Nov 23, 2022 - Economy

Five economic trends we're grateful for

Illustration of a turkey that changes into a heart icon.

Illustration: Brendan Lynch/Axios

It's been a dramatic year for economic news: high inflation, the fastest rate increases in decades, swooning markets and widespread recession fears.

Yes, but: Surveying the landscape this Thanksgiving, we see a pretty remarkable list of shifts for the better. These are the five that stand out as reasons to be thankful even in this time of economic uncertainty.

1) The labor market is super hot. There's just no way around it: By any historical standard, this is an extraordinary time to be an American looking for a job.

  • At 3.7%, the unemployment rate has been lower in only 8% of all months in data that go back to 1948.
  • The number of people filing new claims for jobless benefits has averaged 215,000 so far this year (it ticked up last week to 240,000). But across the 2010s, that number averaged 369,000.
  • There are patches of softness emerging, and it's not guaranteed that conditions will remain robust. But it's hard to look at the 2022 labor market as anything but a boon for workers.

2) Supply chains are unsnarling. An index that gauges the health of supply chain conditions, published by the New York Fed, is well below its most recent peak in April — signaling a return to historical norms.

  • Pandemic-era logjams at America's busiest ports — one of the most visible signs of the goods bottleneck — are over. At the peak of the chaos in January, there were a total of 109 ships waiting to unload at Long Beach and Los Angeles. As of last week, that number was 5, according to the Marine Exchange of Southern California.
  • Those backups, plus COVID-related factory shutdowns and other supply chain issues, fueled shortages of all sorts of goods. This year, retailers have the opposite problem: excess inventory. That's resulting in more deals for shoppers.

3) The war on savers is over. We mean this framing to be somewhat tongue-in-cheek. The same savers who were "victims" of ultra-low global interest rates were, for the most part, also beneficiaries of the asset price surge it fueled.

  • Now, short-term, ultra-safe savings are finally offering decent yields, such as the 4.3% that 90-day Treasury bills now pay. The flip side: Stocks and other riskier investments have plunged in value.
  • That shift creates winners and losers; more cautious savers are doing better, while risk-takers are doing worse. But there is a more interesting implication: The era of monetary policy being constrained by the "zero lower bound" is over — at least, for now.
  • Bond markets are pricing in higher rates for many years to come. That implies that in the future, the Fed may have greater flexibility to guide the economy via rates, without resorting as quickly to unconventional policies like quantitative easing.

4) Gas prices are falling. When gasoline prices topped $5 per gallon in much of the U.S. this summer, it hammered family budgets, cut into spending on everything else and was a political crisis for the Biden administration.

  • Prices have moderated to a national average of $3.61 national average, according to AAA, reversing some of those effects.
  • Worth noting: Because nominal wages have been rising at a steady clip, what it costs to fill up a car in terms of hours worked has improved even more.
  • At the October average hourly wage for nonsupervisory workers, it took 1.96 hours of work to earn enough to fill up a 15-gallon gas tank. It took 2.6 hours in June.

5) Tech layoffs may be good for the economy. While our sympathies are with the thousands losing jobs at tech companies like Meta, Amazon, and (especially) Twitter retrench, there could be a silver lining as those workers find other jobs.

  • There's plenty of reason to think that over the last decade, big tech companies have essentially hoarded talent, keeping more people on their payrolls than needed to run their businesses.
  • High compensation and lavish benefits at big tech have made it harder for companies in every other sector — health care, retail, energy — to attract the engineering talent they need.
  • If some losing their jobs can use their skills to make the user experience of, say, scheduling a doctor's appointment as seamless as creating a social media account, it would be a win for the world.
  • As Bloomberg reported last week, some non-tech companies are already licking their chops at the new availability of top tech talent.
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