Author: smarttalksucce

Karen Hilt owns My Secret Stash in Traverse City, Michigan, retailing products from local artists and sellers— and business has been booming. Hilt’s feeling optimistic about the upcoming holiday season, so much so that she’s gearing up to open a second location.

But like many small business owners, she’s staring down an ongoing labor crunch, and staffing the new store remains a challenge.

A recent poll from the National Federation of Independent Business found nearly half of owners it surveyed were experiencing either significant or moderate staffing challenges.

“Between both locations I have six, and I would love to have 10 or 12 workers. That would make me a lot happier,” Hilt said.

To take up the slack she added, “I’m working pretty much seven days a week, morning, noon and night.”

Hilt’s upbeat holiday sales outlook is echoed by the National Retail Federation, which expects a roaring season, with sales during November and December projected to rise between 8.5% and 10.5% for a total of between $843.4 billion and $859 billion of sales. The projection tops last year’s numbers and would mark a new all-time high, even as a triple whammy of labor shortages, supply chain woes and inflation hit companies nationwide.

“If retailers can keep things on their shelves, and that shippers can get the goods delivered to people’s homes by Christmas, it’ll be really a banner year for holiday spending,” said Jack Kleinhenz, chief economist at the NRF, who noted the staffing issue hits not only retailers in stores and online, but in the supply chain.

Supply chain disruptions and worker shortages could put a crimp in the party. According to the NFIB, 48% of small businesses say supply chain disruptions are having a significant impact. Of those who rely on holiday sales for a significant part of yearly revenue, 38% anticipate such shortages will impact sales.

“We are seeing a shortage of workers in distribution and warehouse. Part of that is the timing of getting the products, even from the port, to the timing of these of these products getting into a distribution and warehouse area. They’re juggling hours, they’re juggling people, and people are working long hours,” Kleinhenz said.

Retail job openings hit 1.3 million in August according to data from the Bureau of Labor Statistics, and Challenger, Gray & Christmas projects 700,000 workers will be hired this season. The retail sector added 35,000 jobs in October according to BLS. Amazon, Target and Walmart and others are looking for hundreds of thousands of workers and bumping wages, offering bonuses and more to recruit.

Baltimore-based Under Armour said it’s entering the holiday season with more teammates than it’s had in years past in its retail stores. The company has hired 1,000 seasonal workers and is seeking 1,000 more workers to be brought on over the next few months.

UA credits a new in-store incentive program for all retail employees, seasonal, full-time and part-time, that allows for bonuses monthly that can equate to 8% or more of their take-home pay— in addition to a $15 an hour starting pay, up from $10 an hour this summer, to its staffing success so far.

“We are in one of the most competitive environments that we’ve seen in a very long time, particularly in retail stores. I think that our decision earlier on in the year to increase that starting wage from $10 to $15, certainly helped us get ahead of the holiday hiring that we’re in right now,” Stephanie Pugliese, UA President of the Americas.

“The holiday season is always a big peak time for any retailer to hire and make sure that we have enough teammates to satisfy the consumer demand, it really is a long-term investment that we have in the talent of our business. We’ve built our plans around investing in that talent on the go forward.”

Back in Michigan, Hilt said she isn’t immune to the supply chain hiccups rippling through the industry, but as bigger retailers face a lack of product, she’s positioned herself to succeed by selling local goods like house plants. Sales of plants really took off during the pandemic as homebound customers sought to spruce up their environments – and their zoom meetings.

“We are definitely beating our projections from years prior, and our customers are happy—we love that everybody’s putting that focus into shopping local,” Hilt said. “I don’t have a lot of product hung up on a ship anywhere.”

Still, she’s paying well above minimum wage and offering extra perks like free lunches to workers. And most of all, she’s hoping small changes will help make the customer experience better in the face of thin staffing.

“I feel like here’s some lemons and let’s make a whole bunch of lemonade,” Hilt said. “Having some people come in and do the stock before or after we’re closed, because if we do that when we’re open, that is detrimental to the experience for our customers who are in front of us, who did take the time to come out and want to do some fun shopping. They want us to be present for them, so we’re trying to just look a little more creatively.”

CNBC’s Betsy Spring contributed to this story.

President Joe Biden met with Federal Reserve Chairman Jerome Powell and Governor Lael Brainard on this week as the administration decides whom to nominate to lead the central bank for the next four years, according to a person familiar with the matter.

