Jobs, Manufacturing, Wages, Bits & Pieces, the Federal Budget II, and Filtering the Noise.
What’s Happening
ADP new employment was half of what expectations were: 77,000 vs. 148,000. Ugh.
It’s not unusual for actual and expectations to vary significantly, but this difference is noteworthy.
The US Jobs Report came in at 151,000 new jobs vs. expectations of 170,000. It did not hit expectations but was better than last month’s 125,000.
The cut in Federal jobs really hasn’t kicked in fully yet, but it was one of five sectors that had job losses. The Fed job loss was 10,000 jobs.
The largest job loss was in food services and drinking establishments, with a loss of 20,000 jobs.
That sober-curious trend is making an impact.
The ISM manufacturing index – that’s the Institute for Supply Management – stayed in positive territory: 50.3% vs. 50.6% expectation. Below expectations but still in positive territory.
That means the manufacturers are still optimistic if the number is over 50%.
Initial jobless claims came in below expectations – a good thing. 221,000 last week vs. expectations of 235,000.
And the unemployment rate kicked up from 4.0% to 4.1%.
And hourly wages are still up 4% year over year. Very good news for workers.
One more thing: Fed Chair Jerry is still in a wait-and-see mode for interest rate cuts. I expect he is looking for the noise volume to decrease so he can think clearly.
Bits & Pieces
Undersea cable cutting/breakage can be nefarious and make headlines, but there are about 150 to 200 cable breaks each year, most of which are caused accidentally by fishing vessels or anchors.
It does play havoc with streaming Netflix when the Red October accidentally drags its anchor across the ocean floor.
Mortgage rates are the lowest in six months – 6.63% average.
100,000 California State workers will be heading back to the office for 4 out of 5 days of the week per the Governor.
That starts in July, and the unions are not happy.
As a point of reference, 95,000 state workers still work entirely remotely or in a hybrid capacity. Wow.
The 2023 Federal Budget – Part II
Last week, I stated that in 2023, total revenues were $4,400,000,000,000, and total expenses were $6.1 trillion.
I talked about how that difference is made up: it’s financed on the Uncle Sam credit card/HELOC, with an average interest rate of 3.282%. Yes, that is higher than what I stated last week—my mistake.
In 2020, the average rate was 1.77%.
The 4-week Treasury Bill sold for an annual yield of 4.3% last week. That was for $75,000,036,600 in federal debt. For four weeks.
Federal Government Expenses:
Mandatory spending:
Social Security: $1.3 trillion
Medicaid: $616 billion
Medicare: $839 billion
Income Security Programs - $448 billion, comprised of:
Earned Income, child, and other tax credits
SNAP – supplemental nutrition assistance programs
SSI – supplemental security income
Family support, foster care, child nutrition, and unemployment
Other - $502 billion, comprised of:
Federal civilian and military retirement benefits
Veteran programs
Other programs
Discretionary spending
Defense: $805 billion
Non-defense: $917 billion
Transportation: $115 billion
Health: $100 billion
Education, training, employment, and social services: $125 billion
Other - $577 billion: Science and space, community development, natural resources, justice administration, international affairs, income security.
Interest expense - $659 billion
And now you are better informed.
Speaking of the Federal Budget: March 14
That’s when the temporary federal budget passed in December expires, leading to a shutdown of many government services.
At press time, it’s unclear if a temporary extension will pass.
We will find out in four days.
The Noise - Last week, I talked about the noise around us. By noise, I mean the headlines, click-bait, one-day news stories, and political posts all around trying to keep pace with what may or may not be news. There isn’t much of a filter out there, so I’ll see what I can do.
Tariffs. First, they are in place, and then they are not. But wait, now it’s only a few items, but then they are postponed until some future date. As a business owner, this is very difficult to manage.
Wall Street. The markets don’t like uncertainty—see tariffs above—and so the stock market goes in the direction it knows best when there is uncertainty: down.
Jobs. According to the headlines, many firms are cutting jobs. The biggest shock to the system is the loss of federal government jobs, as they used to be a safe haven for many folks.
Summary: I believe the tariffs will settle down once the administration is through the negotiation stage of international trade. Until then, it’s like a roulette wheel: totally out of your control, and you don’t know what number it will land on. Since Wall Street really doesn’t like playing roulette, once foreign trade finds a new normal, so will the stock market. Regarding jobs, as a business owner, you need to realize that your employees are hearing about layoffs, so you should consider communicating more to them about how your company is doing. I promise you they will be less distracted around the water cooler and do a better job. As an employee, you have to be at least in the top half of workers in your company to mitigate the risk of being part of a reduction in force, so make yourself indispensable. And don’t hang out around the water cooler; productive people don’t do that.
A man who was a friend and a boss off and on for 37 years told me: “Control what you can control; everything else will fall into place.”
