National

It's not just the cost of borrowing to buy a home that's getting more expensive. Pricier credit card debt is also putting a squeeze on consumers who are relying more on plastic amid the worst inflation shock in decades.

Why it matters: For those carrying a balance, that debt is expected to get even costlier to pay off, as the Federal Reserve continues an aggressive interest rate hike campaign to tamp down red-hot price growth. 

"The prime rate may end the year at 6%. Add in credit card companies' average margin and that could push the average credit card rate a little over 19% — the highest we have on record," says Ted Rossman, a senior industry analyst at Bankrate.

Credit card rates — unlike mortgage rates — move with a lag in response to Fed policy.

By the numbers: Consumers have opened a record number of new credit card accounts so far this year — 11.5 million, according to Equifax. 

And in a sharp shift from a pandemic-era trend, credit card balances are growing again. Balances jumped consecutively in the final three quarters of 2021, before backing off slightly last quarter, according to the Fed's latest household debt and credit report.

Balances are still about 10% below the pre-pandemic peak. 

The bottom line: Amid the booming job market, delinquency rates remain at rock-bottom levels, though there's been a slight uptick in borrowers with lower credit scores starting to fall behind on payments.

Latest borrower squeeze: Credit card rates climb

It comes as some consumers rely more on plastic amid the worst price shock in decades.

Credit cards

Retail

Jobs

Stock market

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Axios Markets

Some are warning that the Federal Reserve's effort to slow inflation could potentially return the U.S. economy to the unusual condition it found itself in during the 1970s and early 1980s: Stagflation. 

The big picture: Despite high inflation, the U.S. economy is humming along — with unemployment at 3.6% in April —near the low levels that last prevailed in the late 1960s. 

Stagflation describes a highly unusual economic state of affairs when the economy is weak or stagnating — with high or rising unemployment — yet inflation is also elevated.

This is the opposite of what usually happens. 

High inflation tends to break out when economic growth is really roaring. 

Periods of weak economic growth, and rising joblessness, are typically accompanied by slow price increases, or even falling prices.

While the annual pace of price increases have surged to 40-year highs in recent months, unemployment is incredibly low.  This is an inflationary environment, not stagflation.  

When's the last time we had stagflation? 

The best-known stagflationary episodes hit the U.S. in the 1970s and early 1980s, when a series of oil shocks — especially the 1973 embargo that Arab members of OPEC placed on the United States in response for military support of Israel — sent fuel costs and inflation surging, as unemployment simultaneously shot higher. 

The combination of energy shocks and stagflationary conditions lasted on and off  into the early years of the Reagan administration. As late as 1982, unemployment was hovering around 10% and prices were rising as much as 6% annually. 

A number of economic policy bigwigs — former Federal Reserve chairman Ben Bernanke, current Fed chair Jerome Powell and Treasury secretary Janet Yellen (who also led the Fed) — have recently either implicitly or explicitly suggested that as the Fed tries to bring down inflation, unemployment will likely rise. 

That will likely mean we'll have an economy that is sort of stagflationary, at least for some period of time. In other words, growth will be weakening, but inflation will still be high.

Treasury Secretary Janet Yellen on Wednesday: "The economic outlook globally is challenging, and uncertain, and higher food and energy prices are having stagflationary effects, namely, depressing output and spending and raising inflation all around the world."

Bernanke in a New York Times article published this week: ''Even under the benign scenario, we should have a slowing economy ... And inflation's still too high but coming down. So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high,'' he predicted. ''So you could call that stagflation."

Powell told the Wall Street Journal this week: "I would say there could be some pain involved in restoring price stability."

What can Biden do about stagflation if it actually occurs?

Not much that wouldn't be politically unpalatable. 

Biden could propose a sharp reduction in federal deficit spending. That could help reduce inflation, but it would likely hurt growth and raise unemployment. 

He could attempt the kind of wage and price controls that President Nixon imposed in 1971, though that seems extremely unlikely and not particularly effective. 

He could basically let the Fed deal with it. That's essentially the path Jimmy Carter took in the late 1970s. The soaring Fed rate hikes and the deep recession that followed contributed mightily to his annihilation in the 1980 presidential election.  

