The Weekly Wrap: Americans Worked Longer But Not Smarter
Welcome back to Friday! This is the Breitbart Business Digest weekly wrap, where we review a selection of the economic and financial events of the past week without incurring any unnecessary labor costs or burning excess petroleum.
This week, the Department of Labor confirmed Americans worked just as much as they thought last quarter but didn’t get as much done. Employers might not be getting peak output, but they don’t dare fire anyone in this tight market. That made some Republicans glum—or maybe it was just the high oil prices. Meanwhile, Fed officials floated the idea of punishing Americans with higher rates just because we’ve been paying too much for gasoline.
Unproductive Revisions
The Bureau of Economic Analysis and Labor Department data showed that Americans were a bit less productive at the end of last year than previously thought. Hours worked held steady, but output didn’t quite measure up to the initial hype. Productivity growth was revised down from a preliminary 2.8 percent annual rate to 1.8 percent, while unit labor costs jumped higher. You folks just weren’t as good at your jobs as we expected.
Okay, that’s not entirely fair. Most of you were pulling your weight just fine, and a 1.8 percent annual rate is still perfectly respectable. The real culprit? Nurses and doctors. Output in the healthcare sector fell because healthcare folks weren’t getting as much done. But that’s not because they were lazier than usual. Rather, it’s that people were less sick than expected. Mild flu, COVID, and RSV seasons meant fewer serious cases, leaving doctors and nurses with less to do. Healthcare production dropped, dragging down overall GDP and productivity numbers.
It’s a good thing fewer people got really ill. But it’s also a reminder that sometimes genuinely positive developments—healthier Americans—show up as a statistical drag on economic growth.
By the way, productivity would have looked even better if the nurses had pulled a TSA-style no-show.
This Is What Full Employment Looks Like
Despite all the hand-wringing over the economy in the media and polls, very few Americans are losing their jobs. The four-week moving average for initial unemployment claims fell to 205,000, one of the lowest levels in the historical data going back decades. Adjusted for the size of the labor force, we’re seeing layoff rates in the lowest percentiles on record.
In other words, Americans are enjoying an extraordinary level of job security. The kind of job security that we typically only see on the rebound from a recent recession. The fact that we’re seeing it in the sixth year of an economic expansion is unprecedented.
A big driver of this is immigration policy. The Biden open borders policy saw an average three million foreigners per year moving into the U.S. workforce. Now we’re down to a few hundred thousand—with more than twice that number self-deporting or being deported. As a result, employers are forced to treat their workers as a scarce and limited resource, not something to be discarded just because flu season gets mild and the nurses have their feet up on the desk.
Republican Optimism Gets Shaken by Iran War
A lot of you are correctly skeptical about public opinion polls. They tend to seriously undercount Trump supporters among almost every demographic group, creating a distorted picture of the president’s approval ratings and economic sentiment. As a result, they tend to downplay good news and overhype bad news.
But the recent shifts in public opinion within groups on the American right should not be discounted. And it’s clear that the Iran war has dampened economic optimism for Trump’s supporters. Back in February, the Economist/YouGov poll found that 62 percent of people describing themselves as “MAGA supporters” said the economy was getting better, 22 percent said the economy was staying the same, and 13 percent said it was getting worse. In the poll released this week, 51 percent said the economy is getting better, 33 percent said it is staying the same, and 16 percent said it is getting worse.
That’s not a huge turn toward pessimism. The “getting worse” share only ticked up a little. A lot of folks moved from seeing things improving to things staying the same. But it does mark a loss of confidence in the trend of the economy. And things are not deteriorating further. A week ago, the numbers were a bit worse. Just 47 percent of MAGA said things are getting better, 30 percent said they were staying the same, and 20 percent said things were getting worse.
