A closer eye on employment costs
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Trade is the pits in South Africa, as in fruits with pits. I'm David Brancaccio in Los Angeles. First, there's news that the cost of employing people did not go up as much as predicted. At one level, that's too bad, since who doesn't want a bigger raise? But if you're worried about interest rates or want inflation to come down, you may see this differently, which may be a bigger story than the other news this morning that retail sales have did not go up as expected in December. Jeffrey Cleveland is chief economist at Payton and Riegel.
A lot of people paying attention to retail sales this morning, but we're looking at the employment cost index because that tends to filter into a view on inflation via wage pressures that filter into all sorts of things, but in particular, services inflation.
What are the implications of employment cost trends on inflation?
And this is the softest reading on my chart since 2021. 2021.
So second year of the pandemic, just before the great surge in wages, inflation, all that stuff. That's interesting.
Yes, you are precisely correct, sir, before the inflation eruption. So I think this is important. When the central bank is looking to see what they might do next, I think moderating wage pressures, moderating inflation pressures will be key to that story. And this is a data point in favor of additional rate cuts, in my view.
With the stipulation that it's a bummer that we're not getting raises, right?
I would say it's a flip side. It's a symptom of a softening labor market. If the labor market were stronger, if we were adding more jobs, if we had a strong demand for labor, we would see more wage growth. And we're seeing the opposite right now. So it is sort of a reflection of a softening of the labor market.
All right. Jeffrey Cleveland, Chief Economist, Payton & Riegel, thank you. Have a good week. Two weeks ago, the business group The Conference Board released a survey that found the lowest consumer confidence since 2014. Yet, yesterday, the New York Fed put out its reading showing some improvement in the mood. Marketplace's Carla Javier reports.
Carola Binder at the University of Texas Austin says after several years of unusual readings, What was really notable was just its lack of notability in a way.
It seems like a very normal times kind of survey read. And that read fits the Fed's decision to not cut or raise interest rates. That's consistent with this idea that, well, we don't need more stimulus, we don't need less.
How do retail sales figures impact economic expectations?
The one thing did jump out to Francesco D'Acunto at Georgetown. He says that despite slightly lower short-term inflation expectations and slightly better labor market expectations...
At the same time, consumers seem to have a much sort of harsher view of potential future financial conditions in terms of their household finances.
Which he thinks has to do with their expected ability to borrow money if they need.
It really seems that they believe that actually interest rates on loans, on any other type of product like credit card debt, is likely to go up going forward.
And while there can be a difference between low- and high-income respondents' feelings, Takunto says that this time they seem to have pretty similar expectations. I'm Carla Javier for Marketplace.
The largest economy in Africa is South Africa, a country that since August has been trying to work with 30 percent tariffs for goods sold to the U.S. Automotive and agriculture are sectors hit especially hard. But farmers there are turning to China to buy more of the country's pitted fruits, nectarines, plums, apricots and more. The BBC's Mo Alley filed this report for us.
Plums are one of the five stone fruits, alongside apricots, peaches, nectarines and prunes, that will soon be exported from South Africa to China under a new trade deal. Pietro Duplessis runs the operations at Bon Esperance.
Stone fruit production and export is pretty much about supply and demand. So if there's an extra market that's opening up for us, it's hugely exciting. In the same time, we've got extra tariffs from the USA. So it's a bit of a dampening on that side.
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