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Yahoo
a day ago
- Business
- Yahoo
Ripped Job Market Swipes Left on New Grads
Youth is a wonderful thing. Unless you're looking for work. A much-anticipated jobs report from the US Labor Department on Friday showed that employers added 139,000 workers in May. It's a cooldown from the 147,000 jobs added in April but above the 125,000 figure that economists surveyed by The Wall Street Journal had expected. That keeps the unemployment rate at 4.2%, still near historic lows. Just don't rub that stat in the face of the recent grads in your life, who, in all likelihood, are struggling to score their first gigs. No, it's not because they're obsessively playing their new Nintendo Switch 2 instead of scouring LinkedIn — this is simply a historically tough labor market for entry-level job seekers. READ ALSO: Wall Street's Elite Get Serious About Debt Alarmism and Consumer Goods Giants Slim Down to Spur Growth For the first time in decades, recent grads have a higher unemployment rate than the rest of the economy. Indeed, the unemployment rate for recent college-educated job seekers aged 22 to 27 reached 5.8% in March, according to a recent survey from the Federal Reserve Bank of New York that noted the job market has 'deteriorated noticeably' for the group. In another telling stat, according to a recent study from Oxford Economics, the recent grad cohort has seen its unemployment rate increase at about triple the pace of the national average; it's now notably elevated compared with pre-pandemic years. Their non-degree-holding peers, meanwhile, have seen unemployment track nearly evenly with the national average. So what gives? It's likely that some healthy competition — both old and new — is keeping Gen Z stuck on the sidelines (and, sure, in their parent's basements, probably playing a little too much of the new Mario Kart): While corporate job cuts have started to spike in recent weeks, the layoff rate had been hovering around historic lows for months — causing what some call a 'no hire, no fire' labor market that effectively kept entry-level job seekers on the sidelines as employers held onto current workers. At the same time, entry-level job seekers are the first group attempting to enter the workforce in the age of artificial intelligence, and the computers may be outperforming them. That seems to be particularly true in the tech sector; while computer science programs ballooned in size in recent years, tech firms have significantly scaled back hiring — especially as AI proves particularly adept at coding. Fed Up: That tough job market may yet come for everyone else, too. 'We expect more slowing over the course of the year,' Barclays' Chief US Economist Marc Giannoni told the Financial Times last week, while noting Friday's job report is likely another data point solidifying the Fed's wait-and-see approach to cutting rates (even though the White House made known its desire for a 'full point' cut following the report's release). Futures traders now see a 99% chance that the Fed maintains current rates this month, according to CME Group's FedWatch tracker, though odds of a 50 basis-point cut by the end of the year edged up to 39% on Friday. Meanwhile, traders on prediction market Kalshi pegged those odds at just 26%. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
Yahoo
a day ago
- Business
- Yahoo
Ripped Job Market Swipes Left on New Grads
Youth is a wonderful thing. Unless you're looking for work. A much-anticipated jobs report from the US Labor Department on Friday showed that employers added 139,000 workers in May. It's a cooldown from the 147,000 jobs added in April but above the 125,000 figure that economists surveyed by The Wall Street Journal had expected. That keeps the unemployment rate at 4.2%, still near historic lows. Just don't rub that stat in the face of the recent grads in your life, who, in all likelihood, are struggling to score their first gigs. No, it's not because they're obsessively playing their new Nintendo Switch 2 instead of scouring LinkedIn — this is simply a historically tough labor market for entry-level job seekers. READ ALSO: Wall Street's Elite Get Serious About Debt Alarmism and Consumer Goods Giants Slim Down to Spur Growth For the first time in decades, recent grads have a higher unemployment rate than the rest of the economy. Indeed, the unemployment rate for recent college-educated job seekers aged 22 to 27 reached 5.8% in March, according to a recent survey from the Federal Reserve Bank of New York that noted the job market has 'deteriorated noticeably' for the group. In another telling stat, according to a recent study from Oxford Economics, the recent grad cohort has seen its unemployment rate increase at about triple the pace of the national average; it's now notably elevated compared with pre-pandemic years. Their non-degree-holding peers, meanwhile, have seen unemployment track nearly evenly with the national average. So what gives? It's likely that some healthy competition — both old and new — is keeping Gen Z stuck on the sidelines (and, sure, in their parent's basements, probably playing a little too much of the new Mario Kart): While corporate job cuts have started to spike in recent weeks, the layoff rate had been hovering around historic lows for months — causing what some call a 'no hire, no fire' labor market that effectively kept entry-level job seekers on the sidelines as employers held onto current workers. At the same time, entry-level job seekers are the first group attempting to enter the workforce in the age of artificial intelligence, and the computers may be outperforming them. That seems to be particularly true in the tech sector; while computer science programs ballooned in size in recent years, tech firms have significantly scaled back hiring — especially as AI proves particularly adept at coding. Fed Up: That tough job market may yet come for everyone else, too. 'We expect more slowing over the course of the year,' Barclays' Chief US Economist Marc Giannoni told the Financial Times last week, while noting Friday's job report is likely another data point solidifying the Fed's wait-and-see approach to cutting rates (even though the White House made known its desire for a 'full point' cut following the report's release). Futures traders now see a 99% chance that the Fed maintains current rates this month, according to CME Group's FedWatch tracker, though odds of a 50 basis-point cut by the end of the year edged up to 39% on Friday. Meanwhile, traders on prediction market Kalshi pegged those odds at just 26%. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter. Sign in to access your portfolio