Powell and Brainard, who met with Biden separately, are seen as the two most likely candidates to lead the globe’s most powerful central bank, which sets interest rates, works to control inflation and oversees the country’s largest banks.

The person told CNBC that the president has not made a final decision on who will lead the Fed. Washington and Wall Street expect a choice in the coming days.

The Democrat-controlled Senate would likely confirm either candidate as Fed chief. The Republican Powell could face resistance from progressives, and the Democrat Brainard would face opposition from the GOP.

At least a handful of moderate Democrats, and virtually every Senate Republican, would be expected to support Powell as an endorsement of his steady hand at the Fed.

The central bank flooded the U.S. economy with cash in the spring of 2020 to combat the spike in unemployment and recession sparked by the Covid-19 outbreak in the U.S. Wall Street credits the big-ticket monetary policy for stabilizing financial markets and keeping interest rates low.

Brainard is widely considered the top candidate for the open vice chair for supervision post if she is not tapped as chair. In that role, Brainard would become one of the nation’s top banking regulators and a key deputy to the chair.

Some progressive Democrats support her candidacy, arguing that Powell hasn’t pushed the Fed hard enough on issues like the economic effects of climate change or income inequality.

One progressive, Sen. Elizabeth Warren of Massachusetts, said in September that to leave Powell as chair would be a mistake. She added that the Fed’s recent rollback of banking regulations makes the central bank chief a “dangerous man.”

Earlier this week, the Fed announced that it will begin to taper its regular asset purchases used to help stimulate the economy during the pandemic.

The central bank has been buying $120 billion in Treasury bonds and mortgage-backed securities since spring of 2020 in an effort to ensure markets have easy access to liquidity and keep interest rates repressed.

It hasn’t said when it will begin to raise interest rates, and isn’t expected to do so for at least several months.

— CNBC’s Kayla Tausche contributed reporting.

Broad-based strength in hiring in October signals the economy is shaking off the Covid-related slump of the third quarter and could grow faster than expected in the fourth quarter.

Employment increased by 531,000 in the month, with gains in many categories, including manufacturing, hospitality, professional and business services. The unemployment rate fell to 4.6%. Revisions to prior months’ data also added a total of 235,000 more payrolls in August and September.

“We’re reaccelerating as the delta wave abates and given the revisions, we’ve weathered the storm,” said Diane Swonk, chief economist at Grant Thornton. “It suppressed spending as people were afraid of the contagion during the delta wave, but it didn’t derail underlying employment, and now we’re picking up again.”

The economy slowed in the third quarter, as supply chain disruptions and Covid hampered activity. Gross domestic product grew by just 2%. Swonk had expected growth of 5% in the fourth quarter, but now she says it could be higher.

“It could be a little stronger with these numbers. There’s no question we’re going to end on a high note,” she said.

Economists had expected 450,000 jobs were created in October, up from September’s revised 312,000. There were some disappointments, including a decline in local and state government education jobs of nearly 65,000. Labor force participation also did not make expected gains and was unchanged at 61.6%.

But overall, economists saw the report as positive. “These numbers were great. The private sector is picking up the baton from the public sector,” said Swonk.

“The education losses really reflect the inability of schools to lure back staff workers and deal with the tsunami of retirements,” she added. “Public sector wages are just not going up at the pace of private sector. There’s no way they can compete. They really need to raise wages. These are low-paid jobs that are now competing with Amazon and Walmart.”

Michael Gapen, chief U.S. economist at Barclays, said the employment report shows the economy is back on track after the dip in third-quarter growth. “We’re not going to see what we saw in the first half of the year, but we’re not a 2% economy,” he said.

Wages continued to rise sharply, the latest sign that inflationary pressures are not abating. Gains in average hourly wages were again elevated, rising by 0.4% from the prior month, or 4.9% over the past 12 months.

While the wage component was hot and job growth strong, economists say the report does not change the dynamic yet for the Federal Reserve. However, a few more months of strong jobs growth could cause the central bank to reassess its timetable on winding down its bond program.

The Fed announced Wednesday that it would begin paring its bond purchases, ending the $120 billion monthly program by the middle of next year. Swonk expects the Fed will begin raising interest rates once it ends the program. She said the central bank could re-evaluate its timetable when it meets in December, if job growth remains strong.

Inflation is also a concern of the Fed. A worsening outlook for inflation could also lead policymakers to act faster to end the bond purchases, and begin battling high prices with higher interest rates, economists said.

