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CNBC
02-05-2025
- Business
- CNBC
Kelly Evans: What's going on with the labor market?
The jobs report was stronger than expected this morning. So why do things still feel so uneasy? The report, in fact, was pretty good all around. We added 177,000 jobs last month (even with a 9,000 dip in government jobs). Nearly 55% of industries added workers, showing demand was pretty broad-based. Average hours worked rose, reversing a previous downtrend, and are consistent with 3% or better GDP growth for this quarter. the labor force participation rate rose. "If...a major rollback in tariffs emerges, then there would be a distinct chance of avoiding a recession," wrote Brian Bethune of Boston College in response. That's a big of course--especially because productivity is collapsing, as we know from the negative GDP print last quarter. That still poses a major threat to the labor market this year. Plus, there are other signs of trouble as well. The number of job openings, which peaked above 12 million in the stimulus-fueled post-Covid haze, is now below 7.2 million, and will likely continue dropping. (For context, these averaged 6 to 7 million pre-pandemic.) The ADP's measure of private payrolls only rose by 62,000 for April. The ISM manufacturing employment gauge is still contracting, as we learned yesterday. Recruiter surveys from Aura Intelligence show further challenges. Staffing and recruiting jobs are down 28% from a year ago. Another bellwether for broader hiring, HR (human resources) jobs fell a whopping 40%, as Aura's Evan Sohn told us yesterday. "Employers aren't panicking yet, but they are repositioning," the firm noted. "They're prioritizing resilience, digital scale, and operational efficiency over raw headcount growth." Little wonder AI jobs were a bright spot in Aura's report, with major hiring in those roles by insurance, non-profit, and marketing companies this month. That doesn't sit well with observers like Derek Thompson, who warns that "AI is competing with college grads," in a new piece in the Atlantic. (He'll join us on Power Lunch to discuss.) Thompson points to data from the New York Fed showing that "the labor market for recent college graduates deteriorated noticeably in the first quarter of 2025." Indeed also reported such findings two weeks ago, saying internship postings are at their lowest in six years, and running 11 points below last year's level. "Outside healthcare, [there are] fewer opportunities to choose from," the firm noted. So yes, the decent jobs report is allaying recession worries this morning. But that queasy feeling remains. See you at 1 p.m! Kelly Twitter: @KellyCNBC Instagram: @realkellyevans
Boston Globe
02-05-2025
- Business
- Boston Globe
Waiting for a shoe to drop in the US jobs market
'We are not seeing right now any really adverse effects on the employment market,'' said Boston College economist Brian Bethune, who expects a 'reasonably good'' 150,000 new jobs in April. But many economists worry the job market is likely to deteriorate. Advertisement Trump's massive taxes on imports to the U.S. are likely to raise costs for Americans and American businesses that depend on supplies from overseas. They also threaten to slow economic growth. His immigration crackdown threatens to make it more difficult for hotels, restaurants and construction firms to fill job openings. By purging federal workers and cancelling federal contracts, Elon Musk's Department of Government Efficiency risks wiping out jobs inside the government and out. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'Looking ahead, we expect the steep tariff increases and the surge in uncertainty and financial market volatility will result in a more pronounced labor market downshift than previously anticipated,' Lydia Boussour, senior economist at the accounting and consulting giant EY, wrote this week. 'Large cuts to the federal workforce and the cancellations of many government contracts will also be a drag on payroll growth in coming months.'' Advertisement A slowdown in immigration 'will weigh on labor supply dynamics, further constraining job growth. We foresee the unemployment rate rising toward 5% in 2025.'' And Boussour is far less optimistic about April job growth than most other economists: She forecasts that employers added just 65,000 new jobs last month. There have been recent harbingers of a potential jolt to the strong U.S. jobs landscape, a bright spot even during the recovery from a global pandemic. Payroll provider ADP reported Wednesday that companies added just 62,000 jobs in April, about half of what was expected and down from 147,000 in March. 'Unease is the word of the day,' said Nela Richardson, chief economist at ADP. 'It can be difficult to make hiring decisions in such an environment.' The ADP number often diverges from the government's monthly jobs data, but on Thursday the U.S. Labor Department reported that the number of Americans applying for unemployment benefits rose last week to the highest level since February. The 241,000 weekly claims reported Thursday are still historically low, but thousands more Americans sought help last week than economists had expected. Trump's policies have shaken financial markets and frightened consumers. The Conference Board, a business group, reported Tuesday that Americans' confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic. In the face of high interest rates engineered by the Federal Reserve in 2022 and 2023 to fight inflation, hiring has clearly slowed — to a solid but unspectacular average of 152,000 jobs a month this year. But it's down from 168,000 in 2024, 216,000 in 2023, 380,000 in 2022 and a record 603,000 in 2021 as the economy surged back from pandemic lockdowns. Advertisement American workers have at least one thing going for them. Despite the uncertainty about fallout from Trump's policies, many employers don't want to risk letting employees go – not after seeing how hard it was to bring people back from the massive but short-lived layoffs of the 2020 COVID-19 recession. 