Yahoo
6 days ago
- Business
- Yahoo
4 Major Questions Are Lingering About Tariff-Related Inflation
Tariffs' effects haven't shown up in official inflation measures yet, but retailers have said they are raising their prices in response to the increased import taxes. There are lingering questions about how those price increases will work their way through the economy. How much of the tariffs companies will cover, which items will see price increases, the extent to which price increases persist, and whether workers think they need a pay raise will be crucial in determining the path of tough to forecast the economy these days, but one thing is sure: prices on some goods are going up. Tariffs haven't yet pushed up official measures of inflation, but economists say that's certain to change soon as Walmart, Macy's, and smaller businesses raise prices on imported goods. Even so, airfares, hotels, and gasoline prices are dropping, and there are signs that rents are peaking after years of hikes. Wall Street analysts and D.C. policymakers are debating how noticeable the tariff-related sticker shock will be and what items will be most affected. With tariff headlines changing by the day, the inflation outlook is 'unusually uncertain,' Barclays economist Marc Giannoni wrote in a recent note to clients. The answer to how high inflation is headed may vary on any given day. But below are four questions that are driving the debate. President Donald Trump has said companies should 'eat' the tariffs, taking a hit on their profits rather than passing costs onto customers and driving up inflation. But if a megaretailer like Walmart felt forced to raise prices, smaller ones with thinner margins and less negotiating leverage may feel more pressure, said Richard Moody, chief economist at the Alabama-based bank Regions Financial. It may take time for that to happen, since retailers are still selling their existing inventories—and some bulked up ahead of tariff uncertainty. But economists expect consumers to feel a bigger hit nonetheless. 'The jury is still out if retailers and wholesalers will pick up much of the tab, but we remain comfortable for now with our working assumption that something like 80% to 90% of the tariff costs ultimately will be passed on to consumers,' Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, wrote in a note to clients. While some imported goods may get pricier, consumers tend to spend more on services such as restaurants or travel. Services make up roughly two-thirds of consumer spending, noted Regions' Moody, who foresees more deceleration in service prices ahead. 'That's going to mitigate some of the impact from rising goods price inflation,' Moody said, though he noted that may be of little comfort to lower-income households that spend less on travel. Another possible mitigator is housing costs. Those make up a large chunk of inflation gauges, and while housing remains expensive following a post-COVID boom, rents have started to fall in some markets. Overall, service prices should 'remain relatively subdued,' Oliver Allen, an economist at Pantheon Macroeconomics, wrote in a note to clients. But he doubted they'll prevent an overall increase in inflation. Inflation may lead to a one-time hit to Americans' pocketbooks, but the effects are more painful if higher prices feed off each other and become persistent. Goldman Sachs Economist David Mericle wrote he's skeptical about the latter scenario, expecting a one-time jump that pushes inflation gauges above 3.5% before coming back down. While the post-COVID bout of prolonged inflation is fresh in consumers' minds, this year's inflation rebound will be 'less threatening than the 2021-2022 episode,' he wrote. At the time, supply chain snarls led to a spike in prices, all while consumers had elevated spending power from stimulus assistance, he noted. But the economy looks different today, with GDP expected to grow at a measly pace of 1% this year and the unemployment rate potentially drifting higher. Economists say wages are critical to determining whether inflation will be one-time or prove stickier. When consumers expect inflation to rise, they tend to seek higher pay from their employers. Those companies then may pass on some of their higher labor costs to consumers, raising prices on the goods and services they buy. If that dynamic stays in check, inflation can rise without causing massive problems. However, one fear is a wage-price spiral, which the U.S. experienced in the 1970s. This spiral only ended after the Fed hiked rates aggressively and brought about a recession. 'A pickup in wage growth would be a crucial intermediate step for high inflation to become persistent, but so far as the trade war has gotten underway, anxiety about the outlook appears to be outweighing any boost from higher inflation expectations,' Goldman Sachs' Mericle wrote. Read the original article on Investopedia
Yahoo
14-05-2025
- Business
- Yahoo
Does the Trade Truce Between the US and China Change the Fed's Strategy?
