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1 big thing: Storm clouds over a jobs report
The Dow plunged for the third straight day today, for a total drop of more than 1,700 points and 4% for the week, pouring cold water on a strong November jobs report and blasting a louder alarm for the possibility of global recession.
The big picture: The stock market turbulence joins other foreboding signs — among them a slowing Chinese economy and an unyielding bout of geopolitical brinksmanship between the U.S. and Beijing — to paint a potentially gloomy economic picture for 2019.
- Macroeconomic Advisers dropped its fourth-quarter GDP growth forecast for the U.S. to 2.3%, from 3%, the WSJ's Greg Ip reports.
Driving the news: The long-running U.S. economic expansion kept unemployment at 3.7% for the third-straight month in November, a half-century low, the Bureau of Labor Statistics reported today.
- And to attract and keep workers, companies raised wages by 3.1%, their fastest pace since 2009.
- But Wall Street appears to be in a panic, fed by worry over the now months-long U.S.-China trade war.
Axios' Courtenay Brown writes: One more worrying sign is the potential for a shortage of workers to be another drag on economic growth.
A whopping 95.8 million Americans have not looked for work for 12 months or longer, according to BLS.
By the numbers:
- The labor force participation rate — the percentage of workers 16 and older who are working or looking for work — has effectively not budged since 2012.
- A large part of that is because many of them are retired — baby boomers and others. But many are also of prime working age, and simply no longer seek work.
- The number of prime-aged people between the ages of 25 and 54 who are either working or looking for work remains stubbornly below where it was when the economy was last close to full employment — back in 2000, per the Economic Policy Institute.
Worker-hungry companies are having to up their game. In addition to hiking wages, some are figuring out how to grab long-term unemployed people.
- "A tight labor market is going to make hiring managers think a little bit different," said Tami Forman, executive director of Path Forward, a nonprofit that helps big companies hire people long out of work.
- Companies haven't quite reached the point where they are hiring atypical candidates in droves, Forman said.
- Companies have hired about 403,000 long-term jobless people so far this year, according to Micah Rowland, chief operating officer of Fountain, a recruiting platform.
There are serious doubts that sufficient numbers of workers will make themselves available to keep job growth from stalling out.
- "Job growth will need to moderate over the next year because there aren't enough workers to hire anymore," said Paul Eitelman, an investment strategist at Russell Investments.
2. Robots or humans?
Over the coming years, the workplace in the U.S. and other advanced economies will see increased automation, and corporate leaders will face a stark choice: whether to keep humans in the mix or let them go. And if it's the former, to what degree?
What’s happening: A wave of studies and corporate PR campaigns argue that there is nothing to fear from artificial intelligence and robots — that when they arrive in force, they will operate to enhance human labor, not to replace it.
- But Ravin Jesuthasan, author of "Reinventing Jobs" and managing director at Willis Towers Watson, a UK-based consulting firm, says that will only be the case if the bulk of companies decide to use AI and robots that way — a decision that hasn't been made yet.
- "The choice can be made to let a lot of humans go, or there can be a deliberate choice to keep humans in," Ravin tells Axios.
The calculus is one of today's most important global questions as economists face early evidence of trouble. We're in a new era of work in which wages barely grow and newly created jobs are either at the very top of the skills matrix, like in AI, or at the bottom, like in Amazon warehouses.
Jesuthasan gives an example in the form of a question: Should oil service companies field completely autonomous drilling rigs, and eliminate the positions currently held by humans, or keep things largely as they are?
- “The technology to create completely autonomous or remote-controlled operations is here today,” he said. But the danger is that such tech could “trigger a race to the bottom,” in which profit is everything and it doesn't matter whether people have jobs.
The bottom line: Jesuthasan says that the question is, “How do we responsibly automate at a time the choice can have a significant detrimental impact on our country?”
3. What you may have missed
You barely got through the week? Never mind — here's the best of Future:
1. Trump's attacks on China go mainstream: On this issue, the center is with him
2. The problem with work: This author says the system needs a big shakeup
3. AI talent is not quite monopolized yet: Experts are strewn across the globe
4. The true cost of driverless cars: It's a lot
4. Worthy of your time
How the yellow jackets differ from the other populists (Adam Nossiter - NYT)
Zuckerberg at war (Felix Salmon - Axios)
Commuting in Oahu gives you stress (Brittany Lyte - Civilbeat.org)
Run a new Brexit referendum (The Economist)
The answer in France: people are fed up with taxes (Anne-Sylvaine Chassany - FT)
5. 1 Pristimantis thing: What's in a name?
For your billionaire friend who already has seemingly everything, consider conferring her or his name on a frog — not a single frog, but the whole species.
Such is the offer of the Rainforest Trust, a conservation group that is auctioning off the naming rights to four frogs, seven plants and a snake, all from Colombia, Ecuador and Panama, reports the NYT's Julia Jacobs. The price of the privilege starts in most cases at $15,000.
- This differs from the traditional path to gaining such name recognition — discovering the species yourself. The trust plans to use the proceeds to buy up the land where the species live to help save them from extinction.