Stephen Stanley, chief economist at Amherst Pierpont, notes the Fed could be forced to adjust its timing. “A few more reports like this one will bring the economy within hailing distance of full employment. This report is a significant step toward the [Federal Open Market Committee] needing to accelerate the pace of tapering early next year and ultimately having to raise rates earlier than policy makers currently anticipate,” he wrote, adding he expects the Fed to begin hiking interest rates in June.

Economists say the fact that job growth was broad-based was a positive for the economic reopening.

Professional and business services added 100,000 jobs, while manufacturing was also strong with a 60,000 gain. Transportation and warehousing workers increased by 54,400 and retail employment grew by 35,300. Construction jobs increased by 44,000.

Employment in leisure and hospitality increased by 164,000 and is now up 2.4 million in 2021. But the sector is still down 1.4 million jobs, or 8.2%, compared to February 2020.

The U.S. jobs market snapped back in October, with nonfarm payrolls rising more than expected while the unemployment rate fell to 4.6%, the Labor Department reported Friday.

Nonfarm payrolls increased by 531,000 for the month, compared to the Dow Jones estimate of 450,000. The unemployment rate had been expected to edge down to 4.7%.

Private payrolls were even stronger, rising 604,000 as a loss of 73,000 government jobs pulled down the headline number. October’s gains represented a sharp pickup from September, which gained 312,000 jobs after the initial Bureau of Labor Statistics estimate of 194,000 saw a substantial upward revision in Friday’s report.

The numbers helped allay concerns that rising inflation, a severe labor shortage and slowing economic growth would tamp down jobs creation.

“This is the kind of recovery we can get when we are not sidelined by a surge in Covid cases,” said Nick Bunker, economic research director at job placement site Indeed. “If this is the sort of job growth we will see in the next several months, we are on a solid path.”

The critical leisure and hospitality sector led the way, adding 164,000 as Americans ventured out to eating and drinking establishments and went on vacations again as Covid numbers fell during the month. For 2021, the sector has reclaimed 2.4 million positions lost during the pandemic.

Other sectors posting solid gains included professional and business services (100,000), manufacturing (60,000), and transportation and warehousing (54,000). Construction added 44,000 positions while health care was up 37,000 and retail added 35,000.

Wages increased 0.4% for the month, in line with estimates, but increased 4.9% on a year-over-year basis, reflecting the inflationary pressures that have intensified through the year. The average work week edged lower by one-tenth of an hour to 34.7 hours.

The unemployment rate drop came with the labor force participation rate holding steady at 61.6%, still 1.7 percentage points below its February 2020 level before the pandemic declaration. That represents just shy of 3 million fewer Americans considered part of the workforce and reflective of ongoing supply concerns.

“While the strength of employment was an encouraging sign that labor demand remains strong, labor supply remains very weak. The labor force rose by a muted 104,000, which is not even enough to even keep pace with population growth,” said Michael Pearce, senior U.S. economist at Capital Economics.

At the same time, the survey of households showed job holders rising by 359,000, leaving the employment level about 4.7 million below its pre-pandemic level.

A separate measure of unemployment that incudes discouraged workers and those holding part-time jobs for economic reasons fell to 8.3% from 8.5%. That rate was 7% prior to the pandemic.

The report comes amid heightened concerns about the state of the labor market, particularly a chronic shortage that has left companies unable to fill positions to scale back production and cut hours of operation.

Companies have been increasing wages and adding other incentives as the working share of the potential labor force operates well below its pre-pandemic level.

Since adding more than a million jobs in July, the labor market had slowed sharply through the rest of the summer, with sizeable letdowns in August and September as economists greatly overestimated growth in both months.

However, revisions showed that the numbers for those months weren’t quite as dismal. Along with the boost from September’s initial count, August’s final reading came up another 117,000 to 483,000.

Concerns linger, though, that the U.S. economy is slowing. Gross domestic product increased just 2% in the summer months, falling short of even the reduced expectations for gains during the pandemic-era recovery.

Recent data, though, has shown a progressive drop in weekly jobless claims, the result in good part from enhanced unemployment benefits expiring. Data Thursday showed productivity is running at a 40-year low and the trade deficit notched another record high, passing $80 billion for the first time.

Earlier this week, the Federal Reserve said job growth is strengthening enough for the central bank to begin cutting its monthly bond purchases, a cornerstone of its efforts to boost the economy during the pandemic. However, Chairman Jerome Powell stressed that the picture must continue to improve before the Fed starts raising interest rates.