Here are the takeaways from today’s Morning Brief. Sign up to receive the following in your inbox each morning:
I have never been in charge of monthly employment reports.
Let me explain.
The government releases the non-farm payrolls report on the first Friday of each month. Similar to last Friday, we saw an incredibly large increase of 254,000 people. As soon as a report hits the news wire, we (the media and investors) break down each line to figure out what’s going on in the economy. More recently, this report has actually been used to predict the direction of Fed policy.
After an initial enthusiastic read, we aim to put that context in order and see how it applies to the companies that drive the stock market. In the late afternoon, we shuffle along to the next market-moving story. If you’re an investor, that means you’re probably obsessing over the daily price movements of Nvidia (NVDA).
By Saturday, employment statistics were a distant memory. By Monday, it will be ancient history.
The fuss over a single data point has always seemed like a bit of a stretch, especially since I’ve long wondered whether it really captures the true health of the economy. This thing is constantly revised up and down. (The last two months have been revised upwards by 72,000!)
Over the past few years, I’ve reported on the numbers, asked executives about them, and tried to keep them in mind when browsing the grocery store aisles.
However, I still question its usefulness and accuracy and am forever looking for better insights into economics.
So here is the byproduct of that pursuit.
This week I spent two days in Bentonville, AR, meeting with the Walmart (WMT) team and walking through the store. The final day concluded with an interview with veteran CEO Doug McMillon.
I first interviewed Doug in 2017, when he was still early in his tenure as CEO (he started in 2014). He seemed like the same guy I first met. He was a deep thinker, fiercely competitive, and passionate about retail and Walmart’s mission to save people money.
Walmart may offer the best insight into the U.S. economy, especially as its wide selection and online marketplace draw in high-income shoppers and profits. The company’s stock is up more than 50% this year, while rival Target (TGT) is up 4.3%.
The economic exchange with Doug is as follows.
Sozzi: How challenged is the average Walmart shopper?
McMillon: People at lower income levels are always going to have a harder time. They have to make trade-off decisions, and I think that’s become more acute since the post-pandemic inflation cycle. So people with household incomes below $100,000 are feeling pressures they didn’t feel a few years ago, and their behavior shows it. And we’re trying to bring prices down… Some of the more stubborn inflation is in consumables categories like prepared foods, dry grocery types, paper products, and cleaning supplies.
the story continues
Sozzi: Do you think prices are coming down and starting to ease?
McMillon: Inflation is lower. But after years of dry grocery and consumables inflation, they are settling at higher levels, and we at Walmart don’t want to accept that. We want to keep finding ways to bring them back more efficiently. And these categories are unlikely to decline in the short term.
(I don’t usually take pictures with officers, but Doug’s office was once used by Sam Walton, who kept a shotgun behind the door. He was a natural. did).
Walmart CEO Doug McMillon (right) shares his thoughts on retail and the economy with Yahoo Finance Editor-in-Chief Brian Sozzi (left) inside his office in Bentonville, Arkansas. (Brian Sozzi)
After getting off the plane from Arkansas, I headed to my office to prepare for an opening bid podcast recording with Michelle Meyer, my favorite chief economist at Mastercard Economic Research Institute (formerly Bank of America). . You can watch the entire episode in the video above.
Michelle has a wealth of economic and consumer data, especially how people are spending with credit and debit cards (she’s predicting a very solid holiday shopping season).
Here are some interesting economic takeaways from our chat:
Sozzi: Why is the labor market slowing down?
Meyer: Think before the pandemic. If you had 250,000 jobs (per month), you’d say, “Oh my god, that’s a statistical error.” For example, how did the Bureau of Labor Statistics report that? Because before the pandemic, given the data we’ve seen in the labor market, the employment growth trend, with some margin of error, was probably 100,000 people. Because it was considered to be an order.
So we went through a period of labor market instability in some ways as we went from extreme job losses when the pandemic hit to this massive rehiring and re-entering the workforce. It is. Now we have to settle on what should be more sustainable and perhaps more moderate.
Employment statistics are probably helpful, but I hope this article serves as a reminder that there are other ways to get a clearer picture of the economy. Find them and be successful.
rewind
Last week, here at Digital Canvas, I recommended you go read three books on AI to become a more knowledgeable investor (and dare I say, human). Then a reader asked me to recommend the best books related to AI.
So I tapped into the AI industry’s vast network of sources and asked for suggestions. What’s interesting is that I’ve heard that there aren’t that many good books on this technology yet (somewhat worrying?) and that there aren’t that many technical white papers online.
Here are some that will take a weekend (if not more) to complete.
Three times a week, I have insightful conversations with the biggest names in business and markets on opening bids. Find more episodes on our video hub. Watch on your favorite streaming service. Or listen or subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
Brian Sozzi is editor-in-chief of Yahoo Finance. Follow Sozzi on X @BrianSozzi And also on LinkedIn. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com.
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