Job growth expected to have cooled in December but not enough to slow Fed rate hikes

The economy is expected to have added 200,000 jobs in December, less than November, but still strong enough to keep the Federal Reserve aggressively tightening policy to fight inflation.

Economists surveyed by Dow Jones also expect that the unemployment rate remained at 3.7% in December, while average hourly wage growth slowed to 0.4% from 0.6% in November. There were 263,000 jobs added in November.

The employment report is scheduled to be released Friday at 8:30 a.m. ET, and it is the last major monthly jobs data before the Fed meets Jan. 31 and Feb. 1.

The data is important since the Fed has been trying to slow the hot labor market in its fight against inflation. The central bank has raised interest rates seven times in this tightening cycle, and economists say it could hike by another half-percentage point in February, but traders in the futures market are betting on just a quarter-point hike.

“I still think we’re in for a solid number on Friday. I don’t think things have slowed all that much,” said Michael Gapen, chief U.S. economist at Bank of America.

Gapen expects 215,000 jobs were added last month. “That’s twice as much job growth as they want.” December’s report could still show some gains from seasonal hiring.

The Fed’s latest economic forecast shows unemployment climbing to 4.6% by the fourth quarter. “Their forecast has the unemployment rate rising. We know the breakeven rate is somewhere between 70,000 to 100,000,” Gapen said. “If you need the unemployment rate to rise, you need jobs to fall below 70,000 to 100,000.”

Gapen expects the monthly number could start to turn negative in the first half of the year, and then continue to be negative for awhile.

“Right now the underlying economy is where we’re looking for evidence to suggest whether the slowdown has broadened beyond housing and nonresidential construction investment,” he said. “The next likely place should be the goods side of the economy.”

The Fed is willing to have the job market weaken because officials see worse damage for the economy if they let inflation remain high, Gapen said. He is looking at construction as one area that could give up jobs, as the real estate slowdown ripples across the economy.

“We have a large number of homes under construction. … We’ll look for mortgage service lenders and realtors … people who are framers and foundation layoffs. That’s probably where you’ll see layoffs first in construction,” he said.

Aneta Markowska, chief financial economist at Jefferies, expects 175,000 jobs were added, but she is most concerned about the continued pressure on wages. She agrees with the consensus that wages grew in December by 0.4%, or 5% year over year, but says that number could jump to as high as 0.7% on a monthly basis in January, as companies implement raises.

Economists worry that wage inflation, should it begin to spiral, is a type of inflation that is more difficult to eradicate. The strength in the labor economy has been surprising economists for months. Job openings in November, for instance, were reported at nearly 10.5 million, more than expected, when the Job Openings and Turnover Layoff Survey was released Wednesday.

“I think what the JOLTs data told us is that actually there is a slowdown in hiring. It’s not because demand for labor is declining rapidly,” said Markowska. “It’s just the supply constraints are starting to bite. You’re seeing the quits rate go up again. Growth hires are still solid. … We’re potentially running into more binding constraints in the labor market, and if that’s the case, we’re in for more upside in wages.”

Diane Swonk, chief economist at KPMG, said an area that has shown an increase in hiring is new companies.

“Much of what we’re seeing is being driven on the demand side, not just by employers, but by new business formation, which they’re all of a sudden having to compete with,” she said. “It’s a very different situation than we’ve seen in the past.”

The Fed has raised interest rates seven times since last March, and the fed funds rate is now at 4.25% to 4.5%. Both Gapen and Markowska said the strength in labor warrants the central bank raising rates by another half-percentage point on Feb. 1, and then a quarter point in March. Many investors, however, expect just a quarter-point hike in February and then another quarter point after that.

Mark Zandi, chief economist at Moody’s Analytics, said the Fed is trying to encourage investors to expect higher rates for longer. That was evident in the minutes from its December meeting, released Wednesday.