The bottom line: Like we said above, we don't yet have stagflation. It's possible that the Fed is able to thread the needle so perfectly that inflation comes down easily and unemployment raises ever so slightly and nobody notices. 

But stagflation is a possibility, and an unappealing one for practically everyone. 

What stagflation means and what Biden could do about it

High inflation tends to break out when economic growth is really roaring.

Illustration of a dollar sign covered in cracks with pieces of tape over the cracks.

Stagflation

Workers' leverage is here to stay

Workers' power may outlast a slowing economy.

Raised fist with little raised fists in it

Employment

This week, the 500 employees of Axios will get together in person — for our first company-wide retreat since the pandemic hit. 

Why it matters: A staggering 75% of our colleagues joined after March 2020. So most of them will be experiencing Axios in person for the first time. They've never set foot on a piece of Axios real estate, and they've never met most of their coworkers in real life.

This is the reality for companies all over the world.

Zoom out: In our work-from-anywhere world, the company retreat is more essential than ever.

Remote work has a slew of benefits — from flexibility for workers, to a limitless talent pool for employers

But it strips away the togetherness and serendipity that makes companies stronger and bolder.

Zoom in: Very early in the pandemic, the leaders of Axios decided we'd be remote first, forever. That was based on two hunches, both of which have proved correct: 

Offering remote work to all hires gives you an edge in the battle for talent — the whole game for a growing company. 

Whatever return-to-work plans an organization made, they'd have to change them. So why not just start with an employee-first approach?

Our thought bubble: Our staff, like most, has proved incredibly productive and resilient in shutdown. But we started warning early that employers were taking a false signal from the success they were having with work-from-home.

Yes, there were advantages, including the time saved from not commuting. But there was a real price in culture and creativity — the intangibles that come from spending unstructured time together, without the transactional, agenda-driven structure of a Zoom.

In a new study, researchers found that people are less creative in virtual meetings than live ones.

What's next: Schedule innovation. Bring teams together at retreats to germinate the next set of great ideas.

This doesn’t have to be in person. Bosses won’t get anything out of forcing people to show up when they’re concerned about child care or health. The standard video meeting may stifle brainstorms, but you can retreat in the virtual world. 

The new world of work has spurred a whole industry around remote creativity — including virtual golf outings via VR headsets.

Most will do what we are doing: a mix of team, regional and all-staff gatherings to spark human connections — and fresh ideas.

The bottom line: Pre-pandemic, 8% of U.S. office workers were fully remote. Now, 32% either are remote or want to be, per Gallup polling. And most others want hybrid work.

That's a third of your workforce that relies on well-organized, fun retreats to soak up company values and forge friendships.

The future of retreats

A staggering 75% of our colleagues joined after March 2020.

Illustration of a vintage postcard that reads "corporate retreat"

Remote work

Axios Closer

Amazon is partnering with the National Immigration Forum, an advocacy group based in D.C., to help refugee and humanitarian-based immigrant employees obtain citizenship, the group announced Monday. 

Details: The partnership is an extension of Amazon's Welcome Door program, which launched about a month ago.

Through the program, eligible Amazon employees receive free social, legal and financial support, such as mentorship, skills training — which includes college tuition — and reimbursement for work authorization fees.

The program has been offered to employees in the U.S. starting in April, with the company planning to expand it globally by the end of the year.

The big picture: Amazon and nearly three dozen major companies, including Facebook, Uber and UPS, committed to hiring and training Afghan refugees last fall.

In March, more than 50 companies, including Amazon, vowed to support people fleeing Ukraine. 

What to watch: The U.S. expects to admit up to 100,000 refugees from Ukraine. More than 76,000 Afghans have been brought to the U.S. so far this year. 

Amazon will help refugee employees obtain citizenship

The company is partnering with the National Immigration Forum.

The George Washington Bridge hangs its 60 x 90-foot American flag from the New Jersey side tower to mark Memorial Day as an Amazon truck heads to New York City on May 31, 2021 in Ft. Lee, New Jersey. 

