE different from the CPI. The PCE adjusts to consumers’ changing spending habits more quickly than the CPI. The PCE will capture our move from ribeye steak to sirloin faster, which makes inflation “go away,” because we’re no longer spending on the more-expensive meat. Don’t fret about our falling standard of living, that just gets lost in the mix.
While some people might see this is a good thing, the smart people at the Fed know what’s happening. The central bankers won’t take this as an “all clear” signal. We shouldn’t, either.
San Francisco Police Department(SFPD) Clarifies That New Robots Will Have Explosives But Not Guns… Trying to clear up a misunderstanding, the SFPD told local groups that their new robots will carry “intermediate force” options, or explosives, that might harm people if they are close enough when they blow up. The SFPD explained it would only happen if civilians or police were in danger or if the police could not safely approach suspects. There was no word on whether the robots would be tasked with one of the most pressing issues in San Francisco, picking up poop on the streets and sidewalks, or with stopping the rampant shoplifting.
Data supplied by HS Dent Research
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