'They laid millions of these people off, and they had a hell of a time getting them back to work,'' Boston College's Bethune said. 'So for now, the unemployment rate and the number of people filing claims for jobless benefits every week remain low by historical standards. Bethune does not expect Musk's cuts to the federal workforce to show up much in the April jobs numbers. For one thing, job cuts orders by the billionaire's DOGE are still being challenged in court. For another, some of those leaving federal agencies were forced into early retirement – and don't show up in the Labor Department's count of the unemployed. Samuel Tombs and Oliver Allen of Pantheon Macroeconomics see employers adding 150,000 jobs in April. But they expect job creation to slow to around 100,000 a month in May and June as falling business confidence takes a toll on hiring. A slumping labor market, they reckon, will convince the Fed to cut interest rates in June or July. After cutting rates three times last year – as inflation eased closer to its 2% target – the Fed has been reluctant to cut any further until it has a better idea whether Trump's tariffs will push prices higher. A deterioration in the job market could persuade Fed officials to offer the economy some relief. Advertisement
Boston Globe
01-05-2025
- Business
- Boston Globe
Will China tariffs ruin Christmas? Trump doesn't rule out fewer toys on the shelves.
'It'll happen,' he said. Then, in one of his trademark asides: 'Somebody said, 'Oh, the shelves are going to be open.' Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.' Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up It was an uncharacteristic swipe at kiddie consumerism — and a shrug at potential holiday shortages. It sounds unreal — the president of the richest country shrugging off empty store shelves. But the risk is very real. Advertisement 'We have a frozen supply chain that is putting Christmas at risk,' Greg Ahearn, chief executive of the Toy Association, a US industry group representing 900 companies, China produces nearly 80 percent of all toys and 90 percent of Christmas goods sold in America, according to the Times. Those imports are being hit with tariffs of up to 145 percent. Advertisement And it's not just toys that could be in short supply. Shoes and apparel, furniture, auto parts, hardware products, and smartphones top the list of US imports from China. 'While the level and application of tariffs on China across products is still in flux, it is quite possible that we will see serious product shortages,' said Boston College economist Brian Bethune. Still, it's too soon to write off Christmas, or Halloween (the China-dependent costume industry is 'So much can still happen on the trade front and we anticipate a partial roll back of tariffs in the coming months,' said Gregory Daco, chief economist at consulting firm EY-Parthenon. 'We're going to see supply disruptions for sure. The question is really what happens with tariffs in the coming weeks as there currently is an inventory buffer to prevent shortages.' New data show just how much companies rushed to stock up. Imports surged 40 percent in the first three months of the year, the Commerce Department The increase, the biggest since the economy was reopening from the pandemic in the third quarter of 2020, was fueled by 'frontloading' — businesses buying up imported goods before new tariffs kicked in. The gap between imports and exports cut a record 5 percentage points from gross domestic product, leaving the economy 0.3 percent smaller in the first quarter than in the final three months of 2024. (Imports subtract from GDP because they represent spending on goods made elsewhere.) While it was the first drop in quarterly GDP in three years, a recession isn't a foregone conclusion. Advertisement The tariff shock could prove temporary. A separate measure of economic health — called Trump trade adviser Peter Navarro told CNBC that the GDP report was 'the best negative print I have ever seen in my life.' But there's good reason to be nervous. Frontloading sets the stage for a sharp falloff in purchases down the road, Daco, the EY-Parthenon economist, said in a note. That will be a 'far more troubling phase of the ongoing economic slowdown,' he said. Trump's tariff wall is unraveling a post-World War II trading system built on cheap imports. Trump says his trade policy will revitalize US manufacturing, create good—paying factory jobs, and generate revenues that can be used to lower taxes. He's warned of initial disruption but insists the country will be better off in the long run. But most economists — and a growing number of business leaders — disagree. Consumer confidence has plunged. Forecasters put What's next? A Advertisement But there's no denying the outlook has darkened. Recession or not, too much winning isn't likely to be our big problem this year. Material from prior Globe coverage was used in this report. Larry Edelman can be reached at
