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Real Time Economics
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Good morning. This is Jeff Sparshott with the latest on the economy. You can send questions, comments and suggestions by replying to this email.
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Weak Growth, Tight Job Markets Are a Global Phenomenon
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From Berlin to Tokyo to Wellington, economic growth is slowing or turning negative across advanced economies, yet labor markets remain historically tight. Talk of a “jobful recession” has centered on the U.S., where payrolls grew by more than half a million in July and the unemployment rate declined to its prepandemic low of 3.5% even as economic output contracted in the three months through June. The same conundrum crops up around the world. In Germany, growth stalled in the three months through June, and the country faces imminent recession as its energy supplies dry up. But the unemployment rate remains close to a 40-year low, and almost half of companies say worker shortages are hampering production. The jobless rate in
the wider eurozone is at a record low. New Zealand’s economy shrank in the first three months of the year, but its jobless rate, at 3.3%, has stayed close to a multidecade low, Tom Fairless and Megumi Fujikawa report.
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It is the opposite of the “jobless recovery” diagnosed after the 2008 global financial crisis, when economic growth in the U.S. and parts of Europe picked up but unemployment remained painfully high for years. The reason, economists say, is a tight labor market because of an aging population and relatively few immigrants, features that have become more pronounced in advanced economies during the pandemic.
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No major data today but mark your calendar for Wednesday at 2 p.m. ET. WSJ's Greg Ip moderates a panel on stagflation hosted by the Aspen Economic Strategy Group. Panelists include former Treasury Secretary Larry Summers, Federal Reserve Bank of Minneapolis President Neel Kashkari, BlackRock CEO Larry Fink, and AESG director Melissa Kearney. Register to watch the livestream free here.
📰 Enjoying this newsletter? Get more from WSJ and support our journalism by subscribing today with this special offer.
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Some big U.S. companies say hiring is getting easier, at least by a little. Employers in hospitality, retail, healthcare and other industries hardest hit by worker shortages over the past two years say they are seeing emerging signs that recruiting workers—and getting them to accept jobs when offered—is becoming less of a challenge, even as the overall job market remains tight. The national hospital chain HCA Healthcare, which struggled to find enough nurses and other workers throughout the pandemic, says hiring is up and turnover is down. At Uber Technologies, more people are signing up to work as drivers or food couriers. Marriott International says it is seeing steady improvement in its hiring, with wage increases slowing,
too. Corporate leaders say the job market still favors workers over employers and that challenges remain in drawing enough staff. Still, many say the worst of the hurdles appear to be over, Chip Cutter reports.
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How One Grocery Chain Is Preparing for a Downturn
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Supermarket chain Karns Foods says it is getting ready for a recession. The family-run company in Mechanicsburg, Pa., is carrying more low-cost food brands and dropping some expensive products altogether. The 10-store chain with about 1,200 employees said it is also obsessively comparing its prices every week, far more often than in the past, against retailers from Walmart to Giant in their stores, online and across print advertisements, and adjusting as needed, Jaewon Kang reports.
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Amid an economic slowdown and high inflation, companies are trying to forecast shifts in consumer demand and recalibrate their business. A number of retail giants and consumer companies have issued profit warnings and projected falling sales in recent weeks as consumers start to pull back on spending. Small operators like Karns face particular challenges of managing growing costs and juggling competition from bigger peers.
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Oil, Gas and ... Wood Pellets
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Shale companies are reporting banner profits but are warning that inflation in the oil patch is leading them to increase their spending. Oil prices hovering around $110 a barrel in the second quarter lifted the earnings of some of the largest shale companies. Pioneer Natural Resources, Continental Resources, Diamondback Energy, Coterra Energy and Matador Resources all reported historically high profits in recent days, according to FactSet. At the same time, many shale companies are increasing their budgets to deal with labor shortages and the soaring prices of raw materials and services. Pioneer expects its annual budget to grow by about 7% to around $3.7 billion, while Devon Energy Corp. sees its budget rising by about 6%.
The extra spending won’t boost oil and gas production. Instead, the increase is necessary to meet their production targets for the year, Benoît Morenne reports.
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The wood-pellet market is on fire. War has cut off the supply of compressed-wood pellets from Russia, Belarus and Ukraine to the power plants in Western Europe that burn them instead of coal. That has put a premium on pellets from North America, especially the U.S. South. U.S. export volume, which has climbed steadily over the past decade, is running ahead of last year, when a record of more than 7.4 million metric tons of U.S. wood pellets were sold abroad, according to the Foreign Agricultural Service. The average price before insurance and shipping costs has risen to nearly $170 a metric ton, from around $140 last year, Ryan Dezember reports.
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China’s Exports Unexpectedly Robust
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China’s export machine remained surprisingly resilient in July following a strong bounceback from the spring’s harsh Covid-19 restrictions, defying again predictions of softening global demand for Chinese-made goods. Chinese shipments to the rest of the world rose to $332.9 billion in July, China’s General Administration of Customs said Sunday, an 18% increase compared with a year earlier. The strong export growth reflected a rapid easing of Covid-induced supply-chain disruptions, as workers at China’s factories and ports caught up on backlogs of orders, Stella Yifan Xie reports.
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Real Time Economics offers a downloadable calendar with concise previews, forecasts and analysis of major U.S. data releases. To add to your calendar, please click here.
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How are we doing? Please send us any questions, comments or suggestions by replying to this email. Thank you.
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