“I think they are trying to guide markets from thinking rates are going to come down quickly this year,” he said. “If you look at market expectations, the fed funds rate comes up to 5% shortly and then comes back down quickly in the back end of the year. The message in the minutes is rates are going to be higher for longer. Who knows at the end of the day if they are going to keep rates that high for long, but that’s the message they wanted to send.”

Zandi expects the economy added 225,000 jobs in December.

“The job market is slowing steadily, but surely. It’s not enough. The Fed, I think, would love to see job gains south of 100,000, closer to zero, to get unemployment moving north and wages moving south. These numbers suggest we’ll quickly be moving in that direction,” he said. “I think we’ll be at 100,000 in the spring and there will be months at zero on the spring or summer.”

Because of its potential impact on the Fed, the jobs report could move the markets.

“I’d look at wages first and foremost. If jobs comes in at 250,000 or 300,000, I don’t think the market reacts too much,” said Michael Schumacher, head of macro strategy at Wells Fargo. “If the wage side of it comes in at 0.5, or 0.6, that’s pretty disruptive. 0.3 is a nonevent. The market needs a 0.2 to move a lot, and then the narrative kicks in that the Fed is almost done.”

GOP leader McCarthy loses 10th ballot

WASHINGTON — U.S. House GOP leader Kevin McCarthy, R-Calif., lost a 10th vote for House speaker on Thursday, as far right Republicans continued to deny him the long-sought gavel.

They instead offered two other GOP alternatives: Florida sophomore Rep. Byron Donalds, who was first nominated on Wednesday, and Rep. Kevin Hern of Oklahoma. Hern’s unexpected nomination was first announced by Colorado Rep. Lauren Boebert, one of McCarthy’s most outspoken detractors.

Hern has consistently voted for McCarthy for speaker, but he has not said outright that he would reject the job if McCarthy withdraws his name.

The emergence of another potential alternative to McCarthy was the latest setback in a frustrating day for the longtime GOP leader. Although the vote is still ongoing, McCarthy has already lost at least five votes, making it impossible for him to secure the gavel. With 222 Republicans in the newly elected House, he can only afford to lose four of them to reach the 218 needed to win the speakership.

Earlier in the day, McCarthy sounded optimistic about talks between his top lieutenants and a group of around 20 GOP holdouts.

“I think everyone in the conversation wants to find a solution,” McCarthy said on his way into the House chamber for the day’s first vote.

But less than two hours after votes began, another influential McCarthy holdout, Rep. Scott Perry, Pa., posted an angry tweet accusing McCarthy of leaking details of internal negotiations.

This was one of several complaints publicly aired by McCarthy holdouts on Thursday.

In her nomination speech for Hern, Boebert accused McCarthy’s allies of threatening to withhold committee assignments from Republican members who did not back McCarthy. “That is true,” she said, noting that it happened in a GOP conference meeting. “But we don’t govern in fear.”

The continued absence of a speaker has left the House in disarray, largely due to the fact that rank-and-file members can’t be sworn into office until a speaker is elected and cannot set up their local or Washington offices. This leaves all 434 members of the House technically still members-elect, not official voting representatives. 

Ahead of Thursday’s votes, Democratic Party leaders berated Republicans for the party’s dysfunction, and emphasized the harm that going days without a House speaker was inflicting on the legislative branch and the nation.

“We cannot organize our district offices, get our new members doing that political work of our constituent services, helping serve the people who sent us here on their behalf,” incoming Democratic Whip Katherine Clark, D-Mass., told reporters in the Capitol Thursday morning. “Kevin McCarthy’s ego in his pursuit of the speakership at all costs is drowning out the voices and the needs of the American people.”

Democrats also emphasized that the absence of a speaker was threatening U.S. national security by keeping members of Congress from accessing classified intelligence that is only available to lawmakers after they have taken the oath of office, which none of them can take without a speaker.

