American workers have the upper hand over their employers right now — and there are tentative signs it could last, even as economic storm clouds gather, Emily writes.

Why it matters: Put simply, your boss needs you more than you need her. And it might stay that way, at least for some workers, particularly those on the lower end of the wage scale.

The big picture: There just aren't as many workers these days, as demographic forces were supercharged by the pandemic.

• "The labor supply has shrunk, which gives workers more leverage, more bargaining power and pushes employers to compete harder and improve job quality," Aaron Sojourner, a labor economist at the University of Minnesota, tells Axios.

State of play: Unemployment is near a record low, and, crucially, there are jobs, jobs, jobs(!) for almost everyone who wants one — 1.9 jobs for every unemployed worker, according to the latest BLS data.

• Headwind ahoy: Fed chair Jerome Powell called this labor market "tight to an unhealthy level" in March when there were 1.7 jobs for every worker. The Fed is raising rates in an effort to cool things down, which could mean higher unemployment rates.

Yes, but: There are a few reasons workers may emerge from this tightening period with their power intact...

• Baby boomers are finally leaving the stage. Labor force participation for those 55 and older is nearly 2 points lower than in February 2020.
• There aren't as many millennials or Gen Zers to replace them, as Axios chief economics guru Neil Irwin has written.
• People with long COVID, those facing child care pressures, or even dealing with substance abuse, are also missing from the labor force.

And regardless of the tight market, a lot of folks may not be willing to put up with the same old mistreatment. They've been through a traumatic experience since March 2020.

• "A lot of people felt kind of pushed around," Sojourner said. "Either they were laid off or they were asked to do a lot of things they hadn't signed up for."
• Now those folks are rethinking their relationship to work. There's a "re-sorting" happening, said Chicago Fed president Charles Evans recently.

What we're watching: Workers' empowerment is also creating the rumblings of a resurgence in union organizing, although unionization rates in the U.S. are still stubbornly low.

• There were 661 new union filings in the first quarter of 2022 — these are petitions from groups of workers seeking to hold union elections. That's up from 448 in the same quarter in 2020 before COVID, according to data tracked by Kevin Reuning, a political science professor at Miami University.

The bottom line: The pandemic-fueled demographic forces at play here tightened the labor supply to such an extent that even if the economy slows, these newly emboldened workers may get to keep their leverage.

✈️ Spirit board urges shareholders to reject JetBlue offer. (press release)

📉 Melvin Capital to liquidate, return cash to investors after last year’s meme stock-driven losses. (Bloomberg)

💸 More subprime borrowers are defaulting on credit cards, auto and personal loans. (WSJ)

🌾 Russian blockade adds to fears of a global grain shortage. (NYT)

Markets seem to be sniffing recession, sending stocks to their worst daily decline yesterday since the early days of the COVID crisis, Matt writes.

Driving the news: The S&P 500 fell 4%. The Nasdaq dropped 4.7%. The Russell 2000 index of small-cap stocks sank 3.6%.

Why it matters: While the markets have been volatile for much of the year, the character of the sell-off yesterday — centered on consumer stocks — was redolent of an economic downturn that would hit profits.

The catalyst: Disappointing earnings reports from Target and Walmart in recent days appeared to spook Wall Street.

• Target fell a remarkable 25% on Wednesday, its biggest drop since the 1987 market crash.
• Walmart similarly suffered its worst one-day drop on Tuesday since 1987.

The bottom line: It seems all but certain we are getting mauled by a bear market. But we'll have to wait for the S&P 500's losses to hit 20% from the Jan. 3 peak to get "official" confirmation. See you back here tomorrow!

This is one chart you don't want to see heading up and to the right again, Axios' Kate Marino writes.

The big picture: Supply chain pressures finally had started to ease — just a tad — in January. Then came Russia's war in Ukraine, and China's latest round of punitive COVID-related lockdowns.

• Those events have helped reverse the signs of thawing supply chains from earlier in the year. In April, the New York Fed's new Global Supply Chain Pressures Index start heading back up again, meaning the bottlenecks are getting worse.
• The index is based on a compendium of data on transportation costs and delays.

What's next: Geopolitical tensions will probably continue to stoke supply problems in the near future, the New York Fed notes.

The bottom line: The Federal Reserve is banking on bottlenecks starting to ease soon, to help its fight against inflation. That looks increasingly unlikely, at least for now.