💼🏪 The Labor Market is Tiiiiiiiight
Happy Wednesday,
I hope you all have had a restful holiday so far. One of my friends’ families threw an ice skating party last Friday where they rented a rink out for a few hours. I thoroughly had fun and didn’t fall flat on my face! I also want to welcome all our new subscribers to this newsletter that came from my most recent YouTube video - we are now at 9,000+ readers and on the way to 10K!
2022 definitely felt like a year of experimentation. Trying all different types of videos on the channel, some did great: including the $5000/Month Shrimp Side Hustle Video, which has over 450,000 views as of writing, but not all videos performed that way.
It seems like most of you who are subscribed are into investing, personal finance, self-development, and side hustle content. And good news! I plan to bring you more of that in 2023. Self-development is a huge passion of mine and I believe that I can share more habits, goals, and ways that I try to improve myself and get better on a daily basis. The market is predicted to be volatile this coming year, but we’ll be here with you every step to help you make sense of what’s happening.
I thank you for being a reader of Hump Days this year, and we will continue to improve our offerings for you next year.
Enjoy this week’s edition!
- Humphrey, Rickie & Tim
Featured Story
By the textbook definition of what is and is not a recession, in Q3, we snapped the two consecutive quarters of contraction typically used to define a recession. The GDP growth rate in Q3 was adjusted upwards to 3.2%. While all the headlines may be skewed toward the negative (increasing interest rates, tech layoffs, and record inflation), strong consumer spending and, especially, how tight the labor market has remained have kept the economy afloat as of late.
In the latest report by the Labor Department, new filings for unemployment benefits rose by a seasonally adjusted 2,000 last week but remain at historically low levels which suggests that employers are holding on to workers despite concerns about an economic slowdown. This is contrary to what one may believe given the huge tech layoffs that swept headlines over the last few months but according to a ZipRecruiter survey of new hires, about 79% of workers recently hired after a tech company layoff landed a new job within three months of starting their search. In the same survey, 83% of all laid-off workers found new jobs within the same time frame which shows just how tight the labor market really is.
These two data points show an expanding economy despite the Fed’s aggressive pace of interest-rate increases looking to cool the economy to bring down inflation which hit 40-year highs earlier this year. Many experts say that the labor market is still too hot from the Fed’s perspective and to expect higher interest rates that eventually push the economy into a mild recession in 2023.
There have been some early hints of the economy softening and that what the Fed is intending to happen is actually carrying out. Retail sales fell 0.6% month to month and those seeking ongoing unemployment benefits have been slowly climbing which could be a sign that some unemployed people are taking longer to find new jobs.
The Fed is waiting on the labor market to slow down enough to get real control over inflation. Hump Days will keep you updated on how this develops.
Weekly News Roundup
U.S. Jobless Claims Tick Up, Economy Grows Faster Than Previously Thought (WSJ)
The Commerce Department said Q3 economic growth was stronger than previously estimated, growing at a 3.2% seasonally adjusted rate, largely due to higher estimates of consumer spending. The Q3 number snapped two consecutive quarters of contraction. The labor market also remains historically tight and resilient consumer spending is driving further growth despite a high-interest rate environment.
Cathie Wood’s Ark Sheds Almost $50B in Assets since 2021 Peak (Financial Times)
Ark Investment Management has lost almost $50B in assets from its stable of ETFs since its 2021 peak. This was led by steep declines in its flagship Ark Disruptive Innovation ETF ($ARKK), which has lost around two-thirds of its value this year and is on track for its worst annual performance.
Russia Bans Oil Sales to Countries that Accept Price Cap (CNBC)
Under a price cap imposed earlier this month, oil traders must promise not to pay above $60 per barrel for Russian seaborne oil to retain access to Western financing. Russia then announced on Tuesday it would ban oil sales to countries that abide by the price cap, which has been set close to the current price for Russian oil but far below the prices at which Russia was able to sell it for much of the past year.
Chart of the Week
Distressed debt in the US alone jumped more than 400% in 12 months. Globally, almost $650 billion of bonds and loans are in distressed territory, according to data compiled by Bloomberg.
Distressed debt is a type of financial instrument that represents a loan or other debt obligation that is in default or near default. This means that the borrower is having difficulty making the required payments on the debt and may be at risk of defaulting or filing for bankruptcy.