US ECONOMY & POLITICS

US Job Gains Top Estimates; Jobless Rate Holds at 3.6% – Bloomberg, 7/8/2022

• US employers added more jobs in June than forecast and the unemployment rate held near a five-decade low, signs of both strong demand and a tight labor market that will keep Federal Reserve officials tilted toward another jumbo interest-rate hike.
• Nonfarm payrolls rose 372,000 last month following a revised 384,000 in May, a Labor Department report showed Friday. The unemployment rate was unchanged at 3.6% as the pool of available workers shrank, and wage growth remained firm.
• The labor force participation rate — the share of the population that is working or looking for work — slipped to 62.2%, and the rate for workers ages 25-54 declined to a four-month low of 82.3%.
• The number of Americans not in the labor force rose by about half a million to the highest level this year.
• Friday’s report showed that average hourly earnings rose 0.3% from the prior month, in line with projections. Earnings advanced by a still-elevated 5.1% from a year earlier after an upwardly revised 5.3% gain in May.

More Americans Are Self-Employed Than Any Time Since 2008 Crisis – Bloomberg, 7/8/2022

• The share of the US workforce that’s self-employed has climbed to the highest level since the Great Recession, as the pandemic jobs shake-up spurred many Americans to try working for themselves.
• About 16.8 million people were classified as self-employed in June, according to Bloomberg calculations based on the latest data from the Bureau of Labor Statistics. That’s an increase of 1.4 million workers over the past two years, representing more than one-third of the expansion in the labor force during that period.
• The construction industry is where the largest number of self-employed Americans work, and their ranks continued to grow in the pandemic, according to data from the Federal Reserve Bank of St. Louis. There’s also been an increase in the real-estate and transportation industries.

U.S. wholesale inventories revised lower in May – Reuters, 7/8/2022

• U.S. wholesale inventories increased less than initially thought in May, suggesting that inventory investment could subtract from gross domestic product in the second quarter.
• The Commerce Department said on Friday that wholesale inventories rose 1.8%, instead of 2.0% as reported last month. Stocks at wholesalers advanced 2.3% in April.
• Economists polled by Reuters had expected May inventories would be unrevised. Wholesale inventories increased 24.7% in May on a year-on-year basis.
• Wholesale motor vehicle inventories gained 1.8% after rising 2.2% in April. Wholesale inventories, excluding autos, increased 1.8% in May.
• Sales at wholesalers rose 0.5% in May after increasing 0.8% in April. At May’s sales pace it would take wholesalers 1.26 months to clear shelves, up from 1.25 months in April.

Fed Hawks Back 75 Basis-Point July Hike, Still See Soft Landing – Bloomberg, 7/8/2022

• Two of the Federal Reserve’s most hawkish policy makers backed raising interest rates another 75 basis points this month to curb inflation, while playing down fears the US economy was headed for recession.
• Governor Christopher Waller and James Bullard, president of the St. Louis Fed, both stressed the need to get policy into restrictive territory to confront the hottest price pressures in 40 years, even if this meant slowing growth. Both are voting members of the Federal Open Market Committee this year.
• While Waller and Bullard are viewed as being part of the Fed’s hawkish wing, their case for front-loading rate hikes has broad support.
• Minutes from the June FOMC meeting released on Wednesday showed central bankers were prepared, if necessary, to combat inflation by tightening policy even further than anticipated in their latest forecasts.
• Those projections, which were updated last month, see the Fed’s benchmark lending rate reaching 3.4% by December and peaking in a target range of 3.75% to 4% next year, versus a current range of 1.5% to 1.75%.

Fed’s Bostic calls for 75 basis point interest rate hike in July – Reuters, 7/8/2022

• Atlanta Federal Reserve Bank President Raphael Bostic, until recently among the central bank’s most dovish policymakers, on Friday said he “fully” supports another three quarters of a percentage point interest rate rise at the Fed’s next policy meeting later this month.
• “We can move by 75 basis points at the next meeting and not see a lot of protracted damage to the economy,” Bostic said in an interview with CNBC.
• Bostic said a report out earlier Friday showing U.S. job growth increased more than expected and the unemployment rate remained at 3.6% in June “reaffirms that the economy is strong and there is still a lot of momentum in the labor market and that is a good thing.”

Housing-Affordability Index Drops to Lowest Level Since 2006 – Wall Street Journal, 7/8/2022

• Record home prices and higher mortgage rates in May made it the most expensive month since 2006 to buy a home, prompting more buyers to give up and pressuring sellers to cut asking prices.
• The National Association of Realtors’ housing-affordability index fell to 102.5 in May, the association said Friday, the lowest level since the index fell to 100.5 in July 2006. It was close to the lowest level since July 1990, when the index stood at 100.2.
• The sudden drop in demand is expected to lead to slower home-price growth by the end of the year, and some economists are forecasting price declines.
• Nationwide, however, many economists say home prices can keep rising because the inventory of homes for sale generally remains low.
• The number of active listings in June was down 34% from June 2020 and down 53% from June 2019, according to Realtor.com.

Calls for TikTok Probe Widen, Adding to Pressure on Biden to Weigh In – Wall Street Journal, 7/8/2022

• Calls for an investigation into the security risks posed by the video app TikTok are widening, adding to pressure on President Biden to make good on his year-old promise to get tough on apps that could share Americans’ personal data with foreign adversaries.
• The Democratic chairman of the Senate Intelligence Committee and the panel’s top Republican sent a joint letter to the Federal Trade Commission this week urging an investigation of TikTok’s data-handling and other practices.
• The letter from Sens. Mark Warner (D., Va.) and Marco Rubio (R., Fla.) followed reports by BuzzFeed that ByteDance’s employees in China have repeatedly accessed U.S. users’ personal data.
• TikTok recently acknowledged that its engineers in locations outside the U.S., including China, can be granted access to U.S. user data, but only as needed and under strict controls.

