May 3, 2019

Axios Future

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1 big thing: The wages mystery
Expand chart
Reproduced from a chart by Joseph Brusuelas; Chart: Axios Visuals

The U.S. economy is confounding: Three months from the longest expansion since such data began being tracked 170 years ago, the economy keeps pumping out strong job growth, and has now pushed down unemployment to a 50-year low.

  • Yet it is delivering only middling wage growth lower, for instance, than the last expansion in the 2000s. That has been an enduring mystery, especially amid month after month of ultra-low jobless figures over the last year.

What's happening: In its latest report, the Labor Department today said April joblessness was at a drum-tight 3.6%, the lowest since 1969.

  • Normally, such a number would be considered to well satisfy the 4% minimum needed to show "full employment," which takes into account people changing jobs as a matter of course.
  • But in the current expansion, government and private economists say there is room yet for jobs to get even tighter.

The presumed continued slack in the economy may explain why wages grew just 3.2% in April.

  • That's double the approximately 1.6% inflation rate over the last year, providing workers a real gain. But economists point out that wages routinely grew by more than 4% on an annual basis during the expansion in the 2000s.
  • Joseph Brusuelas, chief economist at RSM (whose numbers are behind the above chart), says that such low monthly jobless figures should deliver greater wage gains. "Nominal wage growth is modest at best compared to previous business cycles late in the expansion."

This does not mean economists are unhappy with today's jobs report. On the contrary, they're mostly elated by the higher-than-expected 263,000 jobs created in April. They also by and large treated the wage gain as something to crow about.

  • But this is because economists are largely trained to look at wage gains as a key contributor to inflation, which they regard as the No. 1 thing to guard against.
  • Very few economists treat the greater ability of workers to buy goods and services as a fundamental measure of economic health.

The political environment is starting to change that. Decades of largely flat wages and the loss of economic stature across U.S. cities and counties are thought to be a contributing factor in widespread alienation and institutional mistrust.

  • Economists are also becoming more comfortable with wage gains because inflation does not appear to be taking off.

What's next: Andrew Chamberlain, chief economist at Glassdoor, says these economic conditions are an argument for the Fed to keep interest rates flat and not tighten them.

  • "The Fed should let the economy burn hot," he tells Axios. "This is one of those times historically where workers at the bottom can win gains."
  • Wage growth for the lowest-paying jobs are seeing the highest gains. Detailed figures are available only up to March. But in the first quarter, the lowest quartile saw a 4.4% wage increase year on year.
  • Among the steepest gains have been bartenders (a 9.6% increase on average over the last year), retail cashiers (4.6%) and bank tellers (4.6%).

A red flag: In the first few months of the year, job listings are usually up at Glassdoor, but Chamberlain says that this year they are down. This contradicts the narrative of continued job growth, and could suggest slower pace ahead. "It definitely shows that there has been some hesitation by some employers to hire," he said.

2. The hunger for meatless meat

Illustration: Aïda Amer/Axios

Racing to catch up with millennial food preferences, Big Fast Food is pulling in as many alternatives to the old-school cheeseburger as it can get its hands on.

  • Chicken, turkey, and salmon are popping up on drive thru menus.
  • So, too, are brand names from the newly popular wave of imitation beef made of plants.

Axios business editor Dan Primack writes: Investors are paying attention. Faux-beef maker Beyond Meat saw its shares leap 163% yesterday on its first day of trading (and another 1.5% today), marking the best IPO day performance since before the financial crisis.

The bull case: Impossible Foods, a rival to Beyond Meat, recently got onto Burger King's menu, and there is widespread speculation that Beyond Meat will strike a similar deal with McDonald's or Wendy's.

  • Former McDonald's CEO Don Thompson is on Beyond Meat's board, having invested through his VC firm Cleveland Avenue.
  • These products aren't just for vegetarians and vegans: Impossible CFO David Lee tells Axios that around 90% of his customers consider themselves to be carnivores.

The bear case: More than a dozen states are considering banning companies from using the word "meat" to describe burgers or sausages made from plant-based materials or in labs.

  • This is the cattle ranchers lobby vs. the grocery lobby, and could present a particular challenge for a company with "meat" in its actual name.
  • There have been similar legal skirmishes over words like "egg" and "milk," with "chicken" most likely to follow as Tyson prepares to launch its own alternative protein product this summer.

Go deeper: Scoop: Tyson Foods sells stake in Beyond Meat amid rising tensions

3. What you may have missed

Photo: Richard Baker/In/Getty

Did you get sidetracked? No worries — here is the top of Future for the week:

1. The death of reliable prices: Changing on the hour

2. For Bond, a mission less possible: The jobs problem for spies

3. Deepfakes for good: How deception can have positive outcomes

4. Betting income tomorrow for education today: A new tuition scheme

4. Worthy of your time

SpaceX Falcon 9 rocket launch, March. Photo: Jim Watson/AFP/Getty

Rise of the young-old society (Camilla Cavendish — FT)

How to watch tomorrow's SpaceX launch (Axios)

Banking gets disrupted (The Economist)

No NAFTA rewrite unless tariffs go (Burgess Everett, Marianne Levine — Politico)

Chewbacca, RIP (Brittany Vincent — MTV)

5. 1 odd thing: Jack Dorsey, lifestyle icon

Photo: Drew Angerer/Getty

Jack Dorsey, CEO of Twitter and Square, has enough money to dine like a king every day until he dies — but he eats only once a day during the week, and not at all on the weekends.

Kaveh writes: He's also into silent mediation, cryotherapy, and drinking lemony saltwater in the morning. And his followers eat it up. Jack Dorsey is "Silicon Valley’s answer to the mega-influencer Gwyneth Paltrow," writes the NYT's Nellie Bowles.

  • One positive word — or tweet — about a product can leave it backordered for weeks, Bowles writes.
  • The maker of a "near-infrared sauna" that Dorsey once mentioned on a podcast found his demand shoot through the roof. “He legitimizes it," the sauna-maker told Bowles.

But his public endorsement of not eating for several days in a row has drawn criticism: What's carefully calibrated "biohacking" to the uber-rich of Silicon Valley might be called an eating disorder elsewhere.

  • Amanda Mull, who has written about the dangers of the extreme diets that Dorsey and other tech execs espouse, tweeted last month: "I think it’s genuinely very dangerous for someone as influential as he is to preach the virtues of not eating until you hallucinate!"