Job Openings Remain Above Pre-Pandemic Levels

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Daly, Mester Say Fed Still on Track for Rate Cuts

April 02, 2024 03:42 PM EDT

The Federal Reserve remains on track to cut interest rates later this year, despite growth remaining strong and prices remaining higher than originally expected, officials said today.

While the Federal Reserve’s projections of three rate cuts in 2024 is “reasonable,” San Francisco Fed President Mary C. Daly also emphasized it was “not a promise.” In an interview with Amber Dixon of Nevada Week on Vegas PBS, Daly said the strong ISM manufacturing data released this week wasn’t enough to adjust her outlook on the economy.

Daly’s remarks come after Institute of Supply Management (ISM)  data this week showed that manufacturing output and prices were higher than expected, sparking worries that inflation could be coming in stronger than expected.

The report helped throw some cold water on market optimism for rate cuts. Economists and investors have projected rate cuts will come at the Federal Reserve’s meeting in June. However, rate movement forecasts based on fed funds futures trading data fell yesterday in the wake of the report to a nearly 50-50 chance that rates would be cut at the Fed’s meeting in June.

By Tuesday, investors recovered, pricing in a 64% chance the Fed would cut rates on June 12, still down from 70% a week ago.

In addition to the ISM data, comments from Federal Reserve Gov. Christopher Waller also chilled expectations for rate cuts.

“There is a path where interest rates start to adjust this year, we’re just not there yet,” Daly said. “If we lock inflation in at this level, it’s a toxic tax on everyone.”

Cleveland Fed President Loretta Mester told a conference of the National Association for Business Economics Tuesday she expects inflation will take longer to cool off than originally anticipated. 

She echoed other recent Federal Reserve speakers in wanting to see more positive inflation data before voting to cut interest rates, saying it’s unlikely there would be enough data before the next rate decision on May 1.

“Some further monthly readings will give us a better sense of whether the disinflation process is stalling out or whether the start-of-the-year readings reflect a temporary detour on the downward path back to price stability,” she said.

-Terry Lane

OPEC Likely To Stand Pat in Meeting Tomorrow

April 02, 2024 02:48 PM EDT

Global oil prices continued surging Tuesday amid a combination of supply and demand considerations that threaten to push Brent crude beyond $90 per barrel for the first time in six months.

On the eve of the latest meeting Wednesday of the Organization of Petroleum Exporting Countries and other countries, known as OPEC+, prices for Brent for May delivery rose as high as $89.06. The global benchmark hadn’t risen that high since mid-October. Oil prices have increased about 15% so far this year.

One of those factors is the OPEC+ production cuts that were enacted last year. Wednesday’s meeting likely won’t change those reductions, as just last month the organization extended them to June. Some analysts say the cuts will remain in place for the remainder of the year.

OPEC produces about 40% of the world’s oil and its members account for 60% of the world’s petroleum market, so its production decisions have a dramatic impact on global prices.

Increasingly short oil supplies appear to have intensified that impact in recent weeks. Last month, the International Energy Agency said global supplies could fall short of demand by 300,000 barrels per day this year.

Nevertheless, OPEC+ reportedly intends to maintain its current production cuts of 2.2 million barrels per day.

Read more ahead of the meeting here.

-Lyle Niedens

Gen Z Paying More Rent Than Millenials, But Less for Homebuying By Age 30

April 02, 2024 01:43 PM EDT

A study shows Gen Z is already paying more to rent than earlier generations. 

Members of Generation Z, defined by this study as those born between 1994 and 2000, will spend $144,557 on rent by the time they’re 30, according to a survey from RentCafe, a rental market research site. That’s almost $20,000 more than the adjusted costs for Millennials, born starting in 1981, when they were the same age.

However, it’s not all bad for Gen Z, as the study showed they would face lower costs for home ownership, totaling $165,206, about $7,000 less than what Millenials paid to own a home. Gen Z is also expected to do better on pay than their Millennial predecessors, earning 14% more on average by age 30. 

“The good news for Gen Z is that the gap between renting and owning is smaller than it was for Millennials while incomes are higher,” the report found. 

For affordability, the study found that California was the worst state for rental costs for either generation, led by San Jose and San Francisco, while Ann Arbor, Mich., and Bloomington, Ind. were among the cities where homeownership costs were less than renting. 

-Terry Lane

Factory Orders Up on More Durable Goods, Transportation Sales

April 02, 2024 10:56 AM EDT

Factory orders rose 1.4% in February, bouncing back after falling nearly 4% in January, according to Census Bureau data. Economists were expecting more modest growth of 1% in the report. 

Durable goods orders and transportation equipment orders rose for the first time in two months, helping push new orders for manufactured goods to $576.8 billion in February. The report showed total shipments also reversed a two-month losing streak to deliver 1.4% growth in the quarter.

The better-than-expected factory order data comes after other indicators showed U.S. manufacturing could be on the upswing, including an Institute of Supply Management (ISM) manufacturing index reading that showed expansion in the sector.

-Terry Lane

Job Openings Stayed Plentiful In February

April 02, 2024 10:44 AM EDT

The labor market churned a little bit faster in February, as the number of job openings increased—and so did the number of people who quit their jobs or were laid off.

The number of job openings rose to 8.8 million in February from a downwardly revised 8.7 million in January, the Bureau of Labor Statistics said Tuesday, matching forecasters’ expectations. That meant for every unemployed worker, there were 1.4 job openings, the same as in January and well above the pre-pandemic level of 1.2 openings per jobless worker.

More people left their jobs, whether voluntarily or not, with the number of quits edging up to 3.5 million from 3.4 million in January, and layoffs rising to 1.7 million from 1.6 million, hitting its highest level since March 2023 although still low by historical standards. Higher quitting suggested workers got a little more bargaining power since people typically quit their jobs for better pay and working conditions at another position.

Overall, the changes were relatively modest, with little signal that the dynamic in the labor market has changed much. The job market has stayed healthy for workers despite the Federal Reserve’s anti-inflation interest rate hikes, which have fought inflation and weighed on the economy by pushing up borrowing costs on all kinds of loans.

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