Dow Today – Wall Street Breakfast: Jobs Day
The last non-farm payrolls report for 2021 will be released this morning, with expectations that the U.S. economy added 400K jobs in December, compared to 210K jobs added in November. The figures – which represent the total number of paid workers in the U.S. minus farm, government, private household and non-profit employees – come as many grow concerned over the direction of the U.S. recovery in 2022. Despite the fears, the unemployment rate is expected to drop to 4.1%, from 4.2% in November, with an unprecedented number of job openings across the economy.
Bigger picture: The NFP picture should be taken with a pinch of salt, given the fact that the “December figures will not yet capture the impact of the surging Omicron variant on employment,” noted Lauren Goodwin, economist at New York Life Investments. In recent months, the market has also seen a big divergence between actual figures and expectations, like the November jobs report, which showed an increase of 210K payrolls despite a forecast of 550K. The prior three months weren’t any better, with calls for 450K jobs in October (vs. 531K actual), 500K payrolls in September (vs. 194K actual) and 750K positions in August (vs. 235K actual).
There are several factors at play, but what’s happening is the Bureau of Labor Statistics is struggling to get data during the pandemic. In fact, the agency already adjusted its initial estimates for payrolls growth by nearly 1M jobs in 2021, which was the highest adjustment ever. Businesses from which the BLS forecasts its estimates are not responding to surveys in time, which means more assumptions are included in the equation, while seasonal factors, such as customary back-to-school adjustments, have been upended by COVID-19.
Go deeper: Fed policymakers pay close attention to the data (higher payrolls can contribute more economic growth) and the market narrative begins to take shape shortly after the first numbers come out. Given that the Fed is now more focused on the other side of its dual mandate – price stability vs. maximum sustainable employment – investors will be particularly focused on some sub-components of the NFP data due to concerns about a price-wage spiral. Keep an eye on the labor-force participation, which reflects people working or actively seeking employment, and average hourly earnings that are expected to climb 0.4% in December, or 4.2% Y/Y.
The Supreme Court will hear legal challenges today to two of the Biden administration’s COVID-19 vaccine mandates, with rulings likely to follow in short order. The first, which is estimated to cover two-thirds of the private sector, or 100M workers, would compel businesses with 100 or more employees to ensure their staff is vaccinated against COVID or are tested weekly for the virus. A separate healthcare worker mandate, which would require vaccinations for workers at facilities that treat federally funded Medicare and Medicaid patients, is currently blocked in half of the 50 U.S. states.
Snapshot: While the Supreme Court had already ruled several cases about COVID vaccine mandates (like healthcare cases in New York and Maine), this time around the case centers around actions by federal agencies. The key legal question here is not whether the mandate is reasonable or necessary in light of the pandemic, but rather if Congress has provided the Occupational Safety and Health Administration with the authority to issue such directives under relevant statutes. Employers who don’t adhere to the requirements could face penalties of up to $13,653 for each reported violation, while OSHA has said it will check on compliance through company record-keeping and some in-person inspections.
The Biden administration feels that OSHA not only has the authority, but also the responsibility to act. Backing this argument is the ability for the agency to issue emergency workplace rules to protect employees “exposed to grave danger” from “substances or agents determined to be toxic or physically harmful or from new hazards.” On the other side of the courtroom, a coalition of business and religious groups, Republican attorneys general or governors, and national industry associations like the National Retail Federation and the American Trucking Associations, say the mandate represents massive overreach. OSHA cannot take a step with such “vast economic and political significance” without specific authorization from Congress, according to the group, which pointed to severe consequences like labor shortages and increased costs for employers.
Nation divided: More than half of employees who work in workplaces with 100 employees or more (the size of companies covered by the federal requirement) either say their employer already requires vaccination (36%) or say they want their employer to require it (17%), according to the Kaiser Family Foundation, while four in ten (41%) say they don’t want their employer to demand a jab. Meanwhile, 37% of unvaccinated workers say they would rather leave their jobs than comply with a jab or testing mandate, while another 46% would get tested weekly and 11% say they would get the shot (6% don’t know or refused to answer the poll).
The current wave of media consolidation is picking up speed following Vox‘s merger with Group Nine and BuzzFeed‘s purchase of Complex. The latest deal will see The New York Times (NYT) scoop up sports subscription site The Athletic for $550M, with the all-cash transaction expected to close in the first quarter. Also don’t forget about Dotdash’s acquisition of Meredith’s National Media Group in October, as well as Axel Springer’s purchase of Politico.
What’s happening? “‘Fewer, better’ is a sentiment that rings true for many marketers when it comes to their media plan,” said Kelsey Chickering, a principal analyst covering media at Forrester. “Market consolidation allows brands and agencies to work with one partner who can give them a variety menu in audiences, content franchises and passion points.” Besides competing better against social platforms for advertising, consolidation allows audiences to visit various sites in a company’s portfolio, as well as giving them the ability to net more subscriptions and revenue.
In the case of The Times, the purchase of The Athletic will go a long way toward its long-term subscriber goals. The Athletic’s 1.2M subs will be added to the paper’s existing stable of 8.3M subscribers, moving it closer to achieving its goal of 10M paid subscribers by 2025. While the transaction is expected to be immediately accretive to NYT‘s revenue growth rate, it will be dilutive to operating profit for about three years (as NYT scales subscriptions and builds its ad business), and accretive after that.
Statement: “We started The Athletic to bring fans closer to the teams, players and leagues they love through deep, immersive journalism and storytelling,” said Alex Mather and Adam Hansmann, who founded the website in 2016. “Today marks a thrilling milestone for that dream, one realized because of the hard work of every single one of our employees. We are proud to have The Athletic become part of the Times Company’s family of subscription products.”
Factious social media
If the first anniversary of the Jan. 6 Capitol attack wasn’t divided enough, the disarray is shifting online again, just as it did in January 2021. Partisan politics are not only taking place in Congress, but are increasingly enveloping Corporate America, as well as how citizens work, operate and interact on social media. The latest development can be seen with the launch date of TRUTH Social, which has been listed in Apple‘s app store with an expected launch date of Feb. 21 (the date coincides with Presidents’ Day).
He said, she said: Former President Donald Trump announced the social network back in October, which would be merged with SPAC Digital World Acquisition (NASDAQ:DWAC). Just like it did in October, the latest launch announcement sent shares of DWAC flying, with the SPAC soaring nearly 20% on Thursday to close at $60. Trump is marketing the platform as an alternative to social media giants Twitter (NYSE:TWTR) and Facebook (NASDAQ:FB), both of which banned him on the grounds of inciting the U.S. Capitol riot on Jan. 6.
“I created TRUTH Social and video-on-demand service (TMTG+) to stand up to the tyranny of Big Tech,” Trump said at the time. “We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable. Trump Media & Technology Group’s mission is to create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America.”
Outlook: Other big personalities are also jumping ship, or at least hedging their followings, citing concerns over free speech and cancel culture. “Just in case shit over at Twitter gets even dumber, I’m here now as well. Rejoice!” said star podcaster Joe Rogan, who wrote his first post on Gettr this week. As of November 2021, the Twitter alternative (started by Trump aide Jason Miller) had almost 3M total users and almost 400K daily average users. In the last week alone, Gettr witnessed half a million new users with the joining of Rogan, Dr. Robert Malone and the Twitter suspension of Congresswoman Marjorie Taylor Greene.