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“At the end of the day, all we are asking Republicans to do is to figure out a way for themselves to organize so the Congress can get together and do the business of the American people,” Democratic Minority Leader Hakeem Jeffries said at a press conference with Clark.

Clark accused McCarthy of being “held hostage to his own ambitions.”

“This is about your responsibility to organize government. It is fundamental to who we are as members of Congress,” she said.

McCarthy, meanwhile, negotiated late into the night Wednesday with both allies and his opponents to try to strike a deal that would get him the gavel, following six failed votes over Tuesday and Wednesday.

U.S. House Republican Leader Kevin McCarthy (R-CA) reacts on the floor of the House Chamber with Rep. Marjorie Taylor Greene (R-GA) as Democrats force the House to vote on whether to continue a late evening session against McCarthy’s wishes, while the competition for Speaker of the House continues, on the second day of the 118th Congress at the U.S. Capitol in Washington, U.S., January 4, 2023 

Jonathan Ernst | Reuters

The first major concession McCarthy agreed to Wednesday was a change to the rules to allow any member of the party to call for a vote on whether to replace the House speaker at any time, a far lower threshold than the current bar, according to NBC News.

“Any one, any where, any time,” is how Rep. Matt Gaetz, R-Fla., one of McCarthy’s staunchest opponents, described the new rule to NBC late Wednesday night.

Gaetz also said McCarthy had agreed to name members of the far-right House Freedom Caucus to positions on key committees, including the powerful House Rules Committee, which controls which bills make it to the floor for a vote and which bills languish indefinitely in committees.

This change satisfied another demand from the far right, that its bloc of members be given more power to push their preferred bills to the House floor.

Rep. Matt Gaetz (R-FL) passionately addresses other conservative Republican members of the House in the middle of the House Chamber after a fourth round of voting still failed to elect U.S. House Republican Leader Kevin McCarthy (R-CA) as new Speaker of the House on the second day of the 118th Congress at the U.S. Capitol in Washington, U.S., January 4, 2023. 

Evelyn Hockstein | Reuters

McCarthy’s allies did not deny that he had agreed to new concessions, NBC reported, but they refused to confirm specifics.

“The question is movement and positive movement,” Rep. Patrick McHenry, R-NC, told NBC News and other reporters camped outside the meeting rooms late Wednesday night. “We’ve had an afternoon turned evening of very positive discussions and there seems to be goodwill around Republicans and McCarthy that is shaping up in a very nice way.”

The limited progress came after McCarthy had failed in seven votes over two days to reach the minimum number needed to become speaker. Not only had McCarthy failed to hit 218, but over the course of two days, McCarthy’s support had actually shrunk from 203 to 200, after Donalds, Victoria Spartz, R-Ind., and another Republican dropped their support.

Democrats, meanwhile, have remained in lockstep throughout all the votes, casting their 212 ballots for Jeffries.

Incoming Democratic Leader Hakeem Jeffries (D-NY), incoming Democratic Whip Katherine Clark (D-MA) and incoming Democratic Caucus Chair Pete Aguilar (D-CA) hold a press conference on Capitol Hill in Washington, U.S., December 13, 2022. 

Elizabeth Frantz | Reuters

This is a developing story and will be updated throughout the day.

Delinquent student loans can reduce Social Security by $2,500 a year

A Social Security Administration office in San Francisco.

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If you are delinquent on federal student loans and collect Social Security benefits, your monthly checks could be reduced.

A pandemic pause has put all garnishments on hold for now.

But when collections are in effect, the reduction in annual Social Security benefits is about $2,500 on average, based on 2019 data, according to new research from the Center for Retirement Research at Boston College.

That typically amounts to 4% to 6% of household income, a significant amount that could pay off the average person’s credit card balance, the research found.

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The number of Social Security beneficiaries who find themselves in this situation is small, based on delinquency rates. Less than 5% of beneficiaries currently have student loan debt.

