Oil, Oil, Everywhere, Nor Any Barrel For America

Last week more numbers relating to the US job market and inflation descended on us. They were picked over, and those that suited some preconception were selected for highlighting. Useful, but a process removed from the real world of job creating, job hunting, supermarket shopping and politics.

No debate about that real world. It is one in which some employers continue to hunt for staff, but no longer pay candidates to show up for interviews. It is a world in which new jobs are being created, and workers continue to eye any advantageous job change, but a bit more warily, and increasingly prefer quitting in place, or quiet quitting as it is called, to just plain quitting. It is a world in which word “recession” is being heard in C-suites and the White House. It is a world in which inflation shows no signs of abating, or share prices signs of a sustained recovery.

Where you stand on all of this depends on where you sit. If you sit in a college dorm, looking ahead to a bout with reality – entry into the labor market – or on your couch, dog snuggled at your feet despite your boss’s call to return to your cubicle, you stand with Senator Elizabeth Warren who is calling for an end to these rate increases before they become too much of a bad thing and add a few million victims to the dole queue.

If you sit in a CEO’s seat, you believe a recession is coming. CEO confidence as reported by the Conference Board late last week after its survey of 136 CEOs, is at “lows not seen since the depth of the Great Recession.” Almost all – 98 per cent – are preparing for a recession. The less bad news is that they are expecting it to be short and shallow, and that 86 per cent expect their capital budgets to remain the same or increase over the next year.

From the CEO seat, you see a labor market that is easing, but continuing to favour job seekers. The Federal Reserve Bank of Atlanta reports that workers who have switched jobs have enjoyed annualized wage increases of 8.4 per cent, topping the 5.6 per cent garnered by those who resisted the lure of the hot labor market. Some 68 per cent of CEOs are having difficulty attracting qualified workers, 44 per cent expect to expand their work forces over the next year, and 85 per cent to raise wages three per cent or more. All these figures are a bit below those in the previous quarter, and suggest employers will hoard rather than fire workers should the economy slow.

If you are in the seats of front-of-screen traders, who  fear what they consider impoverishment, driving down share prices and wiping trillions off the value of portfolios, pension funds, savings, home values, you stand for and end of easing.

Then there are the seats in which politicians sit. The President, who now concedes that a short, shallow recession is coming, is undoubtedly on the edge of his seat with the mid-term congressional elections only 21 days away, his job approval down. The party in power is generally blamed for any economic woes, and the President has added to that problem by an incoherent response to gasoline price increases. He begged OPEC+ to increase oil production, and instead was presented with a reduction. He made matters worse by asking for a one-month postponement of the production cut, proving that he was less concerned with the effect of a gasoline price increase on over-stretched consumers than the fact that it might occur before the election. He has cancelled the permit for the XL pipeline, with enough capacity to bring crude to US Gulf Coast refineries to offset likely OPEC+ production cuts, held back on permits for drilling on federal lands, and threatened the viability of any new investments oil companies might make.

Then we have the seats now occupied by key players. No matter the outcome of the elections, Treasury secretary Janet Yellen can begin planning for a return to some think tank, as can Brian Deese, director of the National Economic Council. There are cans to be carried and this pair are lead candidates for the job.

Most important, if you sit in a governor’s chair at the offices of the Federal Reserve System or in one of its twelve regional banks, you stand for more rate increases so you can view once-transitory inflation from the rear-view mirror. The jobs market remains unhealthily tight, producers raised wholesale prices in September on stuff sold to businesses and shops by 8.5 per cent compared with last year, and consumer prices are up 8.2 per cent. Take out volatile food and fuel prices, and so-called core prices are up 6.6 percent over last year, a bigger jump than last month and a 40-year high. Overall inflation rose more in September, 0.4 per cent, than in August, 0.1 per cent. Fed chairman Jay Powell says he will keep raising rates until the Fed has “clear and compelling evidence” that inflation is coming down. The evidence so far is neither clear, nor compelling, nor anywhere in sight.

According to the latest report the economy is too darn hot, and the price of supping with my baby tonight is too high, to borrow from Cole Porter. Maybe not. It is up this past year by 8.8 per cent in full-service eateries, compared with the 13.0 per cent jump for the still-less expensive but less romantic experience of dining in and doing the washing-up.