The George Washington Bridge hangs its 60x90-foot American flag. Photo: Gary Hershorn/Getty Images

Amazon

Immigration

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

The work from home revolution, grudgingly embraced by Corporate America, has evolved into a thing that workers both love and hate.

Why it matters: This week, an Atlantic article confirmed something knowledge workers have known for a while: Remote work has led to much longer hours, and a grueling schedule of meetings that underscore the limits of flexible arrangements.

Driving the news: JPMorgan CEO Jamie Dimon, a notorious scourge of remote work, abruptly reversed himself in his annual letter published this week. 

Dimon’s volte-face is a reflection of a broader vibe shift on Wall Street, bowing to the realities of a workforce still reluctant to return to cubicle life. 

But some employers are hitting workers where it hurts – in their wallets – to get them to return to the office, according to Fortune.

What they’re saying: NBCUniversal News chair Cesar Conde told Axios’ What’s Next Summit that “a hybrid, flexible work environment is a net-net positive and will be an ongoing part of our culture.” 

Yet Conde also emphasized “the power of proximity” (i.e. in-person interaction) as something the news giant aims to “recreate.”

And in his letter, Dimon insisted that remote arrangements would “need to work for both the company and its clients.”

State of play: Demand from digital nomads have spurred a boom in co-working spaces, but raise questions about why it’s more suitable to camp out in a public space than a traditional office. Meanwhile, some employees have sued their employers to recoup unreimbursed costs from WFH outlays.

Out thought bubble: Axios' Emily Peck and I have both chronicled the growing downsides of being a member of the Zoom class, including virtual meeting fatigue, and the resulting drag on service sector activity. 

The bottom line: The way we work now has clear benefits, but comes with trade-offs. In the coming months, some bosses may well decide that WFH isn’t worth the compromise, or the strains it puts on employers and workers.

WFH revolution showing signs of wear

The movement, grudgingly embraced by Corporate America, is creating negative ripple effects.

Illustration of a pillow on a couch in the shape of a wifi symbol

Amazon workers' historic win last week in New York may wind up spurring union growth around the country after decades of decline, at a time when a tight labor market is empowering workers in ways that once seemed impossible.   

The big picture: A remarkable confluence of factors — including a pro-labor White House, once-in-a-century pandemic and a super tight labor market — helped Amazon workers in Staten Island achieve a David and Goliath union victory, with almost no backing from traditional institutional labor.

"It has electrified all of our members and organizing leaders," said Mary Kay Henry, president of the 2 million-member Service Employees International Union (SEIU).

The new Staten Island Amazon union has been contacted by employees at 50 other buildings in the U.S., according to the organization's president and founder, Christian Smalls.

Another Amazon warehouse across the street from Smalls' building has a union vote scheduled for April, said Seth Goldstein, the group's lawyer. And a separate group of AmazonFresh employees — inspired by the Staten Island efforts — voted to unionize and are moving forward, he noted.

What's next: Other large employers are on edge about what this means for them.  

"If Amazon, the consummate on-top-of-things company, can get bested after spending $4 million last year on labor relations consultants, then other companies may be more vulnerable to organizing than they’ve long seemed,"  Josh Eidelson wrote in Bloomberg. 

Starbucks CEO Howard Schultz on Monday said the company was "being assaulted, in many ways, by the threat of unionization."

Between the lines: This wouldn't have happened without COVID-19. Smalls started organizing in protest of the warehouse's health and safety conditions during the pandemic. 

The win also may not have happened if a different president was in the White House. One of the first things Biden did on inauguration day was fire the management-friendly general counsel of the National Labor Relations Board, ultimately replacing him with Jennifer Abruzzo, who's enforced the labor laws with a zeal not seen in a long time. 

A key NLRB settlement with Amazon in December paved the way, enabling organizers to talk to warehouse workers even when they weren't on duty, over-riding a company policy that permitted workers to stay at work for just 15 minutes after their shift.

 "It would have been a very different outcome under a Trump board," said Ana Avendaño, a former lawyer at the AFL-CIO who now teaches law at University of Texas, Austin. The settlement was national and energized workers around the country.

Missteps from Amazon didn't help: a leaked memo in which the company's lawyer called Smalls, who is Black, "not smart, or articulate." Or, the way the company handled a tornado in Illinois that killed six workers.