But those balances are expected to be “substantially” higher for future beneficiaries, who are also expected to have higher delinquency rates, according to the research.

“Among younger cohorts, the share of people holding student loans are much larger,” said Siyan Liu, research economist at the Center for Retirement Research.

“If that continues on into retirement, then a much larger proportion of them, if they have trouble making payments, could be facing benefit upsets,” she said.

Social Security benefits are typically subject to partial withholdings after prolonged federal student loan delinquencies.

The Social Security withholding amount for student loan debtors is typically either 15% of the total monthly benefit or the amount by which the benefit exceeds $750 per month — whichever is less.

“It has been a real issue for people who are on a fixed income and have no other support,” said Adam Minsky, a Boston-based lawyer specializing in student loan law.

“That 15% really can make the difference between being able to pay for rent or food or medication,” Minsky said.

Social Security benefit withholding typically happens after 425 days of delinquency has passed and a loan holder fails to restart repayment.

The money withheld is applied to the federal loan balances.

How much money is at stake

About 2.7 million consumers ages 62 and up owed more than $107.3 billion in federal loans as of September, according to the U.S. Department of Education.

The average annual Social Security benefit at risk due to student loan delinquency is expected to increase to $2,594 for future beneficiaries — those currently ages 35 to 61 — up from $2,299 for current beneficiaries ages 62 and up, based on 2019 data, according to the Center for Retirement Research.

However, the share of household income at risk is expected to decline to 4.4% for future beneficiaries, down from 6.1% for current beneficiaries.

How policy may influence debts

The plan would also have a dramatic impact on delinquency rates, as delinquent borrowers could have their entire balances forgiven.

While Black borrowers stand to see the largest decrease in delinquency rates, Hispanic borrowers would see the largest relative decrease, the research found.

Because Biden’s plan would reduce both debt and delinquency for future retirees, it would also shrink racial inequality, the Center for Retirement Research said.

Some Democratic lawmakers are also eyeing another way of providing relief.

Biden administrations stops taking applications for student loan debt forgiveness

In December, four House Democrats introduced a bill, the Student Loan Relief for Medicare and Social Security Recipients Act, that would eliminate student loan debt balances held for more than 20 years by Medicare and Social Security disability insurance beneficiaries.

It remains to be seen whether the proposal may gain traction on Capitol Hill.

“We should eliminate as much student debt as we can for everyone, but especially for those who have spent decades of their lives working to pay it off,” Rep. Adam Schiff, D-Calif., said in a statement. “This bill would ensure that instead of triaging their benefits, seniors and disabled individuals can focus more on their health, their families, and thriving in their best years.”

China’s new Covid surge is crippling the world’s most important factories and biggest ports

Workers test transformers at a workshop of Hebei Gaojing Electric Equipment Co LTD in an industrial park in Handan, North China’s Hebei province, Jan 3, 2023.

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The surge in Covid-19 cases in China is impacting the completion of manufacturing orders, according to CNBC Supply Chain Heat Map data.

Logistics managers are warning clients that because of the spike in infections, factories are unable to complete orders — even with U.S. manufacturing orders from China already down 40% due to an unrelenting demand collapse.

Orders for ocean bookings continue to be softer according to SONAR Data.

“With 1/2 or even 3/4 [of the] labor force being infected and not able to work, many China manufacturers can not operate properly but produce less than their optimal outputs,” Asia-based shipping firm HLS wrote in a note to clients. “The container pickup, loading, and drayage (trucking) are also affected as all businesses are facing the impacts of COVID. We expect a very soft volume after the Lunar New Year because a lot of factories have slowed production due to the increasing infection, and have to cancel or delay the bookings for the 2nd half of January and also early February.”

HLS also noted that “All indications that the Chinese cities are experiencing infection peaks is based on the surge of infected family members, friends, and colleagues, the long lines at the fever clinics at hospitals across the country.”

Three major ports across China are experiencing supply chain delivery problems because of Covid, according to the note.