The U.S. trade deal with China has eased the fears of a recession, but remaining tariffs could still threaten the Federal Reserve's dual mandate of keeping inflation low and employment high. That has caused traders and forecasters to split on how the Fed will change its strategy in the months ahead. Some say the lower tariff levels will have less of an impact on the job market but will push up inflation, requiring the Fed to hold rates higher for longer. While others say the uncertainty around tariff policy will stop businesses from hiring, requiring the Fed to step in with a rate cut sooner rather than pause in the U.S.-China trade war has many investors doubting that the Federal Reserve will cut interest rates soon, since fears of an impending recession are easing. Before the deal was struck, many thought the Federal Reserve's policy-setting committee would cut its influential federal funds rate this summer to stimulate an economy expected to deteriorate under the weight of tariffs. However, with the agreement alleviating some of the highest import duties on one of the country's biggest trading partners, economists and traders have pushed out those forecasts. There's still a path for the Fed to lower rates later this year, analysts say, citing the potential for a slowdown as still-high tariff rates weigh on economic activity. But for a Fed that was already in 'wait-and-see' mode, the thawing should help avert the type of large-scale layoffs that would bring the Fed to the economy's rescue, they say. 'We no longer think that the FOMC will see enough deterioration in labor market conditions to cut in the next few months,' Barclays chief U.S. economist Marc Giannoni wrote in a note to clients, forecasting the Fed will wait until December to cut interest rates. Bill Adams, chief economist at Comerica Bank, doesn't expect the Fed to cut rates at all this year. Recession risks looked 'uncomfortably high' last month, but they're significantly lower after the U.S.-China trade tensions simmered down, he wrote in a research note. Bond markets are still eyeing at least one Fed cut this year, even as they start pricing in chances of a longer Fed delay. The CME Group's FedWatch tool shows only a 7% probability of the Fed staying steady until December, with 26% seeing at least one quarter-point cut by then, 38% seeing two and 29% anticipating three cuts or more. Forecasters are also split on how the Fed will conduct monetary policy following the trade agreement with China. Much of it will depend on how inflation and the labor market evolve. Giannoni, the Barclays economist, said he sees 'the economy sidestepping a recession' even if growth slows in the months ahead. The unemployment rate should end the year roughly flat at 4.3% this year, he wrote, giving the Fed little reason to stimulate growth further. And though inflation is on the way down—April's data was the latest sign—it remains above the Fed's 2% target. The Consumer Price Index rose 2.3% in April compared to a year earlier, the lowest rate since February 2021. The Fed will likely wait 'until it sees enough moderation in monthly inflation prints to gain confidence' that it is fully quelled, he wrote. Despite rolling back 145% tariffs against China, the agreement reached over the weekend still includes a 30% tariff. The administration has also made it clear that 10% tariffs are the lowest they're willing to go in negotiations with other countries. The remaining tariffs will 'begin to raise prices meaningfully in future months,' Ronald Temple, chief market strategist at Lazard, said in emailed comments. 'Today's inflation print reaffirms my view that the Fed will not cut rates this year,' Temple said. Few see the Fed being forced to cut rates this summer, but some analysts see higher chances of Fed action soon after as growth starts cooling. Though tariffs on China may no longer be sky-high, the average U.S. tariff rate on imports from foreign countries is now 16%, up from 3% at the end of last year, according to Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. 'Constantly shifting and seemingly ad hoc trade policy also perpetuates high levels of uncertainty for businesses, which likely will stifle hiring and investment,' he wrote this week. One major hurdle toward the Fed cutting has been the potential for tariffs to drive inflation upward, but ING economist James Knightley wrote in a research note that the de-escalation of trade tensions should tamp down those worries. 'Inflation will be less of an issue for the Federal Reserve and the scope for Fed rate cuts remains,' he wrote, forecasting a Fed cut in September. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
USA Today
14-04-2025
- Business
- USA Today
Economy will likely slow to near-standstill or recession despite Trump tariff pause: Survey