"There were just a lot of things that really, you know, make you wonder about whether Amazon is truly the woke company it pretends to be," said Goldstein, a longtime labor lawyer (he represented the Kickstarter union) who handled this effort pro bono — accepting a red Amazon labor union T-shirt for his fee.

This victory is also a rebuke to traditional labor unions, which have thus far failed in their efforts to unionize other Amazon locations.  

The Staten Island organizers took some risks that traditional unions would've avoided and, Avendaño said, their non-affiliation with Big Labor was a selling point in organizing.

"There is no strong leadership in [institutional labor]," said Avendaño. Going forward, the union groups will offer support to Smalls' group as it moves into the next stages.

Goldstein, who is 60 years old, also attributed the win to the organizational zeal of millennials. "Young people today are more like my grandparents who did see a value in unions. The circle turns."

State of play: The vote was just the first step in a long process. Now the union must negotiate a first contract with Amazon, which will likely challenge the vote before they even get to the bargaining table. Even in a best-case scenario, that takes a year.

"That's the hard part," Avendaño said. Expect the union to look to negotiate over wages, scheduling, health care and safety, she added.

Amazon didn't respond to questions, and pointed Axios to an online statement.

Amazon workers' union victory is turbocharging a new labor movement

Other big companies fear they'll be next.

Business and thought leaders around the future of work and professional mobility came together at Axios’ inaugural What’s Next Summit on Tuesday for a discussion on how employees now prefer to be treated like customers.

Why it matters: With COVID-19, the great resignation and technological shifts, everyone from business owners to job seekers are asking what jobs will look like in the years to come.

The big picture: Over the past two years, people have fled multiple industries in droves as health concerns, remote work, job/life balance, career expectations and opportunities have shifted. 

Last year, studies showed upward of 40% of workers were considering leaving their jobs.

What's happening: The discussion, moderated by Axios executive editor Aja Whitaker-Moore and Axios Finish Line co-author Erica Pandey, revolved around how evolving culture, values and geographical considerations have radically changed the professional landscape.

“Fair compensation is table stakes,” senior partner at PwC Terri McClements said during the session, highlighting how competitive hiring has become for employers.

As people have left companies and industries, seeking more schedule flexibility or more fulfillment, prospective employees expect companies to offer more robust forms of compensation.

“They want to know whether your culture meets theirs,” Shannon Schuyler, chief inclusion officer at PwC, said. “They want to be treated with dignity. They want to be treated like the customer.”

About this shift in attitudes, Schuyler said, “If we’re not excited about it, then just move aside because it’s going to happen with or without us.”

Access to flexible schedules and remote work has unsurprisingly proved to be a large factor in employee well-being throughout the pandemic. As business leaders eye a return to the office, the What’s Next Summit discussion prompted participants to recognize who exactly is most excited to come back.

“The people who are coming back are white male executives and non-caretakers,” Brian Elliott, executive leader at Future Forum, said.

Discussion participants said that remote work offers more time for those with families, but it allows for an escape from micro-aggressions, code switching expectations and other difficulties faced by people of color.

Elliott said when it comes to looking at returning to the office, considering all the difficulties a team faces is essential. 

“You’ve got to walk your talk,” Elliott said. “It’s got to start at the executive suite.”

According to the discussion’s participants, these workforce evolutions are even more of an expectation in younger generations. 

Kristin Sharp, the CEO of Flex, which serves app-based earning platforms, said that she had heard from younger users that the traditional, single-job career path seemed to them “fundamentally unstable, because you only have one income source.”

A recent college grad said in the discussion that she had felt in “high demand” while job searching but also shared the importance she placed on an organization’s activism, environmental impact, amenities, student loan reimbursement programs and mentorship opportunities.

The bottom line: How companies adapt to evolving expectations around hiring, corporate identity and office space seems increasingly important to prospective job seekers.

Editor’s note: This post has been corrected to identify PwC senior partner Terri McClements as the source of a quote (not PwC partner Terri-Ann Dautzenberg).

As the workforce changes, employees want to be treated like customers

Everyone from business owners to job seekers are asking what jobs will look like in the future.