For the Port of Shanghai, the world’s number one container port, the report warned that “Cancellations are increasing as many factories can’t operate properly due to a lot of workers getting infected with Covid.”

The same warning was also highlighted for the Port of Shenzhen, the fourth-largest container port in the world and the city that is home to Apple manufacturers. “The booking cancellation is increasing as many factories can’t operate properly due to a lot of workers getting invested with Covid,” the report said.

How dynamic Covid restrictions are impacting trade

Qingdao, the sixth-largest port in the world, is reported as having factories with only “1/4 labor force and can not ensure normal production.”

This data falls in direct contrast with reports from Chinese state media, which have looked to reassure the public that the outbreak is under control. The accuracy of data being released by the China CDC has come under increasing scrutiny around the world.

“Factory orders are down between 30%-40%, which you would think would help in the completion of the products,” said Alan Baer, CEO of OL USA. “This is not happening in some areas of the country which is troubling. Then you have to factor in the additional Covid surges after Chinese New Year. Q1 will be challenging.”

As a result of the Covid impact on trucking, MarineTraffic is seeing a slowdown in port productivity in Shanghai.

“While China has recently removed its zero-Covid restrictions, the congestion in Shanghai seems to have risen as MarineTraffic data shows that during the first week of 2023 that the average vessel TEU (twenty-foot equivalent unit) capacity waiting out of port limits was 321,989 TEUs, which is the highest amount recorded since April 2022,” said Alex Charvalias, Supply Chain In-Transit Visibility Lead at MarineTraffic. “Also, the congestion in Ningbo and Qingdao is rising as well, with 273,471 TEUs and 277,467 TEUs, respectively.

The record congestion was a result of the Covid lockdowns that started on March 28th. It took the city until mid-June to reopen after two failed attempts.

In prior outbreaks, the ports of Ningbo and Qingdao have been used as alternatives to avoid the Shanghai congestion. As a result of the logistics strategy, congestion can then follow. According to the HLS report, Ningbo was expected to have peak infections this week.

U.S. inventories could be impacted

Looking ahead at manufacturing orders and if there will be any increase in the near future, Baer told CNBC that “Transpacific to East Coast port volume will remain under pressure until companies reach a balance between existing inventory levels and their expected sales rate.” 

Data from WarehouseQuote shows inventories are still at all-time highs.

“We are still seeing an extremely tight market with limited [third-party logistic] and industrial capacity nationwide,” said Jordan Brunk, chief marketing officer for WarehouseQuote. “We are continuing to see consistent increases in storage rates all over the U.S., with the exception of the southeast, which would indicate capacity is still tight across nearly all regions.”

CNBC Supply Chain Heat Map data providers are artificial intelligence and predictive analytics company Everstream Analytics; global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; supply chain intelligence platform FreightWaves; supply chain platform Blume Global; third-party logistics provider Orient Star Group; global maritime analytics provider MarineTraffic; maritime visibility data company Project44; maritime transport data company MDS Transmodal UK; ocean and air freight rate benchmarking and market analytics platform Xeneta; leading provider of research and analysis Sea-Intelligence ApS; Crane Worldwide Logistics; DHL Global Forwarding; freight logistics provider Seko Logistics; Planet,  provider of global, daily satellite imagery and geospatial solutions, and ITS Logistics provides port and rail drayage services in 22 coastal ports and 30 rail ramps throughout North America.

Homeowners spent up to $6,000 average on repairs, maintenance in 2022

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Some expenses that go with homeownership can often be unpredictable — and costly.

Last year, homeowners spent an average of $6,000 on maintenance and repairs, according to a recent report from insurance firm Hippo. A separate study from home services website Angi that measured similar 2022 costs shows maintenance averaged $2,467 and home emergency spending — i.e., an unexpected repair — was $1,953 on average ($4,420 altogether).

