Economy Week Ahead, Job Market Updates, and Unemployement

Student Loan Forgiveness:

August 31: Democratic hopefuls steer clear of Biden student loan plan

Several Democratic candidates in tough Senate races are treading carefully when it comes to President Biden's decision to cancel student loans for millions of borrowers, with some distancing themselves from the new White House plan that has quickly become a major campaign issue.

“Student loan forgiveness is seen by some as a cultural war — the elites with degrees who are on their path to economic security versus those who did not attend college and are working their butts off every day to make ends meet,” said Debra Dixon, former chief of staff at the Office of Planning, Evaluation, and Policy Development at the Department of Education under President Obama. "By supporting the idea generally, but not wholeheartedly, the senators can try not to alienate the beneficiaries of the student loan forgiveness or those who do not have student loans to forgive," she said.

Rep. Tim Ryan, who is joining Biden at an event next month in the Buckeye State, said on Sunday he supports a broader package of debt relief and a tax cut "For all working people" over the student loan forgiveness plan. Sen. Michael Bennet, who is facing a tougher-than-expected reelection bid, criticized the student loan forgiveness plan for not being targeted enough and giving one-time cancellation as opposed to solving broader issues.

Biden fulfilled his 2020 presidential campaign promise by forgiving $10,000 in federal student loans for all borrowers.

Pennsylvania Democratic Senate candidate John Fetterman, who is joining Biden at an event on Monday, called the relief only a first step and argued that people who did not go to college need to be supported too.

The historical decision to implement the most far-reaching student loan forgiveness program ever was eventually made just three months out from November, in the heat of a midterm election that is crucial for Democrats looking to hold on to control of the Senate.

Economic News/Policy: 

September 4: Economy Week Ahead: U.S. Trade and European Central Bank in Focus

Tuesday: The Institute of Supply Management and S&P Global release their separate surveys of purchasing managers on economic activity in the U.S. services sector.

Wednesday: The Commerce Department reports on U.S. exports and imports of goods and services in July. The trade deficit shrank in June due to higher shipments of energy and food products combined with a decline in imports.

The Federal Reserve releases its periodic compilation of economic anecdotes collected from businesses around the country, known as the Beige Book, including what they have seen happening with inflation, employment, and output growth in recent weeks.

Thursday: The European Central Bank announces its latest monetary-policy decision. In July, the ECB raised interest rates by a half-percentage point and unveiled a plan to buy the debt of Europe’s most vulnerable economies, seeking to protect the currency union as it navigates the twin threats of skyrocketing inflation and slowing economic growth.

The Labor Department releases the number of worker filings for unemployment benefits on the week ended Sept. 3. Initial jobless claims, a proxy for layoffs, fell to a two-month low in the week ended Aug. 27, though they have stayed above the 2019 pre-pandemic average since late May.

China’s National Bureau of Statistics releases inflation data for August. Consumer prices in China rose to the highest level in two years in July.

September 2: Job Market Cooled but Was Still Strong in August

Employers added 315,000 jobs last month, the Labor Department said - a substantial slowdown from the more than half a million added in July but still a solid number. Economists have been saying for months that job growth was likely to slow as the economy comes down from last year's vaccine-fueled boom and as higher borrowing costs make it harder for businesses to expand.

“I think stability is very welcome right now for the economy,” said Michelle Meyer, the chief U.S. economist for Mastercard. "If we have a glide path there, if we take these steps from 500,000 jobs to 300,000 to 200,000, that's a better outcome than if we have a dramatic shock where suddenly next month we have negative job growth."

"Jobs are up, wages are up, people are back to work. And we're seeing some signs that inflation may be - maybe, I'm not over-promising - may be beginning to ease," Mr. Biden said at the White House.

A recent survey conducted by the career site ZipRecruiter found that job seekers were feeling less confident about their searches, and were putting more importance on job security than on flexibility.

"People are spending down that pandemic nest egg a little more quickly than they expected because of rising prices, and now feel a bit more nervous and a bit more desperate to find a job," said Julia Pollak, the chief economist at ZipRecruiter.

Job gains were broad in August, with retailers, manufacturers, and even the struggling construction industry adding jobs.

August 31: Private sector adds 132,000 jobs in August: ADP

Job growth in the private sector continued to slow in August, with companies adding 132,000 jobs, according to an ADP job report released Wednesday.

"Our data suggest a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy's conflicting signals," ADP's chief economist Nela Richardson said in a statement. "We could be at an inflection point, from supercharged job gains to something more normal."

The August numbers are down from July, when the private sector added almost 270,000 jobs, according to ADP. Job growth is also much lower than anticipated, with economists having predicted 225,000 jobs added, according to CNN Business.

While Americans' views on the economy improved in August, they remained negative overall, according to a Gallup poll also released on Wednesday. Confidence in the economy rose from -51 in July to -39 in August, according to Gallup's index, which runs from -100 to +100. The government's more comprehensive job report from the Bureau of Labor Statistics comes out on Friday.

August 31: Recession fears are rising. Why are people still quitting their jobs?

Americans are still quitting their jobs at near-record rates in the face of growing economic uncertainty. The idea of quitting a job amid a period of the increased cost of living and a dubious economic future may seem counterintuitive.

"Despite recent declines, job openings still outnumber unemployed workers by a sizable margin, illustrating just how tight the labor market remains," wrote AnnElizabeth Konkel, an economist at Indeed Hiring Lab, in a Monday analysis.

