The latest job openings data show the U.S. job market is holding up despite widespread predictions about an incoming recession. We’ll also look at the skyrocketing price of cars, a “slowcession” prediction and the Salesforce layoffs.
But first, learn more about the latest developments in the Speakership vote.
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Steady labor raises doubts about recession fears
New federal data showing steady demand for workers and historically low levels of layoffs raised doubts Wednesday about how close the U.S. economy could be to a recession.
The November Job Openings and Labor Turnover Survey (JOLTS), released Wednesday by the Labor Department, showed the job market holding steady despite high interest rates meant to weaken the economy.
“A labor market this strong means an imminent recession is highly improbable. This year will pose many challenges for the US economy, but the labor market looks set to enter with considerable strength,” said Nick Bunker, head of economic research at Indeed Hiring Lab.
- Many economists still believe the U.S. will slip into a recession at some point this year, especially if the Federal Reserve follows through on more planned interest rate hikes.
- But the JOLTS report is the latest sign that the economy on the whole will be harder to weaken than some experts expected.
- The December jobs report set to be released Friday will give the Fed and policymakers a clearer picture of their impact on the job market.
Sylvan explains here.
CAN’T AFFORD CARS
New cars are for richer people: How the auto industry capitalized on pandemic
The U.S. auto industry is changing its business model to produce fewer vehicles at higher prices, effectively embracing the supply chain problems that triggered inflation across the global economy at the beginning of the coronavirus pandemic.
The result is that consumers are being priced out of the market for new cars as automakers seek higher profit margins from constrained supplies. The average price of a new car hit a record in November of $48,681.
“Because there’s been this shift, the people who can buy [new] cars now are much more affluent than before,” said Michelle Krebs, an analyst with Cox Automotive.
- The U.S. auto industry was making about 11 million vehicles per year before the pandemic, a figure that has dropped to around 10 million vehicles annually.
- While those cuts were blamed on chip shortages, those issues have largely resolved, and yet production hasn’t risen.
- Meanwhile, carmakers are reporting massive profits as production stalls and prices rise.
Tobias Burns has the story here.
SLOW YOUR ROLL
Moody’s warns of ‘slowcession’ that could last throughout 2023
Moody’s Analytics warned in a new report that the U.S. could face what it called a “slowcession” this year but maintained that the economy will most likely avoid a full-blown downturn.
“Under almost any scenario, the economy is set to have a difficult 2023,” Moody’s chief economist Mark Zandi said in the January report. “But inflation is quickly moderating, and the economy’s fundamentals are sound. With a bit of luck and some reasonably deft policymaking by the Fed, the economy should avoid an outright downturn.”
- The economy has “generally solid fundamentals,” which could help it avoid a recession, Zandi noted.
- The most significant threat to the economy is a potential misstep in policy by the Federal Reserve, he added.
The Hill’s Julia Shapero has more here.
MORE TECH CUTS
Salesforce laying off 10 percent of workforce in restructuring
The business software giant Salesforce is set to lay off 10 percent of its workforce — nearly 8,000 employees — and cut back its office spaces, according to a letter to employees on Wednesday citing concerns about the direction of the economy.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” the company’s chief executive officer, Marc Benioff, said in the letter.
The decision by Salesforce is the latest in a string of moves by tech companies to turn to layoffs amid fears of inflation and a looming recession. Benioff said the company hired “too many people” as its revenue grew, leading to the need for workforce cuts.
The Hill’s Stephen Neukam has more here.
Good to Know
President Biden’s student debt forgiveness plan has been hit with a barrage of lawsuits that cast its future in doubt. At least two challenges will be considered next month by the Supreme Court.
Here’s where the cases against the plan stand and a rough guide on when borrowers will have some answers about the program’s future.
Other items we’re keeping an eye on:
- The U.S. crypto exchange Coinbase reached a $100 million settlement with New York regulators to resolve an investigation that found the company was “vulnerable to serious criminal conduct,” according to a press release published Wednesday.
- Just 37 percent of U.S. workers feel their salary has kept up with soaring inflation, according to a recent survey, while 41 percent believe they’re currently being underpaid.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.