Regardless of what you may fork over for those expenses, they have the potential to upend a household’s budget when unexpected. While some of the costs may be unpredictable, there are things you can do to mitigate their sting, experts say.

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Aim to set aside least 1% of your home’s value

For starters, the general advice is to annually set aside at least 1% to 3% of your home’s purchase price to cover a combination of home improvements, maintenance and repairs, said Angie Hicks, chief customer officer of Angi.

“That’s for all three buckets,” Hicks said. “For a $400,000 home, the [$4,420] in maintenance and emergency spending in our report is closer to 1%. You want to make sure you have that 1% covered.”

The median selling price for a home stood at $393,756 as of November, according to Redfin. (One percent of that amount is $3,937.)

Maintenance costs may reduce repair expenses

Housing markets face tough start in 2023

In the Hippo report, which was based on a survey of about 1,000 homeowners, 65% of respondents who had something go wrong in their house last year said they could have prevented it with proactive maintenance.

By way of example: It’s worth doing a visual inspection of your roof a couple times a year to make sure you don’t see any missing or curled shingles that warrant a repair before the problem worsens and you’re facing extensive water damage, Hicks said.

“You don’t want a leak,” Hicks said. “Water is the worst enemy of your house.”

While the specifics of a necessary roof repair determine the cost, the average is $1,000, according to thisoldhouse.com. That compares to an average $3,342 shelled out for water-damage repairs, according to Angi.

Monitor and maintain your home’s systems

It’s worth getting your main systems, such as heating and cooling, serviced on a regular basis, said Courtney Klosterman, home insights expert at Hippo.

Also, “get to know the critical systems in your home — major appliances, plumbing, electrical, etc. — so you can monitor them for wear and tear over time,” Klosterman said.

Tech jobs hit the hardest by layoffs last year: report

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The technology industry led job cuts in 2022, totaling more than 97,000 announced across the sector, according to a report released Thursday from outplacement services firm Challenger, Gray & Christmas. That’s up 649% from the nearly 13,000 tech jobs that were cut in 2021, the report said.

Overall last year, employers across industries announced plans to cut nearly 364,000 jobs, according to the report — a 13% increase from the year prior. Still, the figure represents a relatively low number of job cuts in a year. Challenger said it’s the second-lowest recorded total job cut announcements since it began tracking them in 1993, with the lowest occurring in 2021.

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The report comes as economists have warned of the potential for a recession this year, which has put both workers and employers on edge. On Wednesday, Amazon CEO Andy Jassy confirmed the company plans to cut more than 18,000 jobs, which is even higher than the company previously said it would eliminate. Salesforce also announced on Wednesday it would cut 10% of its staff, or about 7,000 workers.

“The overall economy is still creating jobs, though employers appear to be actively planning for a downturn,” Andrew Challenger, senior vice president of the outplacement firm said in a statement alongside the report. “Hiring has slowed as companies take a cautious approach entering 2023.”

Tech companies, which grew rapidly in the early part of the pandemic as services and communication moved almost entirely online, have announced the bulk of job cuts in the past year as people increasingly return to pre-pandemic habits.

The fintech industry has been hit especially hard as cryptocurrencies have faced a downturn and recent scandals have rocked the sector. The more than 10,000 fintech job cuts in 2022 represents a 1,670% increase from the 529 announced in 2021, Challenger said.

Cost cutting was cited as the top reason for the moves last year, and accounted for more than 82,000 of the announced job reductions, according to Challenger. Market or economic conditions were cited in connection to nearly 60,000 of the layoffs.

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WATCH: Tech layoffs and hiring freezes continue to mount. Here’s a wrap-up of some of the biggest names affected

Tech layoffs and hiring freezes continue to mount. Here's a wrap-up of some of the biggest names hit

Bed Bath & Beyond warns of potential bankruptcy

A Bed Bath & Beyond store is seen on June 29, 2022 in Miami, Florida.

