The U.S. Economy Created 223,000 Jobs in December, Beating the Estimate of 202,000… The unemployment rate ticked lower, from 3.7% to 3.5%, which matched the low reading of the 2010s and was the lowest since 1969.
What it means— We would expect investors to take this news badly, as falling unemployment and a strong jobs market support the Fed’s hawkish view. But even though the jobs picture looked strong, average hourly earnings gains fell to 0.3% last month for an annual gain of 4.6%, the lowest since August 2021. This gave investors a little hope that the Fed won’t crash the economy.
In early February, the U.S. Bureau of Labor Statistics (BLS) reconciles its state employment estimates with those supplied by the states, and then reports the results with the jobs numbers. For 2022, the BLS might lower its jobs total by more than one million. Let’s hope that the Fed has access to these data at its next monetary policy meeting, which will occur two days before the BLS releases the numbers.
Minutes of Last Federal Reserve Meeting Show Bankers Committed to Higher Rates… The minutes reflected the unanimous view among the bankers that they would raise rates as high as necessary to bring inflation down to their 2% target.
What it means— Chair Powell and his fellow Federal Open Market Committee members seem to be having a communications issue. They keep telling investors that they will raise rates as high as necessary for as long as necessary to slay the inflation dragon, but investors aren’t listening. Or maybe it’s the Fed that isn’t listening. Investors are telling the Fed that in spite of low unemployment numbers, the economy has slowed significantly over the last six months and inflation is falling rapidly. Instead of worrying about inflation running wild, the central bankers should be worried about overshooting their goal and sending the economy into an unwarranted recession. With more than half of the world in an economic slowdown, the investors likely are correct. Now we need the bankers to recognize the situation. Look for another 0.25% rate increase from the Fed at the end of the month, but it’s likely the Fed will pause after that.
Automakers Sold 14.1 Million Vehicles Last Year, Well off of the Current Rate of 17 Million… Supply chain issues kept inventory off of dealer lots, which hampered sales.
What it means— We don’t have to cry for car manufacturers. Even though they sold fewer cars – worst in more than a decade – they still pocketed a bunch of cash by jacking up prices and all but eliminating rebates. The average new car price increased by more than 20% from 2020 to 2022 and now sits at just over $48,000. With a series of increases and high demand, Ford raised the base price of the EV F-150 by 40%. With extra features and trim, it’s just shy of $100,000.
The question is, what happens next? With short interest rates 4% higher than at this time last year, consumers can’t pay as much for cars as they could, and there’s that pesky business about the rising cost of food. Most manufacturers estimate that the industry will sell just over 16 million units this year, but they might have to use big promotions to persuade consumers. This will eat into profits just as the manufacturers are spending big bucks on their transition to electric vehicles. Don’t count on the car companies to deliver fat earnings this year.
Fire in Wisconsin Dairy Plant Clogs Waterway With Melted and Then Solidified Butter… The fire started in a storage room full of butter, which melted and then found its way into local storage drains and a large canal next to the business. As the butter cooled and resolidified, it clogged the drains and waterway. There’s no word on what caused the blaze.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
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