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Marketplace with Kai Ryssdal
"rsm consulting" Discussed on Marketplace with Kai Ryssdal
"Yay. Boo. That's pretty much today's economic news. From American public media, this is marketplace. In Los Angeles, I'm Carissa it is Thursday today the 26th of January. It is always to have you along, everybody. You know, it will come as news to nobody who's an even occasional listener to this program. That this economy right now is real tough to read. And the latest confirmation of that came this morning in the form of the first peak at gross domestic product for the October to December quarter of 2022. You look real quick. A glance, perhaps, or he listened to the headlines. And you see that on the one hand, it's pretty good. Annualized growth of 2.9% at the end of last year. But you look at a little deeper and you see on the other hand, it's lower growth than we saw in the third quarter of last year and there are some signs that parts of this economy are dragging. So, to get a sense of things while honoring that axiom of economics that there is always another hand, we sent two reporters off this morning to talk to the same economists and bring back two different stories of this economy. One of them good when I'm bad. Marketplace is Mitchell Hartman gets his going. I drew the positive spin on GDP straw in our news meeting this morning, and it's hard to get more positive than this. You know, this is pretty good stuff. We get a very resilient set of growth numbers. That's Joe brucella set RSM consulting. For the overall year, the economy expanded at 2.1%, despite a very challenging growth picture where an economy is absorbing the twin shocks of inflation and interest rates. Those rising borrowing costs for mortgages and credit cards and business loans barely seem to have dented economic activity, says Meghan green at the Kroll institute. The headline figure surprised on the upside at 2.9% for the fourth quarter. It's just the details were a little bit more disappointing. Okay, but wait for that. We'll get to the GDP disappointment beat in about two minutes. Back to the upside. The good news is consumption was still fairly strong for both goods and services. Spending by businesses also held up pretty well, says Andrew hunter at capital economics. Business investment overall increased 0.7% annualized in the context of the huge rise in interest rates we've had. That is reasonably encouraging. One big boost to economic activity came from an increase in business inventories. We saw inventories at essentially almost half the headline gain. That's economist Sarah house at Wells Fargo. Whether that's a good thing or a bad thing, inventories are a little bit in the eye of the beholder. Which brings us to the negative glass half empty version of GDP, so I'm out of here. I'm Mitchell Hartman for marketplace. Mitchell's out, Justin Ho's in, same economists different economy, here you go. Let's start with the build up in inventories that happened last quarter. Remember, job Bruce wayles at RSM, he says we shouldn't get too excited about that. That makes sense ahead of the holidays. That's a one time thing and not going to be replicable. And while the inventory build up could be a sign that businesses are feeling confident. It could also mean that businesses have been caught off guard by the demand environment. And so they've had unintended inventory building. That's Sarah house at Wells Fargo again. She says demand has been weakening. Another sign is that imports to the U.S. were down. With imports falling, it's a sign that businesses have restocked their inventories sufficiently and that they see bathing signs of consumer demand, where they just don't need as much product. And even though consumer spending did rise last quarter, more recent retail sales data found that spending fell in both November and December. Here's Andrew hunter again at capital economics. Although the quarter as a whole was okay, the degree of momentum and strength was fading as the quarter went on. Consumer spending had been propped up by all the relief aid, people got during the pandemic. But Meghan green at the Kroll institute says people have been burning through their savings. The question is how long can they whittle that down before they run out? And I think they'll probably run out at some point this year. Greene says if consumer spending keeps falling, more companies might lay off workers. We asked job we sway less at RSM about whether he thinks the economy will enter a recession this year. We think there's a 65% probability of a recession, most likely starting around midyear. The means there's 35% probability that we won't. Is that a good sign or a bad one? I guess it depends on what you think of those odds. I'm Justin Ho, for marketplace. You will be shocked, shocked. I know to hear that Wall Street put on its rose got her glasses to read today's GDP report. We'll have the details when we do
Marketplace with Kai Ryssdal
Pandemic wage gains were just a fluke
"Come friday. We're going to get the latest stab shot on average hourly earnings in this economy and it is expected to show continued strong winds gains but our guy on economic statistics mitchell hartman. He says best to ignore that and focus instead on the trouble yet to come so a crazy thing happened on the way to the pandemic recession. After the economy shut down and twenty million people lost their jobs. Workers average hourly earnings went up skyrocketed. Actually up eight percent year over year but what got was was not signal. Joseph bruce willis is chief economist at rsm consulting. He'll be our guide through this thicket of wage data and when he says noise not signal he means fast. Rising wages have been a statistical anomaly of the pandemic economy high paid professionals kept working from home and mostly held onto their paychecks but millions of mostly low paid service workers lost their jobs. When you've got forty percent of households making forty thousand or less seen a job loss or loss in wages. That explains that head. Fake if you will on wages forty year old cinnamon deutsche is. An example of what bruce willis is talking about. She was teaching at a childcare center in asheville beulah ohio when it closed and she got laid off in march her three hundred and fifty dollars a week. Paycheck disappeared from the average earnings calculation. But she got unemployment which included