Boston Globe
30-04-2025
- Business
- Boston Globe
Trump's tariffs loom over the economy as shipments from China fall
An early sign of the damage is expected to emerge on Wednesday when the Commerce Department releases its first look at first-quarter economic growth. The economy is forecast to have expanded at an annual pace of just 0.8% from January through March, according to a survey of economists by the data firm FactSet. That would be the slowest quarter of growth in nearly three years and would be down from a healthy 2.4% in the last three months of 2024. Many economists suspect things were even worse. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Asked how much of deterioration in the world's biggest economy could be traced to Trump's erratic policies, Boston College economist Brian Bethune said: 'All of it.'' Advertisement As he promised on the campaign trail, Trump has upended decades of American trade policy. He's been imposing — then sometimes suspending — big import taxes, or tariffs, on a wide range of targets. He's currently plastered a 10% levy on products from almost every country in the world. He's hit China — America's third-biggest trading partner and second-biggest source of imported goods – with a staggering 145% tariff. Advertisement China has responded with retaliatory tariffs of its own – 125% on American products. The take-no-prisoners trade war between the world's two biggest economies has shaken global financial markets and threatened to bring U.S.-China trade to a standstill. Gene Seroka, executive director of the Port of Los Angeles, warned last Thursday within two weeks arrivals to the port 'will drop by 35% as essentially all shipments out of China for major retailers and manufacturers has ceased.'' Seroka added that cargo from Southeast Asia also 'is much softer than normal with tariffs now in place.'' After Trump announced expansive tariffs in early April, ocean container bookings from China to the United States dropped 60% -- and stayed there, said Ryan Petersen, founder and CEO of Flexport, a San Francisco company that helps companies ship cargo around the world. With orders down, ocean carriers have reduced their capacity by cancelling 25% of their sailings, Flexport said. Many companies tried to beat the clock by bringing in foreign goods before Trump's tariffs took effect. In fact, that is a big reason that first-quarter economic growth is expected to come in so low: A surge in imports swelled the trade deficit, which weighs on growth. By stockpiling goods ahead of the trade war, many companies 'will be positioned to ride out this storm for a while,'' said Judah Levine, research director at the global freight-booking platform Freightos. 'But at a certain point, inventories will run down.'' In the next few weeks, Levine said, 'you could start seeing shortages ... it's likely to be concentrated in categories where the U.S. is heavily dependent on Chinese manufacturing and there aren't a lot of alternatives and certainly quick alternatives.'' Among them: furniture, baby products and plastic goods, including toys. Advertisement Jay Foreman, CEO of toymaker Basic Fun, said he paused shipments of Tonka trucks, Care Bears and other toys from China after Trump's tariff plan was announced in early April. Now, he's hoping to get by for a few months on inventory he's stockpiled. 'Consumers will find Basic Fun toys in stores for a month or two but very quickly we will be out of stock and stock product will disappear from store shelves, ' he said. Kevin Brusky, who owns APE Games, a small tabletop game publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The tariff bill of about $25,000 would wipe out his profit on the games, so he is launching a Kickstarter campaign next week to help defray the cost of the duties. Still, his sales representative is urging him to import the games if possible, because he expects that retailers will soon be desperate for products to sell. If he does import the games, Brusky is considering raising its price from $40 to at least $45. Worried that tariffs will push up prices and drive away customer, retailers have put expansion plans on hold for next year, said Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL. 'What they are telling us is: 'We want to slow down the decision to open up stores and commit to leases' because they want to watch how the consumer reacts.'' Consumers already seem to be freaking out. The Conference Board, a business group, reported Tuesday that Americans' confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic. Nearly one-third of consumers expect hiring to slow in the coming months, nearly matching the level reached in April 2009, when the economy was mired in the Great Recession. Advertisement Consumer spending accounts for about 70% of U.S. GDP so if nervous consumers stop shopping, the economic fallout could get ugly. Economist Joseph Brusuelas of the consultancy RSM pegs the probability of a recession within the next 12 months at 55%. Even gloomier is Torsten Slok, chief economist at Apollo Global Management. He sees a 90% chance of a recession by this summer if Trump's tariffs remain in place. Businesses are already planning on significant disruptions, particularly from the 145% duties on goods from China, he said. 