Axios Events

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Sectors with biggest improvement in unemployment rate

There was good news in almost every part of the March jobs report this morning   — particularly about workers who were most impacted by the pandemic.

Details: The unemployment rate held steady or fell for every demographic group (race, ethnicity, gender) compared to February.

Women, for the second month in a row, gained a significant portion of new jobs.

The unemployment rate for Black women 20-years and older fell.

The unemployment rate fell for workers 55 and older too.

The number of people who said they were unable to work because their employer closed or lost business fell by 40% — from 4.2 million in February to 2.5 million last month. 

Sectors to watch: Compared to last year, unemployment rates have fallen significantly in services (leisure, hospitality, retail) as the economy reopened. 

The 0il and gas industry notably staged a bounceback from pandemic low production, with business activity jumping to its highest reading in the six-year history of a Dallas Fed Energy Survey.

March jobs report good for workers hit hardest by pandemic

Women were among workers who rejoined the labor market in March.

The era of excess savings, one of several factors behind the U.S. labor shortage, may be coming to an end.

Driving the news: In a comprehensive study of the worker drought, labor market analytics firm Emsi Burning Glass found the decline in extra cash is a possible impetus for getting workers off the sidelines.

With only 6.5 million unemployed, the firm estimated that “even if every unemployed person got a job today, a shortfall of well over 4 million workers would remain.”

Why it matters: As of February, there were over 11 million unfilled U.S. jobs, even with COVID-19 in broad retreat and skyrocketing inflation forcing consumers to pinch pennies.

Consumers have become inured to soaring prices by effectively shopping their way through it, especially by tapping personal credit. 

But Thursday’s data, which showed a drop in inflation-adjusted consumer spending, suggests those pillars of strength are starting to erode.

Falling excess savings, accumulated from various sources during the pandemic and estimated at nearly $3 trillion, is seen luring reluctant workers back into the fray.

What they’re saying: “When looking at personal savings, it shot up last year, but has been working its way back down to equilibrium.” Ron Hetrick, Senior Economist at Emsi Burning Glass said on LinkedIn recently. 

“We are watching those savings rates, as well as credit card debt, to see that eventually people will hit their cap, which is a good sign because it may mean that some people are getting ready to come back to work.”

Our thought bubble: Machines are slowly encroaching on the turf of low-skilled workers. 

The worker crunch is economically unsustainable, and it's feeding a rise of the robots that suggests those jobs might not be available when workers opt back into the labor force.

Declining savings may force workers off the sidelines

One of several factors behind the U.S. labor shortage may be coming to an end.

Economic data

The next U.S. jobs report could be a big market-moving event.

Why it matters: The Fed wants to know if the U.S. labor market has made “substantial further progress,” the vague threshold that would give the FOMC the confidence to dial back some of its emergency bond purchase program.

By the numbers: According to FactSet, economists estimate U.S. employers added 756,500 jobs in August, which would be a slowdown from the 943,000 added in July.

The unemployment rate is estimated to have fallen to 5.2% in August from 5.4% the month prior.

What they’re saying: “The softening in employment activity would be consistent with other economic data that have weakened since the surge in COVID case counts due to the Delta variant,” Bank of America U.S. economist Joseph Song says.

“Related to that,” Wells Fargo economists write, “the FOMC is likely to again consider deteriorating public health conditions as a detriment to ‘substantial further progress,’ which removes some heft from the August employment report when it comes to determining the timing of potential tapering.”

In other words, assuming job growth did decelerate significantly in August, then the FOMC may wait until after its Sept. 22 meeting to announce the timing of tapering.

What to watch: The August U.S. jobs report will be released at 8:30am ET on Friday.

Go deeper: The harm the Fed wants to avoid by tapering too early

What economists expect from the August jobs report

The Fed wants to know if the U.S. labor market has made “substantial further progress.”

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Jobs

The big picture

What economists expect from the August jobs report

New survey shows companies are open to moving to cheaper locales

How the pandemic will reshape the job market

Coronavirus could upend traditional workweeks

What offices might look like as America returns to work

A reckoning for small business

All Jobs stories