six hundred dollars a week in extra federal pandemic pay until she was hired back three months later. I made twice as much on unemployment with the extra six hundred dollars. As i do now but i am glad to be back to work. I mean i like going to work so like many americans do inches. Income actually went up for a while because of additional unemployment benefits and relief checks but those temporary effects are fading. And just says we're in for a rude awakening. What i think we're going to see is a very bifurcated. Wage market this idea that k shaped economy separation between the hadgem. The have notch bruce willis says the haves those who work in what he calls. These zoom economy will have made goes at the upper end. Those who are already thriving. There's going to be competition for those workers. you know. Premium place their wages but for lower wage says workers even as the economy reopened and employers. Start staffing up again. Those in the middle to the lower end of the market where the damage occurred. They're not going to see a lot of wage growth. That's due in part to supply and demand. Lots of unemployed workers looking for jobs not enough job openings to give them leverage to demand higher pay. then there's something. Economists call downward nominal wage rigidity firms during hard times ten not reduce. The wages of the employee said they keep on the books but when the times get better wage gains core restrained. That is pretty much what cinnamon joy is seeing in her job. She's back at work fulltime at her previous salary of three hundred and fifty dollars a week. The extra unemployment income she banked back in the spring has run out. My credit card is back up to you. Know almost max out trying to pay five or ten bucks extra so that i can pay that down. I make enough money to pay my bills and have mcdonald's once in a while but you know if my car breaks down or have an emergency am just outta luck i i have to borrow from. Somebody doesn't expect chill get a raise until she hits ten years of service in twenty twenty
Marketplace with Kai Ryssdal
Delaying COVID-19 relief could do lasting damage
"We are not going to hazard a guess here about what is going to happen with negotiations on an economic relief bill the negotiations that the president shutdown yesterday afternoon, and then tried to restart piecemeal. Last night what we are going to do is deal the facts as we have them now, which is that there are no negotiations and as far as anybody knows, there is no help coming for this economy till after the election and maybe longer. So that being case two stories today on that topic, and then a political insight marketplace's Mitchell Hartman gets going with story number one the. Big Picture. Back, in March Washington sent three trillion dollars coursing through the economy's veins. One of the biggest infusions was six hundred dollars a week in extra unemployment payments to more than twenty million jobless Americans that expired midsummer and George Washington University economist J Shamba says the amount of cash going out to laid off workers cratered it fell from one hundred, ten, July two, thirty, four, million dollars in September. So there's this massive drop off to the economy and also to the most vulnerable households those twelve hundred dollar relief checks from the spring have been spent with most of the federal pandemic relief now gone. Slowing retail sales and personal spending Joseph Bruce. RSM Consulting says. A quarter of small businesses have closed. He predicts without more federal support including lending to small businesses more will fail and state and local governments won't be able to keep teachers and other essential workers on the payroll says Michael. `grats. At Columbia Law School. The loss of civil service jobs will disproportionately affect minority because they've been hired into those jobs. Bottom Line says Dan North at credit insurer, Euler Hermes, North America. Okay. Let's say we don't have a stimulus package. The economy gets pretty severely damaged in the short term probably for five years to get back on. The burden falling to families that are running out of time and money says Columbia's Michael `grats people are facing eviction. Difficulty paying for food and lodging. This is a desperate situation. One that the chaos in Washington isn't making any
Marketplace with Kai Ryssdal
Unemployment is bad, but we dont know just how bad
"We begin today unemployment and I'm GonNa hit you with a bunch of numbers tomorrow morning the Labor Department will release its employment report for July the June report showed that nearly eighteen million Americans were out of work this morning we learned that just shy of one point two, million people filed for first time unemployment last week they joined the roughly thirty million Americans who are already claiming unemployment benefits. So eighteen million, thirty, million, thirty, one. And two how many unemployed Americans are there right now other than you know a lot we asked marketplace's Mitchell. Hartman to crunch the numbers. Let's start with those unemployment claims economists like this number because it's up to date and reflect the actual number of claims states process last week says Joe Bruce, Willis RSM consulting all of the people who were receiving some form of unemployment benefits, and that's north of thirty one, million people on the other hand. The Labor Department's monthly jobs report for June pegged the number of unemployed Americans at just under eighteen million. But that's likely low ball right now says at least Gould at the Economic Policy Institute to be counted as unemployed, you have to be actively looking for work, but in Cova Times, there are many people that are not actually looking because they are taking the advice of the health experts in this country maybe they're caring for children right now who schools have been closed former. Commissioner Eric Griffin has her own formula for counting total unemployment right now, what I've been doing is adding up all of the people whose jobs have been disrupted the bulk of them probably pandemic of recession related including those waiting to be called back from furlough and part timers who want fulltime work she comes up with twenty five million. Back in February before the pandemic hit one, hundred and fifty, eight, million Americans had jobs. So about one in six of them don't now I'm Mitchell Hartman for