Hear this story Experts predict the economy will nearly stall in 2025, growing 0.8%, down from their projection of 1.7% just last month. The 46 economists surveyed by Wolters Kluwer Blue Chip Economic Indicators estimate a 47% chance of recession, up from 25% in February. 'We had a very solid economy at the beginning of the year,' Barclays economist Marc Giannoni said. "The tariffs are…weakening activity and weakening demand.' Forecasters have a bleak outlook on the U.S. economy because of President Donald Trump's escalating trade war even amid his 90-day pause of the highest tariffs on more than 50 countries − and they see the odds of a recession as a tossup. The experts predict the economy will nearly stall in 2025, growing 0.8%, down from their projection of 1.7% just last month, according to the average estimate of 46 economists surveyed by Wolters Kluwer Blue Chip Economic Indicators on April 4 and April 7. They reckon there's a 47% chance of recession, up from 25% in February. 'Even higher tariffs' The economy grew a healthy 2.8% last year. Need a break? Play the USA TODAY Daily Crossword Puzzle. The poll was conducted after Trump unveiled his reciprocal tariffs on dozens of countries on April 2 but before he announced a 90-day pause on duties as high as 50% on all nations other than China on April 9 and exemptions for many electronics products late Friday. Yet some of the surveyed economists interviewed in recent days noted that Trump at the same time raised the import fee on Chinese shipments to an outsize 145%, more than offsetting the economic benefits of the concessions. 'That adds up to even higher (total) tariffs,' said Barclays economist Marc Giannoni. The effective, or average, U.S. tariff, on all imports rose to 30%, up from 23% when Trump announced the reciprocal duties. Before the trade war, the average U.S. tariff rate was 2% to 3%. In yet another twist, late Friday, the Trump administration announced exemptions for smartphones, computers, chips and other electronics products. That, Giannoni said, would lower the effective tariff rate back to 23% and "should reduce the negative effects on activity and inflation," but wouldn't significantly change Barclays' projection for a recession later this year. Commerce Secretary Howard Lutnick told ABC News on April 13 the carevouts for the electronics products is temporary and tariffs for those items would be included in a duty on computer chips that Trump plans to impose in a month or two. That would further mitigate any economic benefit from the exemptions. Paying for the tariffs: What Trump's 90-day tariff pause means for your wallet A separate survey of 31 experts this week – 21 of whom responded the day Trump announced the 90-day pause – reveals a similarly dour view, according to the poll by the National Association of Business Economics. They expect the economy to grow just 0.7% this year. The average tariff rate should gradually fall to about 20% this year and 15% in 2026 as companies import fewer Chinese goods because of the high fees and increasingly source their products from other countries, Giannoni said. Still, he expects overall inflation to rise from 2.4% in March to 3.4% by the end of the year, based on the Consumer Price Index. Is the US economy declining? Forecasters say the economy was likely to slow this year after a post-pandemic burst of activity but consumers were in generally good shape, with low debt and wage growth that was still outpacing inflation. The tariffs, however, are expected to drive up prices as manufacturers and retailers pass along much of the fees to consumers. That's likely to sap their spending power, which makes up about 70% of economic activity. 'We had a very solid economy at the beginning of the year,' Giannoni said. "The tariffs are…weakening activity and weakening demand.' 'It's a massive shock,' said Nationwide Chief Economist Kathy Bostjancic, who expects the economy to grow 1% this year and believes the question of whether the nation tips into recession is a borderline call. Is a US recession coming? Giannoni figures the nation will experience a mild recession the second half of the year, with gross domestic product falling 1.5%, net job losses of less than 100,000 and the 4.2% unemployment rate peaking at 4.7%. Besides the hit to consumer spending broadly, Bostjancic said the turmoil in the stock market has reduced the wealth of high-income Americans who have accounted for the lion's share of consumption, causing those households to spend less. She also expects the Trump administration's substantial layoffs to deliver another blow to the economy. Consumer sentiment this month fell to the lowest level since June 2022 and Americans' inflation expectations a year from now rose to 6.7%, the highest since 1981, according to a survey by the University if Michigan. Economists expect consumer spending to increase 0.9% this year, down from 2.8% in 2024, according to the Wolters Kluwer poll. Is business investment increasing? And while the 90-day pause on many tariffs grants a reprieve to many countries as well as consumers, 'The disruption we are seeing and the uncertainty we are seeing is already bad for growth,' Giannoni said. 'The 90-day pause is extending the uncertainty.' Business investment is projected to grow about 1.2% this year, down from 3.6% in 2024, according to the Wolters Kluwer survey. Which tariffs have gone into effect? Trump's reciprocal tariffs, theoretically aimed at matching the fees other countries charge for U.S. shipments to their countries, included a minimum 10% fee and additional charges of up to 50% on more than 50 nations. Those took effect Wednesday. The president already had imposed a 20% fee on China; 25% on imported steel and aluminum; 25% on all imported cars and light trucks; and 25% on some goods from Canada and Mexico not covered by a trade agreement.
