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November Economic Outlook: We can handle the hard times. 

 Quick takeaways

• •Prepare yourself for lots of attention in December on year-end economic numbers. But know that the end of another 365-day cycle and the crush of data that comes with it may not have special meaning for your financial picture.
• As one economic number—unemployment—remains low, another one—inflation—remains too high for many. As one rises, the other may fall, and it’s a reminder that economic data isn’t isolated. Everything is interconnected, and strengths and weaknesses (as well as solutions and insights) often appear over time.

In the summer of 2022, Duke University women’s basketball coach Kara Lawson gave her team an unusual pep talk. Shared widely, her point was this: It’s a fool’s errand to wait for things—school, sports, jobs, life—to get easier. They don’t. They get harder. Your energy is better spent figuring out how to better handle the hard stuff that life continuously throws your way.

The economy, of course, has leaned into that idea of hard. Want to open a news website and see a headline that talks about inflation releasing its tentacles, or the stock market leveling off? Good luck. The economic outlook is confusing right now. It won’t always be so, but how you handle this hard economic moment may strengthen your financial foundation.

Does year-end data matter that much?

A continuous stream of economic data is released throughout a calendar year, but expect this year’s end numbers to garner outsized attention. Retail businesses will release ever-important post-holiday sales. We’ll get a peek at Q3 gross domestic product (GDP) numbers as well as any personal income trends. Consumer sentiment may continue to offer insight into the mindsets of U.S. residents. One thing that is different, especially in the last few years, says Winston, is the big-energy attention—by us, by news sites, by pundits—to any change in daily economic metrics. Stock market up in the morning, stock market down in the afternoon: All of it gets the same news overload, without reflection or pause. It’s no wonder it’s hard for anyone to make sense of what’s happening. The question for you in this hard economic moment is how you handle it. A little economic mindfulness helps. Your history informs your response to any news, and it’s common to misattribute the cause of events, says Winston; that’s behavioral finance in action. 

Your wallet: Of course, a lot of people use the end of the year to take stock of their financial progress—and you can too. Did you move forward toward your savings goals? Do you have any big-picture items you want to focus on in 2023? The steps and worksheet in our financial goals may help. Look for what you can celebrate—and avoid finding fault. Another piece of behavioral finance at work in this hard economy? Looking for a person or entity to blame. “It’s almost like a reflex,” Winston says. That’s happening a lot right now when it comes to economic news.

But how things came to be in this moment can’t be isolated to one data point or one decision. Here’s an example: Remember when the cargo ship Ever Given was stuck in the Suez Canal in 2021? Stacked 14 stories high, its cargo delays trickled down, months later, in all sorts of ways—to the people who wanted to buy a laptop or finish a kitchen renovation with a new stove, for example. Events like that are a way of remembering that the economy at this and any moment is cumulative: It’s a web that connects in ways that are hard to disentangle. One thing that is working? People. The unemployment rate continues to demonstrate welcomed strength. In October, it was 3.5%. Figuratively, every single job lost during the pandemic has been replaced. That’s a statistic worth celebrating. If millions more people were not working, it’s likely inflation would be lower—but many more households would be suffering without jobs and incomes.The notion that things aren’t all good or all bad is worth remembering. 

Your wallet: What’s one area of budgeting or financial planning success you’re proud of this year? Think about the choices you made that ensured you’d meet that goal. How can you use that strength in another area of your financial life?

principal.com

Layoffs Snowball as the Holidays Approach

As the holiday season draws near—and companies face lower consumer confidence and greater fears of a recession—many employers are laying off workers. The technology sector has been particularly hard hit, with thousands laid off from Meta, Stripe and Twitter. HR has been in the crosshairs as well, reportedly with expected layoffs at Amazon. In addition, layoffs are spreading beyond technology, such as to the Walt Disney Company. We’ve gathered articles on the news from SHRM Online and other media outlets.

Expected Layoffs at Amazon Reportedly Will Cut HR

Amazon reportedly will cut approximately 10,000 jobs, reducing HR, the company’s devices organization and retail division. The total number of layoffs at the company remains in flux. But if the figure stays around 10,000, that would be approximately 3 percent of Amazon’s corporate employees and fewer than 1 percent of its global workforce of more than 1.5 million.

The layoffs during the holiday shopping season reflect how quickly the souring global economy has pressured Amazon to cut costs.

(The New York Times)

Meta Lays Off More than 11,000 Workers

Meta downsized by more than 11,000 employees, or 13 percent of its workforce, on Nov. 9. CEO Mark Zuckerberg said the company grew too quickly 

during the pandemic, when a surge in online commerce lifted many tech companies. The cuts may also be due to the billions Meta has invested in the metaverse when the company was already struggling financially.

Nearly half of the jobs Meta eliminated were technology roles. The company will stop developing smart displays and smartwatches. Meta executives said they were reorganizing parts of the company, combining a voice and video unit with other messaging teams. Overall, 54 percent of those laid off were in business positions.

