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- Tuesday's Scoop: Wavering🌤️
Tuesday's Scoop: Wavering🌤️
Wells Fargo's diversity fraud & Abbott's baby food disease
Scoops Team
July 30, 2024
Hey friend - welcome back to your daily scoops on the economy and companies impacting your life.
Here’s what you need to know today to inform your work, spending, and investments:
🌎 Big picture
Employers continue to cut back on their hiring plans, but layoffs are still low.
Ride-hailing companies’ workers in California will remain independent contractors.
Americans gained a little optimism about the economy this month.
How are you feeling about the economy? |
💼Work trends
Unemployment Rate: 4.1%
Not far from 50-year lows.
Employers continue to cut back on their hiring plans, but layoffs are still low. The Labor Department's Job Openings and Labor Turnover Summary indicated that there were 8.18 million positions available in June, slightly down from an upwardly revised 8.23 million in May but well below the peak of 12.182 million in March 2022. There are 1.2 available jobs for every unemployed worker, which aligns with the level before the pandemic. Hiring rates hit their lowest since the pandemic began, while the quits rate held at 2.1%, reflecting less confidence in job-switching opportunities. Layoff rates decreased in June. These numbers paint a picture of a hiring market that has returned to normal from the explosive post-pandemic growth, without any clear indication of a tilt into a recession yet.
🤓 Inside Scoop: What is the difference between a tight and loose market?
Economists and financial analysts often refer to certain markets or policies as tight or loose, indicating whether something is restrictive to normal function.
You might hear that the labor market has been tight, referring to the demand for employees far exceeding the amount of available workers. That imbalance has restricted economic growth by not providing businesses with the resources they need and spurred inflation by making those limited resources more expensive (higher wages). As business activity slows, and companies reduce their hiring plans, the demand for workers will come closer into balance with the supply.
Economists will also use temperature adjectives to qualify the scale of imbalance. A tight labor market could be too hot and need to cool or loosen.
Economic policy can also be tight or loose. Policymakers have been tightening restrictions on business activity by increasing borrowing costs. If they start to cut interest rates, they will be loosening up their restrictions.
Ride-hailing companies’ workers in California will remain independent contractors after California’s Supreme Court upheld Proposition 22. This decision, which comes after years of campaigning and millions spent by ride-hailing and food delivery companies, means these workers will not be classified as employees, entitled to benefits and protections like minimum wage, unemployment, or health insurance. Prop 22 does offer some protections, including a wage guarantee and health insurance stipends, but falls short of the total benefits employee status would provide. The ruling sparked disappointment among labor advocates who argue that it allows tech companies to sidestep basic worker protections, but it will save on-demand delivery and transportation companies like Uber a lot of money.
👜Cost of living trends
Inflation Rate: +3.0% (YoY), -0.1% (MoM)
Policymakers aim for 2% YoY inflation. (June CPI)
Americans gained a little optimism about the economy this month. The Conference Board’s consumer confidence index rose in July, with the measure of future expectations reaching its highest since January. Slower cost of living inflation and faster wage growth have boosted Americans’ expectations for future income. However, there’s still pain in the real estate market. The share of people planning to buy a home in the next six months fell to the lowest level in over a decade. Views on the job market are also shifting. The highest share of respondents since early 2021 reported jobs being hard to get.
📈Investment trends
The Market: ⬇️ -0.5%
S&P 500: 5,436.44
1Mo: -1% | 1Yr: +18% | 5Yr: +85%
The market drifted lower on Tuesday as investors grew more concerned about the underlying strength of the economy. Updates from major consumer-facing companies have painted a gloomier picture of Americans' spending trends, and companies keep cutting back hiring plans.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
How are these companies doing? Judge their decisions. Investing starts with an opinion. (+2 pts)
 Abbott Labs | Hidden Dangers Abbott has been ordered to pay $495M in damages after a jury found its specialized formula for premature infants caused a dangerous bowel disease in one child. The Similac maker faces hundreds of similar lawsuits alleging it failed to warn doctors about the side effects of its formula on infants.
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 Wells Fargo | Sham Diversity Wells Fargo is being sued for allegedly conducting false interviews with non-white and female applicants without intending to hire them, misleading shareholders about its commitment to diversity. The fourth-largest US bank is still subject to an asset growth cap from regulators after years of scandals.
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💭Broader perspectives… (+2pts)
Should companies set racial and gender targets in their job applications process? |
 Pfizer | Turning Around Pfizer reported sales growth for the first time since 2022 when slowing demand for its COVID-19 treatments started dragging down revenue. The pharma giant's acquisitions of cancer therapies have boosted sales while it slashed costs to strengthen profitability.
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 Procter & Gamble | Diaper Change Procter & Gamble is still struggling to drive sales growth, reporting flat revenue despite an increase in sales volume for the first time in two years of steady price inflation. The consumer brand giant will introduce a new mid-priced version of its Luvs diapers to regain market share in the baby care market.
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 Microsoft | Strong Momentum Microsoft notched another quarter of soaring sales growth across its many businesses, from Windows and Office to PCs and Xbox. The AI-fueled growth of Microsoft's cloud businesses isn't meeting investors' lofty expectations despite its rapid adoption.
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🛠️ Recommended resources (+2pts)
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