Note: The overwhelming majority of today's newsletter was written before the trade deal news broke. So, you know, keep that in mind.
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(Today's Smart Brevity count: 1,122 words, ~ 4 minutes.)
Illustration: Aïda Amer/Axios
Wednesday's productivity report is the latest sign that historically low U.S. unemployment may be indicating a sick, rather than a healthy economy.
What's happening: As uncertainty has increased over the U.S-China trade war and other geopolitical events, companies that have the capacity to invest in new equipment, technology or factories are holding off and hiring workers to pick up extra slack instead.
Why that's bad: The increase in hiring is less about expansion or optimism than the fact that workers are a cheaper investment, and one that is easier to reverse should the economy go south.
By the numbers: This story of hiring as uncertainty insurance is being borne out in the data, experts say.
Why it matters: Productivity is the secret sauce to economic growth, and the U.S. has had underwhelming productivity growth for the last 15 years — a full 1% below the pace of annual growth in the 15 years prior.
Threat level: A basic way to measure productivity is, "Do you give workers more tools?" David Kelly, chief global strategist at JPMorgan Asset Management, tells Axios. "We're actually increasing the number of workers and decreasing the number of tools in the last two quarters. That doesn't bode well."
Yes, but: Experts also remain bullish on a positive outcome to the trade war and other uncertainties clouding the economic outlook.
The last word: "If freedom is just another word for having nothing left to lose, then productivity is just another word for having no one left to hire," Kelly says.
U.S. and global dealmaking slowed significantly in the third quarter, with equity and M&A announcements "plummeting" year over year and quarter over quarter, according to the latest data from S&P Global Market Intelligence.
By the numbers:
Be smart: Q3's weakness happened in the context of heightened global uncertainty and a number of geopolitical events that shook confidence, including the Saudi Arabia oil field strike, Brexit negotiations and a surprise election result in Argentina, S&P analysts note in the report.
The bottom line: "The trade war has been taking a toll on economic growth. Countries such as Germany with the greatest exposure to manufacturing and trade have seen the most weakness. Consumers have remained resilient, which bodes well for consumption-driven economies such as the U.S., but the tariffs keep coming."
Americans plan to increase their holiday spending, with the average rising to about $675 on gifts this holiday season, according to a survey provided first to Axios by The Conference Board.
Yes, but: Consumers say they are expecting steep discounts, with more than a third reporting they expect — at a minimum — to buy half of their gifts on sale.
The intrigue: Consumers continue to move online for holiday purchases. The Conference's Board survey, conducted by data provider Nielsen, found that 42% of respondents expect to do at least half of their holiday shopping online. That's up from just under 37% in 2017.
Axios' Caitlin Owens writes: Millennials' health problems are on the rise, with future adverse consequences to both their own finances as well as the U.S. economy, according to a new report by the Blue Cross Blue Shield Association.
What they found: As millennials age, their health is declining faster than the previous generation's, and they're increasingly suffering from conditions like hypertension, high cholesterol, depression and hyperactivity.
The big picture: The biggest changes are in millennials' behavioral health. In 2017, accidental deaths — including overdoses — and suicides caused 60% of deaths among 25-29-year-olds, according to the CDC.
Caitlin's thought bubble: Our health spending is already on an unsustainable path. This absolutely does not help.
Equity investors are making a sustained move to value stocks and more defensive sectors of the market, data from Bank of America Merrill Lynch show.
Why you'll hear about this again: In its last fund manager survey, released in mid-October, BAML analysts noted that "investors rotated into defensive equities like healthcare and consumer staples and out of cyclicals like materials and banks."
Of note: Investors took profits on equities after the S&P 500 and Nasdaq touched all-time highs last week, with "ETF inflows dwarfed by single stock outflows," that led to net selling for equities after six straight weeks of net buying.
Editor's note: In the third item of yesterday's Markets I incorrectly referenced and linked to the S&P U.S. Spinoff Index instead of the S&P U.S. IPO & Spinoff Index. The IPO & Spinoff index has trailed the S&P 500 by 8% over the last six months (not nearly 12%).