Joe Raedle | Getty Images News | Getty Images

Bed Bath & Beyond warned Thursday it’s running out of cash and is considering bankruptcy.

The retailer, citing worse-than-expected sales, issued a “going concern” warning that in the upcoming months it likely will not have the cash to cover expenses, such as lease agreements or payments to suppliers. Bed Bath said it is exploring financial options, such as restructuring, seeking additional capital or selling assets, in addition to a potential bankruptcy.

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Shares of the company plummeted 23% in early trading after Bed Bath issued the updates in a pair of financial filings. The stock earlier hit a 52-week low.

Still, CEO Sue Gove said the retailer is focused on rebuilding the business and making sure its brands, Bed Bath & Beyond, Buybuy Baby and Harmon, “remain destinations of choice for customers well into the future.”

Among its challenges, Bed Bath said it is having trouble getting enough merchandise to fill its shelves and is drawing fewer customers to its stores and website.

The retailer also said it wasn’t able to refinance a portion of its debt, less than a month after notifying investors it planned to borrow more in order to pay off chunks of existing obligations.

Bed Bath’s debt load has been weighing on the company. The retailer has nearly $1.2 billion in unsecured notes, which have maturity dates spread across 2024, 2034 and 2044. In recent quarters, Bed Bath has warned it’s been quickly burning through cash.

Bed Bath’s notes have all been trading below par, a sign of financial distress. 

Stalled turnaround

Mounting losses

White House defends student loan forgiveness plan to the Supreme Court

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Supreme Court to hear two challenges

Biden administrations stops taking applications for student loan debt forgiveness

The Supreme Court has agreed to hear two of those legal challenges: One brought by six GOP-led states that argue that forgiveness will hurt the companies in their states that service federal student loans, and another involving two plaintiffs who say they’ve been harmed by the policy by the fact that they are partially or fully excluded from the loan forgiveness.

Higher education expert Mark Kantrowitz said the Biden administration made many strong arguments in its brief.

“The federal government does a very good job of demonstrating that the plaintiffs lack legal standing,” Kantrowitz said.

This is a breaking news story. Please check back for updates.

ADP jobs report December 2022:

Job market shows unexpected strength in ADP December payroll report

The jobs market closed out 2022 on a high note, with companies adding far more positions than expected in December, payroll processing firm ADP reported Thursday.

Private payrolls rose by 235,000 for the month, well ahead of the 153,000 Dow Jones estimate and the 127,000 initially reported for November.

While the goods-producing sector increased by a relatively meager 22,000, service providers added 213,000, led by leisure and hospitality, which added 123,000 positions. Professional and business services grew by 52,000, while education and health services added 42,000.

Stock market futures edged lower following the report as investors fear that strong jobs numbers could push the Federal Reserve to keep raising interest rates.

The big jobs surprise comes despite the Federal Reserve’s attempts to slow a sizzling jobs market that has helped push inflation to near its highest level in more than 40 years.

The central bank raised interest rates seven times in 2022, totaling 4.25 percentage points, and officials have identified labor market imbalances as a pivotal area they want to target. There are still about 1.7 job openings for every available worker, a condition that has led to a spike in wages that nevertheless has failed to keep pace with cost-of-living increases.

ADP reported that annual pay across all categories rose 7.3% from a year ago, led by a 10.1% increase in the pivotal leisure and hospitality industry.

“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” ADP’s chief economist, Nela Richardson, said. “Business segments that hired aggressively in the first half of 2022 have slowed hiring and in some cases cut jobs in the last month of the year.”

Trade, transportation and utilities saw a job loss of 24,000 on the month, while natural resources and mining declined 14,000 and financial activities dropped by 12,000. Other notable gainers by sector included professional and business services (52,000), education and health services (42,000) and construction (41,000).

Job gains were evenly distributed between small- and medium-sized businesses, which together added 386,000 workers. Companies with more than 500 employees reported a drop of 151,000.