US-China Talks Over Delisting Stocks Hinge on Redacted Audits – Bloomberg, 7/8/2022

• US and Chinese officials have held calls in the past week to further negotiations aimed at keeping about 200 Chinese stocks from losing their listings on New York exchanges, and redactions in auditors’ documents are a key barrier.
• Talks are reaching a critical point as a deadline to resolve the matter closes in. While regulators from the two countries and their staff are continuing to refine a draft agreement  — between the US Public Company Accounting Oversight Board and the China Securities Regulatory Commission and Ministry of Finance — sticking points remain, according to people familiar with the matter.
• The Securities and Exchange Commission, also involved in the negotiations, has long been eyeing some New York-traded firms with parent companies based in China and Hong Kong because the jurisdictions refuse to allow audit inspections by American officials.
• A deadline of 2024 looms for kicking businesses off the New York Stock Exchange and Nasdaq Stock Market unless China acquiesces, but it could be moved up if US lawmakers pass legislation before the end of the year.

EUROPE & WORLD

Japan’s Shinzo Abe, Former Prime Minister, Is Assassinated – Wall Street Journal, 7/8/2022

• Shinzo Abe, a former Japanese prime minister, died after being shot Friday during an election campaign rally, sending shock waves through a country unaccustomed to gun violence.
• Police arrested a 41-year-old man who they said approached Mr. Abe from behind as he gave a speech in the city of Nara and fired twice with what appeared to be an improvised firearm.
• Mr. Abe, 67, was the longest-serving prime minister in Japanese history and remained powerful even after stepping down in 2020.
• During his term in office, he pushed to strengthen the nation’s military, beefed up cooperation with U.S. forces and made Tokyo a more muscular force in international diplomacy.

Germans Face ‘Enormous Wave’ of Energy Price Hikes, Uniper Says – Bloomberg, 7/8/2022

• German households and industries should brace for an “enormous wave” of higher energy prices that will begin to hit bills next year, utility Uniper SE warned.
• Most customers lock in prices for a year and aren’t yet feeling the impact of surging wholesale costs, according to Uniper Chief Executive Officer Klaus-Dieter Maubach. The gas giant on Friday sought a government bailout amid the energy crunch.
• “An enormous increase will happen, it’s what German consumers must expect and it’s up to everyone of us now to do something about it,” he told reporters on Friday. The only way to avoid higher bills is to use less gas, he said.
• German year-ahead power prices rose 19% this week and have almost tripled this year. Benchmark European gas costs have also surged.

Surging Fuel Costs Pressure African States as Protests Build – Bloomberg, 7/8/2022

• Protests are building in Africa over surging fuel costs that have governments scrambling over how to respond.
• Demonstrators blocked a key supply route in South Africa this week, tying up the delivery of commodities, over an increase in the regulated pump price.
• That followed a protest in Mozambique, the world’s third-poorest country, where bus drivers paralyzed the capital Maputo after diesel prices jumped.
• The effect of fuel shortages throughout Africa in the wake of Russia’s invasion of Ukraine is especially pronounced for populations whose transportation costs account for a disproportionately high percentage of monthly budgets.
• Though the continent includes a number of significant producers of oil, there is limited capacity to refine it into fuel for cars, trucks and planes. That means countries need dollars to buy imported diesel and gasoline.
• One person died during protests against rising fuel prices in Guinea last month, while butane distributors in Morocco held a two-day strike as diesel costs surged.
• In Kenya and Nigeria, both heading to elections in the coming months, the governments are burdened with costly fuel subsidies, as they struggle to finance gaping budget deficits.

Food Insecurity Hits Rich Countries as Inflation Makes Basics Unaffordable for Many – Wall Street Journal, 7/8/2022

• Rampant food inflation is roiling the world’s least-developed nations. It is also hitting poor people in rich countries.
• Last month, the average price of cheddar cheese, a U.K. staple, was up by 59% from last June, according to the Agriculture and Horticulture Development Board, a trade body. Milk was up 27% in April over last year, according to government data.
• Some 44% of adults polled by the U.K.’s Office of National Statistics in May said they were buying less food because of the higher prices. Food banks are seeing a third more traffic since the start of the pandemic, according to the Trussell Trust, a food-bank provider.
• The Food Foundation, a food and nutrition lobby group, found food poverty, or food insecurity, had affected 15.5% of Britons in the six months to April, up from 7.6% pre-Covid.
• In a survey published in May, it found a 57% jump in the proportion of U.K. households cutting back on food or missing meals altogether. The survey found 7.3 million adults in April were living in households that said they had gone without food or couldn’t physically get it in the past month. That compared with 4.7 million adults in January.

Factmonster – TODAY in HISTORY

• The first public reading of the Declaration of Independence was given in Philadelphia, Pa. (1776)
• Vermont became the first colony to abolish slavery. (1777)
• The Wall Street Journal began publication. (1189)
• General Douglas MacArthur was named commander-in-chief of the United Nations forces in Korea. (1950)
• The Recording Industry Association of America (RIAA) awarded the first official gold album. It was for the Oklahoma soundtrack. (1958)