US ECONOMY & POLITICS

U.S. Job Growth Falls to Slowest Pace of Year – Wall Street Journal, 10/8/2021

• U.S. job growth fell to the slowest pace of the year in September, as the Delta variant and a persistent shortage of workers restrained the ability of companies to hire.
• The economy created 194,000 jobs in September, the smallest gain since December 2020 and down from 366,000 jobs added in August, the Labor Department said Friday.
• Many workers gave up a job search and exited the labor force last month. The smaller pool of labor meant that despite the slowdown in hiring, the unemployment rate fell to 4.8% last month from 5.2% in August.
• The jobless rate remains higher than the pre-pandemic level of 3.5%. But other measures—chiefly, wage growth—suggest the labor market is tight.
• Compared with a year earlier, wages rose 4.6%, a pickup from prior months.
• Perhaps the biggest mystery right now is the shrunken labor force. With the expiration of enhanced jobless benefits, rising vaccination rates and higher wages, many economists predicted that workers would return to the labor force this fall.
• But last month, the labor-force participation rate—or the share of workers with a job or actively looking for one—dipped slightly to 61.6%, down from 63.3% in February 2020 ahead of the pandemic.

Jobs Report Keeps Fed Taper on Track for November – Wall Street Journal, 10/8/2021

• Despite Friday’s disappointing September jobs report, Federal Reserve officials have signaled in recent weeks the gains are likely to satisfy the thresholds they have laid out to start reducing their bond buying at their policy meeting next month.
• In determining whether the economy had met its tests for beginning to scale back their easy-money policies, Fed Chairman Jerome Powell had set a relatively low bar for the central bank to clear.
• “It wouldn’t take a knockout, great, superstrong employment report,” he said after the Fed’s Sept. 21-22 meeting, referring to the figures released by the Labor Department on Friday.
• Fed officials have stressed in recent weeks that the bar to raise interest rates is different—and significantly higher—than the threshold for tapering asset purchases.

Debt-Limit Bill Passes Senate, Heads to House – Wall Street Journal, 10/8/2021

• The Senate voted along party lines Thursday to raise the U.S. borrowing limit into December, after Democrats struck a short-term agreement with Republican leaders that averted a looming default for now but sets up another showdown within months.
• The key moment came earlier in the evening, when 11 Republicans joined all 50 Democrats in a vote to break the 60-vote filibuster threshold and proceed to final passage of the measure, which cleared the Senate 50 to 48, with two Republican absences.
• The legislation, based on a proposal made Wednesday by Senate Minority Leader Mitch McConnell (R., Ky.) and accepted by Majority Leader Chuck Schumer (D., N.Y.) Thursday morning, will raise the nation’s borrowing limit by $480 billion, the amount the Treasury Department says is needed to meet the country’s cash needs until Dec. 3.
• The bill now goes to the Democratic-controlled House, where House Majority Leader Steny Hoyer (D., Md.) said lawmakers would be called back from recess for an Oct. 12 vote. The White House said President Biden would sign the bill.

Private Prisons Still Make Money From Federal Inmates Despite Biden’s Executive Order – Wall Street Journal, 10/8/2021

• Prison operators are striking deals with municipalities to replace expiring federal contracts, cushioning the financial blow from the Biden administration’s efforts to disentangle the U.S. government from privately run detention facilities.
• Days after President Joe Biden was inaugurated, he ordered the Justice Department not to renew any expiring contracts with privately operated jails and prisons, while honoring existing agreements.
• CoreCivic and GEO Group, the prison industry’s two major publicly traded companies, are plugging some of the revenue gaps created by the expiration of federal contracts by signing new deals known as intergovernmental agreements involving cities and counties.
• These three-way agreements allow the federal government to hand off custody of prisoners serving time for federal crimes or awaiting sentencing from a federal judge to localities. City and county law enforcement then transfer those inmates to private detention facilities they have contracted with.

Trump Iowa Visit Tests Appetite for Another Presidential Bid – Wall Street Journal, 10/8/2021

• Former President Donald Trump is taking his most affirmative step yet toward a possible 2024 campaign by returning to a crucial state on the nominating calendar for the first time since his presidency, even as Republicans there express mixed feelings about him running again.
• Mr. Trump will host a rally Saturday evening in Iowa, the state that traditionally launches the nomination process.
• A Des Moines Register/Mediacom Iowa Poll released earlier this week showed Mr. Trump now has higher favorability ratings in the key state than he did as president, with 53% of Iowans—including 91% of Republicans—viewing him positively.
• The findings of a national poll by the nonpartisan Pew Research Center released this week showed 44% of Republicans and GOP-leaning independents want Mr. Trump to run for the White House again, while 32% say they would like him to no longer be a major national political figure.

EUROPE & WORLD

Samsung Expects 28% Rise in Operating Profit – Wall Street Journal, 10/8/2021

• Samsung Electronics is forecasting a 28% jump in third-quarter operating profit, the latest reminder of how the world-wide semiconductor shortage has turned out to be a financial boon for chip makers.
• The world’s largest smartphone and memory-chip maker is projecting operating profit of 15.8 trillion South Korean won, equivalent to about $13.3 billion, for the quarter ended Sept. 30.
• That compares with about 12.35 trillion won for the year-earlier quarter.
• The Suwon, South Korea-based firm estimates revenue of 73 trillion won, a 9% gain from a year ago.
• Samsung said it plans to boost investments by one third to more than $205 billion over the next three years, in part to pursue leadership in chip manufacturing.
• For the final three months of the year, contract prices for NAND Flash memory, or the storage on phones, computers and servers, could be flat or see a mild decline versus the July-to-September quarter, according to Taiwan-based research firm TrendForce.
• Similar prices for DRAM, which enables device multitasking, are expected to decline 3% to 8%, with supply beginning to exceed demand, TrendForce said.