(The New York Times) and (Reuters)

Twitter’s Reduction in Force

Twitter reduced its workforce by nearly half recently, laying off approximately 3,700 workers. Dozens are reportedly being asked to return as they were laid off “by mistake,” according to sources cited by Bloomberg. Former employees sued Twitter Nov. 3 in a proposed class action by those who claimed employees were not given proper notice of the layoffs.

(CNBC), (TechCrunch+), (Bloomberg) and (SHRM Online)

Other Layoffs, Including Soon at Disney

Other recent layoffs have occurred at such companies as Coinbase, Netflix, Shopify, Stripe and Spotify. Online payments giant Stripe cut 14 percent of its workers Nov. 3. CEO Patrick Collison wrote in a memo to staff that the layoffs were necessary amid rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets and sparser startup funding. These factors signal “that 2022 represents the beginning of a different economic climate,” he said.

In addition, Bob Chapek, CEO of the Walt Disney Company, announced that Disney is on the verge of cutting costs and staff. “We are going to have to make tough and uncomfortable 

decisions,” he said in a memo. “But that is just what 

leadership requires, and I thank you in advance for stepping up during this important time.”

(CNBC) and (Deadline)

Layoffs’ Severe Impact on Workers with H-1B Visas

The layoffs will be particularly difficult for workers with H-1B visas, who will have to find a job within 60 days or leave the U.S. unless they change their visa status. Tech companies depend on foreign workers, particularly from India and China, to fill specialty roles. Companies say there’s a shortage of workers with the needed technical skills.

(Quartz)

Avoid Costly Errors in Layoffs

Without careful planning, layoffs can result in costly errors. “The losses incurred in discrimination litigation following a badly executed layoff can easily exceed the amount that was sought to be saved by implementing the layoff,” said Gerald Hathaway, an attorney with Faegre Drinker in New York City..

www.shrm.org

24% of Workers in the Gig Economy are Uninsured. How Can Employers Help?

A closely watched measure of U.S. consumer prices rose by more than forecast to a 40-year high in September, pressuring the Federal Reserve to raise interest rates even more aggressively to stamp out persistent inflation. The core consumer price index, which excludes food and energy, increased 6.6% from a year ago, the highest level since 1982, Labor Department data showed Thursday. From a month earlier, the core CPI climbed 0.6% for a second month. The overall CPI increased 0.4% last month, and was up 8.2% from a year earlier. 

The advance was broad based. Shelter, food and medical care indexes were the largest of “many contributors,” the report said. Prices for gasoline and used cars declined. On the heels of a solid jobs report last week, the inflation data likely cement an additional 75-basis point interest rate hike at the Fed’s November policy meeting and spurred speculation for a fifth-straight increase of that size in December. Traders also priced in a higher peak Fed rate for next year. 

U.S. stocks opened lower and Treasury yields surged, with the 30-year rate briefly hitting 4%, the highest since 2011. The median forecasts in a Bloomberg survey of economists had called for a 0.4% monthly rise in the core and a 0.2% gain in the overall measure. The report stresses how high inflation has broadened across the economy, eroding Americans’ paychecks and forcing many to rely on savings and credit cards to keep up. While consumer price growth is expected to moderate in the coming months, it’ll be a slow trek down to the Fed’s goal. Policy makers have responded with the most aggressive tightening campaign since the 1980s, but so far, the labor market and consumer demand have remained resilient. The unemployment rate returned to a five-decade low in September, and businesses continue to raise pay to attract and retain the employees needed to meet household demand. 

The CPI report is the last one before next month’s U.S. midterm elections and poses fresh challenges to President Joe Biden and Democrats as they seek to retain thin congressional majorities. Already, the surge in inflation has posed a serious threat to those prospects. Shelter costs — which are the biggest services’ component and make up about a third of the overall CPI index — rose 0.7% for a second month. Both rent of shelter and owners’ equivalent rent were up 6.7% on an annual basis, the most on record. 

Economists see the housing components of the report as being elevated for quite some time, given the lag between real-time changes in rents and home prices and when those are reflected in Labor Department data. Bloomberg Economics doesn’t expect year-over-year rates for the major shelter components to peak until well into the second half of next year. Geopolitical developments could also keep inflation elevated. OPEC+ recently announced oil production cuts, and a potential gasoline export ban by the Biden administration could backfire with higher pump prices. The Russia-Ukraine war continues to disrupt supplies of commodities like wheat, while the White House is also considering a ban on Russian aluminum — a key component in cars and iPhones — in response to the country’s military escalation in Ukraine. 

Excluding food and energy, the cost of goods was unchanged from August. Services prices less energy advanced by the most since 1990 on a monthly basis. Changing consumer preferences are underpinning services inflation and have helped ease demand for goods. Meantime, a strong dollar is diminishing foreign demand for US-made products. Prices paid to US producers rose more than expected in September, driven in large part by services costs, Labor Department data showed Wednesday, likely portending ongoing price pressures for consumer prices for services. Producer prices for food and energy also rose. 

A separate report Thursday emphasized how inflation is depressing workers’ purchasing power. Real average hourly earnings dropped in September and were down 3% from a year earlier, elongating a string of declines dating back to April 2021. 

benefitnews.com