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Some economists want you to quit your job, lots of European workers are angry, and don’t look now but fourth-quarter economic growth appears kinda ugly. Good morning, let’s get the week started.
Economists to Workers: Please Quit
From the U.S. to the U.K. to Australia, workers’ pay has been rising slowly even though official unemployment is at its lowest levels in decades. One explanation: workers’ reluctance to switch jobs, Tom Fairless reports.
- While unemployment fell quickly after the financial crisis, job-switching rates recovered more slowly and remain lower than in earlier decades. That is surprising because changing jobs is often lucrative. U.S. workers who switch jobs gain more pay on average than those who stay put.
- Some economists say the amount of job-market churn may be a stronger predictor of wages, inflation and productivity than unemployment. If so, wage growth and inflation could remain soft even as labor markets continue to tighten—especially if the recent sag in global growth weighs on workers’ confidence.
The bigger picture: Job-switching doesn’t just matter for individuals who move. Job switchers also improve the bargaining position of workers who stay in their jobs, by encouraging employers to pay more to retain them. People who move tend to find work that better utilizes their skills. And the most productive companies are able to pay more to poach workers and expand, while less productive companies shrink.
WHAT TO WATCH TODAY
The National Association of Home Builders housing market index for November is expected to hold steady at 71. (10 a.m. ET)
The Cleveland Fed’s Loretta Mester speaks at the University of Maryland at 12 p.m. ET.
TOP STORIES
Odd Job
Europe’s job market is booming. So why are so many workers so angry? A growing proportion of new jobs are part-time, temporary or self-employed positions that lack the benefits that European workers have long expected. By last year, 14.2% of European jobs were temporary, compared with just 4% in the U.S.—leaving many workers without insurance, a pension or disability benefits. The result is a surge in the ranks of Europeans who have jobs and still struggle to make ends meet, while watching the lives of many others improve. The share of eurozone workers at risk of poverty rose to 9.2% in 2018 (after peaking at 9.5% in 2016) from 7.9% in 2007, Daniel Michaels and Paul Hannon report.
How Old Are You?
Employees in their 50s, 60s and 70s, though outnumbered in the workforce by millennials, are the only group whose labor-force participation rates have grown since the turn of the century. Yet they are the least visible in offices, retail outlets and other workplaces. That is because many conceal their ages. Worried they’ll be avoided or rejected by younger managers and co-workers, they often go to great lengths to try to appear younger—by doing such things as getting cosmetic surgery, shortening their work histories on social-media accounts and in conversations, not citing past accomplishments and not displaying photographs of their grandchildren, Carol Hymowitz reports.
U-G-L-Y You Ain’t Got No Alibi
U.S. retail sales rebounded in October, showing that consumers remain a key source of economic strength. Even so, households don’t appear to be the force they were earlier in the year. And the rest of the economy? Not so great. Retail, industrial production and inventory data out late last week pulled gross domestic product estimates lower. It’s early and plenty of data is still missing, but as of right now the fourth quarter is looking a little ugly. Moody’s Analytics cut its gross domestic product growth estimate to a 0.6% pace from 1.2%, the Atlanta Fed’s GDPNow model dropped to 0.3% from 1% and Macroeconomic Advisers is tracking 1.4%, down from 1.6%. Macroadvisers shows consumer spending slowing but still the driving force of growth. The bright side: “The fundamentals for consumer spending are strong, including gains in employment and income, robust increases in net worth, and broadly favorable financial conditions.” That could set the stage for a pickup in growth starting next year.
Dow 28000
Investors aren’t too worried about a slowdown. Much of the stock market’s dash higher has been powered by shares of economically sensitive companies like banks, manufacturers and oil producers. That rally has suggested that money managers are turning optimistic about the economic outlook. The Dow Jones Industrial Average topped 28000 in the very last minute of Friday’s trading session, capping off an otherwise quiet week with its first thousand-point milestone since July, Akane Otani reports.
China Eases
China’s central bank on Monday lowered the interest rate on its regular reverse repurchase open market operations for the first time since October 2015, aiming to boost market confidence and prop up slowing growth. “The move is a key step towards lowering marginal funding costs for banks, which rely heavily on repos as a source of short-run liquidity,” said Capital Economics economist Julian Evans-Pritchard. “Looking ahead, with economic growth still slowing and unlikely to bottom out in the near-term, we think the [People’s Bank of China] will take further steps to shore up lending.”
India’s Slowdown Could Be Worse Than it Looks
India’s economy is growing at the slowest pace in six years, according to official figures. That data is likely to be disguising an even sharper slowdown. Last month, economists at the Center for Global Development, a Washington-based think tank, drew attention to the growing inconsistency between several already-recessionary Indian economic indicators and its headline growth rate. Several economic indicators have only worsened since. Misreading how fast India is growing risks further missteps in economic governance. Without an honest view of the economy’s real strength, the country will find it more difficult to make progress, Mike Bird writes.
WHAT ELSE WE’RE READING
Fertility rates are falling around the globe. Why aren’t we having more kids? “Our current version of global capitalism—one from which few countries and individuals are able to opt out—has generated shocking wealth for some, and precarity for many more. These economic conditions generate social conditions inimical to starting families: Our workweeks are longer and our wages lower, leaving us less time and money to meet, court and fall in love. Our increasingly winner-take-all economies require that children get intensive parenting and costly educations, creating rising anxiety around what sort of life a would-be parent might provide. A lifetime of messaging directs us toward other pursuits instead: education, work, travel,” Anna Louie Sussman writes in the New York Times.
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