China’s Sept services activity returns to growth – Caixin PMI – Reuters, 10/8/2021

• Activity in China’s services sector returned to growth in September as a major COVID-19 outbreak in the eastern province of Jiangsu receded, a private-sector survey showed on Friday, offering some support to a slowing economy.
• The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 53.4 from 46.7 in August, pulling away from the lowest level seen since the height of the pandemic last year. The 50-point mark separates growth from contraction on a monthly basis.
• Sub-indexes of new business, prices charged, and employment all bounced back to expansionary territory in September, although new export business shrank again, touching the lowest in seven months due to the surging pandemic overseas.
• Input prices increased for the 15th straight month in September and rose at a faster pace, driven by rising labor, freight and raw material costs, the survey found, an issue that drove factory activity into contraction last month.
• Caixin’s September composite PMI, which includes both manufacturing and services activity, rose to 51.4 in September from 47.2 the previous month, buoyed by strength in the services sector.

UK consumer confidence slides as inflation worry mounts: Bank of America – Reuters, 10/8/2021

• British consumer morale has fallen to its lowest since February, when the country was under heavy COVID-19 restrictions, due to worries about the economic outlook and about rising prices, a Bank of America report showed on Friday.
• The survey chimed with other gauges of consumer confidence in Britain that have suggested a growing cost-of-living squeeze has started to drag on the economy’s recovery from the COVID-19 pandemic.
• “Our proprietary UK consumer confidence indicator continued to drop over the past two weeks, reaching the lowest since February on our 7-day moving average,” Bank of America economist Robert Wood said in a note to clients.
• The survey showed inflation expectations rose by 60 basis points from August, with almost a third of Britons now expecting inflation above 5% in five years’ time.
• Bank of England officials are trying to gauge whether higher inflation expectations pose a risk to its 2% inflation target over the medium term.

Delivery Giant Meituan Fined in Beijing’s Tech Crackdown – Wall Street Journal, 10/8/2021

• Chinese food-delivery giant Meituan was fined more than $533 million on Friday for engaging in anticompetitive practices, the latest move by Beijing in a yearlong regulatory crackdown aimed at reining in the country’s powerful tech companies.
• China’s top antitrust body, the State Administration for Market Regulation, said Meituan had violated antimonopoly laws by effectively forcing merchants to sell exclusively on its platform, a practice known in China as “er xuan yi,” or “choose one out of two.”
• In Friday’s statement, China’s antitrust regulator said that the fine was set at 3% of Meituan’s total domestic revenue last year, equivalent to about $17.8 billion. It also ordered the firm to revamp its operations and submit compliance reports for the next three years.
• Meituan, China’s biggest provider of food-delivery and related services, said it accepted the penalty “with sincerity,” adding that it would refrain from the “er xuan yi’’ practice in the future.

TSMC and Sony considering joint chip factory, Japan gov’t to help -Nikkei – Reuters, 10/8/2021

• Taiwan’s TSMC and Japan’s Sony Group are considering jointly building a chip factory in Japan, with the government ready to pay for some of the investment of about 800 billion yen ($7.15 billion), the Nikkei reported on Friday.
• The plant in Kumamoto, southern Japan, is expected to produce semiconductors for automobiles, camera image sensors and other products which have been hit by a global chip shortage, and is likely to start operations by 2024, the report said.
• TSMC has been concerned about the concentration of chipmaking capability in Taiwan, which produces the majority of the world’s most advanced chips. China does not rule out the use of force to bring the democratic island under its control.
• Japanese officials are also worried about the supply chain stability of its industries, with a global chip shortage forcing automakers to cut production.

Ireland Signs On to Global Deal Seeking to Curb Tax Avoidance – Wall Street Journal, 10/8/2021

• A global agreement to set a minimum 15% corporate tax rate cleared its last major hurdle Thursday after Ireland, a low-tax country that is the European headquarters for some of the largest U.S. tech companies, said it would join the overhaul effort.
• The change in Irish policy comes ahead of a Friday meeting of 140 governments and jurisdictions that have for years been negotiating a way of taxing international companies to limit avoidance and divide tax revenue in a way they say is fairer. The group seems likely to give its backing to a final agreement that would aim for implementation in 2023.
• Ireland had been one of a small number of holdouts when the outlines of a global agreement were settled in July. That accord, driven by the U.S., aims to overhaul the way multinationals are taxed, the culmination of a yearslong effort to squeeze tax-avoidance arrangements.

Factmonster – TODAY in HISTORY

• The 14th president of the United States, Franklin Pierce, died in Concord, N.H. (1869)
• The Great Fire of Chicago started. That same day in Peshtigo, Wis., the worst forest fire in U.S. history also began. (1871)
• Bruno Hauptmannn was indicted for the murder of Charles Lindbergh’s baby. (1934)
• President Harry Truman announced the U.S. would share the secret of the atomic bomb only with Great Britain and Canada. (1945)
• Martha Stewart began her prison sentence at Alderson Federal Prison Camp. (2004)
• A 7.6 magnitude earthquake centered in the Pakistani-controlled part of the Kashmir region killed more than 80,000 and injured 65,000. (2005)