There were roughly two open jobs for every unemployed American, according to Labor Department data, giving job seekers ample opportunities to find new jobs with better pay or working conditions. In other words, employers still have too many open jobs and not enough candidates to avoid boosting wages and other perks to find talent.

The number of Indeed users seeking jobs with a $20 per hour wage rose above those seeking $15 per hour in June 2022, and the number of job seekers looking for $25 per hour is up 122 percent over the past 12 months.

“Since the pandemic, job seekers have been looking for higher pay, less stress, and greater flexibility. In August, however, job security rose to the second-place spot in their priority ranking,” Julia Pollak, chief economist at ZipRecruiter explained. "One in four employed job seekers say they feel less secure about their current job than they did six months ago. Rising risk of a recession, paired with a wave of recent tech layoffs, has made employees more concerned about the precarity of their jobs."

Energy and Environmental Policy/News:

September 2: G-7 agrees to a price cap on Russian oil

The G7 agreed to a price cap on Russian oil Friday as Russia shut a major gas pipeline to Europe, citing maintenance issues, amid the already fraught European energy situation. The countries agreed that they would prohibit "Services which enable maritime transportation," like shipping, of oil from Russia if it's sold at a price higher than the price cap - an attempt to curb Russian profits from the sale of the fuel.

"Today we confirm our joint political intention to [finalize] and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally - the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price determined by the broad coalition of countries adhering to and implementing the price cap," the group said in a statement sent out by the U.S. Treasury Department Friday.

"The initial price cap will be set at a level based on a range of technical inputs and will be decided by the full coalition in advance of implementation in each jurisdiction. The price cap will be publicly communicated in a clear and transparent manner," the statement continued.

A Kremlin official said in response to plans for the price cap on Friday that Russia would not sell to any countries that participated in the price cap, rejecting any non-market principles associated with the sale of its energy products, Reuters reported. The refusal to ship Russian oil not sold below a price cap attempts to cut into these continued profits, Treasury officials said.

Energy market analysts doubt whether the price cap will have a significant effect on global energy prices since Russia has been able to continue selling its oil and gas despite waves of sanctions from the U.S. and Europe.

ICYMI: 

September 6: Biden Administration Releases Plan for $50 Billion Investment in Chips

The high cost of building the kind of complex facilities that manufacture semiconductors, called fabs, has pushed companies to separate their facilities for designing chips from those that manufacture them. Many leading companies, like Qualcomm, Nvidia, and Apple, design chips in the United States, but they contract out their fabrication to foundries based in Asia, particularly in Taiwan.

The department said the funding aimed to help offset the higher costs of building and operating facilities in the United States compared with other countries, and to encourage companies to build the larger type of fabs in the United States that are now more common in Asia. One of the department's biggest challenges will be ensuring that the government funds add to, rather than displace, money that chip-making companies were already planning to invest.

The chips bill specifies that companies that accept funding cannot make new, high-tech investments in China or other "Countries of concern" for at least a decade, unless they are producing lower-tech "Legacy chips" destined to serve only the local market.

The Commerce Department said it would review and audit companies that receive the funding, and claw back funds from any company that violates the rules. Earlier versions of the chips bill also proposed setting up a broader system to review investments that U.S. companies make abroad to prevent certain strategic technologies from being shared with U.S. adversaries.

September 5: Liz Truss Named As Next U.K. Prime Minister, Conservative Party Leader

Liz Truss will become the next prime minister of Britain, taking over from Boris Johnson at a time of economic peril and political upheaval in the United Kingdom. Truss, Britain's 47-year-old foreign secretary, won the support of her party's grassroots with promises of tax cuts and with her fealty to Johnson, who was booted from Downing Street by Conservative lawmakers but is already missed by rank-and-file party members.

Truss wasn't the top choice of Conservative Party lawmakers, and a majority of Britons tell pollsters she will be a "Poor" or "Terrible" prime minister, but she was the favorite among the Tory activists who selected the leader of their party and Britain in a vote announced Monday.

Conservative Party lawmakers said they could no longer trust a prime minister who prevaricated his way through scandal after scandal.

According to a YouGov poll, 12 percent of the general public say Truss will be a good or great prime minister compared with 52 percent who say she will be poor or terrible. The disconnect of her words was noted by her critics, who pointed out that Truss didn't mention that her party has been in power for the past 12 years - and that she has served in the cabinet since 2012 - so these problems were the doings of the Conservatives.

Opposition Labour Party leader Keir Starmer tweeted: "I'd like to congratulate our next Prime Minister Liz Truss as she prepares for office. But after 12 years of the Tories, all we have to show for it is low wages, high prices, and a Tory cost of living crisis. Only Labour can deliver the fresh start our country needs."

For Fun: 

September 3: Artemis I Launch Scrubbed Again, New Attempt May Not Come Till October

The Artemis program is NASA's flagship deep-space human exploration program, meant to return astronauts to the moon for the first time since the last of the Apollo missions in 1972. Created under the Trump administration and carried on by President Biden, it seeks to develop a permanent presence on and around the moon.

Saturday's flight, known as Artemis I, is the first in a series of test missions. It would send the Orion crew capsule in orbit around the moon for about six weeks without any astronauts on board. The next flight, Artemis II, scheduled for some time in 2024, would send astronauts into lunar orbit but not to the surface of the moon. A lunar landing, Artemis III, could come in 2025 or 2026 if all goes according to plan.