Macro Monday (2/05/2024)

The Macro Institute's Weekly Economic Primer

Author

The Macro Institute
February 05, 2024

For macro enthusiasts like us, last week was about as good as it gets. We had a Fed meeting, an employment report, and an ISM print, but that’s just the tip of the iceberg. For this week’s chart, we’re looking at two data series that in our view do not receive enough attention. The U.S. Employment Cost Index might be the best wage indicator we have, but it only comes out once per quarter. Luckily, we have a very reliable series to forecast it: Private Sector Quits. When more workers are quitting their jobs, it’s usually because wages are rising as demand for labor exceeds supply. As the labor market has begun to soften, fewer people are resigning their posts and wage increases are slowing. This graph doesn’t even tell the whole story. Productivity growth has been unusually high in the past few quarters, meaning wages have gone up without necessarily affecting companies’ bottom lines. This explains the very unusual dynamic in 2023 as real economic growth accelerated while inflation slowed.

The Macro Week In Review

What We Read This Weekend

US Property Losses Trigger 20% Drop in Japanese Bank Aozora

Japan’s Aozora Bank Ltd. became the second lender in a span of hours to surprise investors with losses tied to US commercial property, sending shares down by the limit and heightening concern over global banks’ exposure to souring real estate bets.

www.bloomberg.com/news/articles/2024-02-01/aozora-plunges-20-after-bank-forecasts-loss-on-us-property

ECB asks some lenders to monitor social media for early signs of bank runs

ECB keeps close eye on liquidity after bank runs in 2023

http://www.reuters.com/markets/europe/ecb-asks-some-lenders-monitor-social-media-early-signs-bank-runs-sources-2024-01-24

Economists say the labor market is strong — but job seekers don't share that confidence. Here's why

More than half of unemployed adults say they are burned out from searching for a new job. Experts suggest it might be due to the cooling labor market.

www.cnbc.com/2024/02/02/why-it-feels-so-hard-to-get-a-job-right-now.html

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