'You see that in company reactions: Orders are down, (spending) plans are down, costs are up, prices paid are up,' he said. He expects large layoffs by trucking firms and retailers as soon as late May, as the slowdown in goods coming into U.S. ports from China works its way through the supply chain. Flexport CEO Petersen said shortages of products are 'not a tragedy.' 'It's going to be much more about the layoffs that follow,' Petersen said. 'That's where the real pain is going to be felt. Shortages mean companies aren't selling stuff and therefore don't have the profits that they need to pay their workers.'' He said the stakes are so high that he expects the U.S. and China to deescalate their trade war and bring down the tariffs. In fact, Trump and his advisers have sounded more conciliatory lately. Treasury Secretary Scott Bessent, for example, said that the triple-digit tariffs the U.S. and China have slapped on each other are not sustainable. Advertisement But more abrupt shifts in trade policy risk increasing the uncertainty that has paralyzed businesses and worried consumers. Moreover, said economist Cory Stahle of the Indeed Hiring Lab, 'conditions may worsen in the coming months if people start behaving like they are in a recession. Softening some of the recent trade policy changes may ease some business concerns, but it may already be too late.'' D'Innocenzio reported from New York
Boston Globe
03-03-2025
- Business
- Boston Globe
Trump's economic gamble hits early turbulence
Some souring of sentiment is understandable. President Trump's economic game plan is an untested break from the past. There are cracks in the economy — there always are — but the foundation remains solid. The latest: Consumers retreated in January, reducing spending by the most in almost four years, The 0.5 percent drop in inflation-adjusted personal outlays from the previous month followed healthy increases in November and December. The Personal Consumption Expenditures index, the Federal Reserve's preferred inflation gauge, rose an annual 2.5 percent in the first month of the year, well above the central bank's 2 percent target, according to the report. Surveys released last week showed declines in Though bad weather might have affected purchasing, consumer confidence 'took large negative hits in January and February, as households have become shell-shocked by a quantum leap in economic policy uncertainty,' said Boston College economist Brian Bethune. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Underscoring the rising uneasiness: The stock market in February gave back a chunk of the gains made since the November election. Yields on the 10-year Treasury, a benchmark for investors' views on the economy, have fallen on expectations that further weakening could nudge the Fed to cut interest rates. Advertisement Why it matters: Trump retook the White House with promises to rev up the economy. He said he'd cut taxes, regulations, and the twin budget and trade deficits while boosting energy production and bringing down prices. Although the GOP lawmakers are weighing Behind the numbers: Analysts blame the gloomier outlook mainly on worries that tariffs on the country's biggest trading partners will lead to a trade war that increases prices and hurts American exports. Last week, the president said his previously announced 25 percent levies on goods from Canada and Mexico, and a doubling of tariffs on China to 20 percent, would take effect Tuesday. About $1.5 trillion in imports would be affected. Advertisement Trump also warned he would impose a 25 percent duty on Further stoking uncertainty: cuts to federal funding and mass firings of government workers ordered by Musk's Department of Government Efficiency. Local impact: Massachusetts has been roiled by the National Institutes of Health's decision to Across New England, NIH funding supports nearly 25,000 jobs that generate more than $4 billion in economic output, according to Bjorn Markeson, an economist at IMPLAN, an economic software and analysis firm. He estimates that the NIH's new 15 percent cap on reimbursements for indirect costs — down from as high as 70 percent — puts 10,000 jobs and $1.4 billion in economic output at risk. 'The impact is not just on research scientists,' Markeson said. It will also affect their suppliers and other businesses where they spend money. Caveats: The economic fears are real but the reality is more benign. Consider: The job market remains in good shape. Trump's tariff bark could prove worse than his bite if he uses threats of higher duties as a negotiating tactic. Consumer confidence is prone to short-term swings. With a month left in the first quarter, the Final thought: The economy is expected to grow at a respectable pace this year. But the 2.3 percent median estimate of forecasters tracked by Bloomberg is down from the 2.8 percent increase recorded in the final year of the Biden administration. And inflation is expected to remain about where it is now. 'I think President Trump said that he'll own the economy in six or 12 months, but I can tell you that we are working to get these prices down every day, but it took four years to get us here,' Treasury Secretary Scott Bessent Advertisement True, the real test of Trump's policies lies down the road. But the start has been less than auspicious. Larry Edelman can be reached at