The best explanation for that rebound is likely that oil prices appear to have topped out at around $110 a barrel and mostly stayed closer to $100. Similarly, gasoline prices climbed a buck to nearly $4 a gallon but haven’t kept rising. Both are much lower than what we saw under Biden. That’s likely convincing some folks that everything’s going to be okay.
Supporting that idea is polling from Gallup that found only 35 percent of Americans worry “a great deal” about energy availability and affordability, unchanged with a year ago and far below the 47 percent who worried in 2023. Just 23 percent of Republicans are super-worried about energy. Only 43 percent of Americans expect an energy shortage to occur in the next five years. When Gallup last asked this question after the start of the Russia-Ukraine war in 2022, this was up at 55 percent.
And then there’s this from Joanne Hsu, who runs the University of Michigan’s consumer sentiment surveys: “Overall, the short-run economic outlook plunged 14%, and year-ahead expected personal finances sank 10%, while declines in long-run expectations were more subdued. These patterns suggest that, at this time, consumers may not expect recent negative developments to persist far into the future.”
And even though gas prices are up 30 percent from a month ago, Gallup says just two percent of Americans say their top concern is gas prices.
Fed Officials Are Worried About Oil Markets, and Bond Traders Are Worried About Fed Officials
As far as can be discerned, approximately half of these energy erethimics work for the Federal Reserve, and the other half are bond traders. After somewhat hawkish remarks from Fed officials this week, the futures market started pricing in a rate hike instead of a cut later this year. On Friday, the odds of a hike by year’s end had risen as high as 52 percent.
Although gasoline and oil prices have been contained, there is the possibility of a broader commodities shock that could include natural gas, fertilizers, helium, and sulfur. Worst case, this pushes out into shortages of certain pharmaceuticals, plastics, aluminum, and even microchips.
The problem with the market’s current view, however, is that a Fed hike into these things would make no sense. Even if a broad supply shock from the war winds up putting upward pressure on inflation, higher rates are not going to help at all. Falling equities prices are already tightening monetary conditions. And higher energy prices due to supply constraints is a contractionary force on the economy. We don’t see a Warsh-led Fed—or even, somehow, a Powell-led Fed—risking recession by tightening into that.
The only rationale we could see for a 2026 rate hike would be a post-Iran war boom. If the Fed were to get nervous that the economy is growing too quickly following the cessation of Iran bellicostics, perhaps it would hike. But pricing in a good news rate hike now seems unlikely.
The Censure of Andrew Jackson
On this day in 1834, the United States Senate censured President Andrew Jackson. It was another round in the populist president’s long war with the financial establishment. Jackson had vetoed the recharter of the Second Bank of the United States in 1832, then ordered federal deposits withdrawn and spread among state-chartered banks. When Treasury Secretary William Duane balked, Jackson fired him and installed Roger Taney, who carried it out.
An 1833 lithograph cartoon showing President Andrew Jackson destroying the Second Bank of the United States with his “Removal Notice.” Lithograph by Zachariah Downing, published by Henry R. Robinson. (Library of Congress via Wikimedia Commons)
Henry Clay and the Whigs, fresh off gaining Senate control, branded Jackson a “backwoods Caesar” running a “military dictatorship.” They didn’t hold a “no Kings” rally, but you get the point. Jackson shot back that Clay was “reckless and as full of fury as a drunken man in a brothel.” (Apparently, things were still pretty nasty in the eras before social media!)
Clay, Daniel Webster, and John C. Calhoun pushed through the censure 26–20, accusing Jackson of grabbing power the Constitution never gave him. Jackson fired off a protest calling it unconstitutional and a backdoor impeachment without due process.
Jackson ally Thomas Hart Benton spent three years campaigning to expunge it. When Democrats retook the Senate in 1837, they did just that: black lines were drawn through the entry in the journal, with “expunged” written across it. Jackson threw a dinner for the “expungers.”
A biographer later claimed Jackson’s only regret upon leaving office was that he never got to shoot Henry Clay. No Senate has censured a president since.