The job gains cap off a year in which payroll growth averaged nearly 300,000 a month, according to the ADP data, which can differ substantially from the Labor Department’s official nonfarm payrolls count.

That growth has come even with an economy that saw negative growth in the first two quarters — a widely accepted definition of a recession — and aggressive tightening from the Fed. At their December meeting, central banker policymakers said they plan to continue raising rates and don’t anticipate any reductions at least through 2023, according to minutes released Wednesday.

The ADP report comes a day before the Labor Department’s count, which is expected to show growth of 200,000 in nonfarm jobs and an unemployment rate holding steady at 3.7%. Nonfarm payrolls rose by 263,000 in November, which was far greater than the ADP total.

Walgreens Boots Alliance (WBA) Q1 earnings 2023

Walgreens earnings beat estimates as early flu season helps drive sales

Walgreens Boots Alliance on Thursday reported fiscal first quarter earnings that beat Wall Street’s estimates after an early flu season boosted demand for cough and cold medicine.

The company said it also raised its full-year revenue outlook due in part to its U.S. health care segment’s just-sealed acquisition of Summit Health. For the most recent quarter, however, the segment’s revenue came in below expectations.

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Here’s how Walgreens did in its first fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.16, adjusted, vs. $1.14 expected
  • Revenue: $33.38 billion vs. $32.84 billion expected

Despite the strong sales, Walgreens swung to an unadjusted loss of $3.7 billion, or $4.31 per share, for the three-month period that ended Nov. 30, compared to a net income of $3.58 billion, or $4.13 per share, a year earlier.

The loss was driven by a $5.2 billion settlement Walgreens was ordered to pay for opioid-related litigation after a series of states alleged the company mishandled prescriptions and should’ve realized they were prescribing the ultra-addictive drug too often.

Thanks to an early flu season and a strong demand for over the counter cough and cold medicine, sales jumped to $33.38 billion, down slightly from $33.9 billion a year earlier. The company also saw a boost in beauty and personal care sales, which helped offset losses from a dip in demand for Covid vaccines and home-test kits, which drove profits in previous quarters.

For the last five quarters, Walgreens has beat Wall Street’s expectations as the ubiquitous drugstore chain continues to transform itself from a pharmacy-led retailer to a broader health-care company.

While the company has made significant investments to bring that vision to life, sales from their U.S. healthcare segment fell short of expectations at $989 million but still grew significantly from the prior-year period.

The company is in the process of acquiring CareCentrix, which coordinates home care for patients after they’re discharged from the hospital, and Shields Health Solutions, a specialty pharmacy company.

That’s on top of the $5.2 billion deal they already struck with primary-care provider VillageMD, which has opened 393 total clinics clinics adjacent to Walgreens stores.

Since the end of the last quarter, an additional 59 VillageMD clinics were opened and the program will continue to expand after the provider announced plans to acquire urgent care provider Summit Health-CityMD for about $8.9 billion. The deal closed Tuesday.

The acquisition led Walgreens to increase its full year sales guidance to $133.5 billion to $137.5 billion.

Following the news of the Summit Health acquisition in November, Walgreens raised its US Healthcare targets to $14.5 billion to $16 billion for fiscal year 2025, up from their previous target of $11 billion to $12 billion.

The company is also maintaining its full-year earnings per share guidance of $4.45 to $4.65, compared to estimates of $4.50.

The earnings release comes after Walgreens confirmed it would be among the pharmacy chains to offer abortion pill mifepristone after the FDA ruled it can be sold at drug stores.

“We intend to become a certified pharmacy under the program,” the company told CNBC late Wednesday.

“We are working through the registration, necessary training of our pharmacists, as well as evaluating our pharmacy network in terms of where we normally dispense products that have extra FDA requirements and will dispense these consistent with federal and state laws.”

Read the company’s earnings release here.

CNBC’s Bertha Coombs contributed to this report.