Morning Report: The services economy strengthened in November

Vital Statistics:

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S&P futures4,054-21.25
Oil (WTI)82.442.43
10 year government bond yield 3.56%
30 year fixed rate mortgage 6.37%

Stocks are lower as markets continue to digest Friday’s jobs report. The strong wage growth number was a subject of discussion over the weekend in the business press. Bonds and MBS are down.

The upcoming week should be relatively uneventful as we have little economic data and the Fed is in the quiet period ahead of next week’s FOMC meeting. We will get productivity and unit labor costs on Wednesday, but that is the second revision for the third quarter and probably too far in the past to matter much for monetary policy. We will get the University of Michigan Consumer Sentiment number on Friday, which will include inflationary expectations.

The services economy improved in November, according to the ISM Services Index. The Business Activity component increased by 9 points, which is bullish for the economy. Supply chain issues continue to abate. Prices continue to be firm, although the number of firms reporting increased prices did decrease slightly.

While the manufacturing economy seems to be in contraction, the services economy is getting better. I suspect that the US dollar’s strength is playing a part, and as the Fed wraps up its tightening regime the dollar will weaken.

Dr. Cowbell argued over the weekend that the Fed’s inflation target should be 3%, not the 2%. FWIW, in the 1980s and 1990s, inflation was much higher than the 2% target, and I think most people remember that as a pretty comfortable period economically.

16 Responses

    • why wouldn’t this be any different than forcing a baker to make a gay marriage cake? Religion is protected just like sexual preference is.

      Like

      • I think the restaurant will be able to argue that it’s over their status as a political lobbying group, not religion per se. I think they were there as a group event.

        That’s assuming that The Family Foundation of Virginia tries to sue in the first place.

        But they ought to post their policies on who can and can’t dine at their locations explicitly.

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    • Yeah I saw that and yes I’ve been there before along with their other restaurant, Brenner Pass.

      I found the handling of it to be unprofessional, especially the need to virtue signal on social media after cancelling the reservation.

      The restaurant made a post about this when it happened:

      Here’s the text if you don’t want to track it down on Facebook yourselves:

      “To whom it may concern,
      Metzger Bar and Butchery has always prided itself on being an inclusive environment for people to dine in. In eight years of service we have very rarely refused service to anyone who wished to dine with us. Recently we refused service to a group that had booked an event with us after the owners of Metzger found out it was a group of donors to a political organization that seeks to deprive women and LGBTQ+ persons of their basic human rights in Virginia. We have always refused service to anyone for making our staff uncomfortable or unsafe and this was the driving force behind our decision. Many of our staff are women and/or members of the LGBTQ+ community. All of our staff are people with rights who deserve dignity and a safe work environment. We respect our staff’s established rights as humans and strive to create a work environment where they can do their jobs with dignity, comfort and safety.

      We hope you will understand our decision as we understand it is your choice to dine with us or not.

      Nathan, Brad and Brittanny
      Owners, Metzger Bar and Butchery, Brenner Pass, and Black Lodge”

      847 likes.

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      • From the restaurant:

        We have always refused service to anyone for making our staff uncomfortable or unsafe, and this was the driving force behind our decision.

        With regard to “uncomfortable”, this is almost certainly an out and out lie. People are “uncomfortable” over all manner of things, and I rate the chance that the restaurant has refused service to anyone and everyone who might have, in one way or another, made a person on staff “uncomfortable” to be approximately 0%, especially when the “comfort” of the employee had nothing to do with the behavior of the customer inside the restaurant. If a member of their staff had been “uncomfortable” serving a customer of, say, certain races, we all know that it would be the employee, not the customer, who would be dismissed from the restaurant. The owners/management are liars.

        With regard to “unsafe”, this is just the typical progressive, mealy-mouthed tactic of conflating disagreement with violence. But it is worth noting that the restaurant doesn’t rely on the usual, objectively indeterminable notion of an employee “feeling” unsafe. It insinuates that the employee’s safety would have in fact been placed in jeopardy by having to service the customers in question. In fact they used various forms of the word “safety” three separate times, each time suggesting that to serve these customers was somehow objectively dangerous. Surely that is a defamatory claim over which the denied customers can, and I think ought to, sue.

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        • I don’t think they have any grounds to sue as no one was mentioned individually by name and the threshold for defaming a public political advocacy group like The Family Foundation of Virginia is very high.

          “each time suggesting that to serve these customers was somehow objectively dangerous”

          If it comes to a trial, the servers will just go on the stand and state that they personally felt threatened based on the public statements of the group. It’s not going to be decided on an objective standard, but rather a subjective one and how credible they would be as witnesses along with the jury’s own biases.

          I don’t think it was a good idea to refuse service, but it was within the restaurant’s rights and isn’t defamation. That’s just as much of a stretch as saying they were “unsafe” in the first place. I’m going to stick with my original characterization of “unprofessional”.

          This is the restaurant version of the editor of the New York Times opinion page getting fired for running the Op-Ed by Tom Cotton because it made the staff feel “unsafe”. Same thing when management faced a staff revolt.

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        • jnc:

          If it comes to a trial, the servers will just go on the stand and state that they personally felt threatened based on the public statements of the group.

          Sure, but that was my point…the statement did not say they were refused service because employees “felt” unsafe. The statement said (or rather necessarily implied) that they were refused service because they made the employees unsafe. That is different in that it is a claim not about the state of the employees, but rather about the nature of the customers. And that claim is objectively false. Or at least not objectively defensible, unless management knows something about the customers that we don’t know.

          I don’t think it was a good idea to refuse service, but it was within the restaurant’s rights and isn’t defamation.

          It isn’t the refusal of service that I think is defamatory. It was the public claim that the mere presence of these people as customers represented some kind of objective threat to the “safety” of employees. We all know that is not just false but almost certainly a falsehood known by the management that made the claim to be so, and it seems to me it is therefore a deliberate defamation of the members of the organization.

          You are probably correct that the courts wouldn’t hear such a case. But they should.

          This is the restaurant version of the editor of the New York Times opinion page getting fired for running the Op-Ed by Tom Cotton because it made the staff feel “unsafe”. Same thing when management faced a staff revolt.

          I don’t think so. Again, there was nothing in the statement about employees “feeling” unsafe. It said (or logically implied) that if the reservation was honored, the employees would be unsafe. That is not a claim about the state of mind of the employees, but rather an accusation against the customers.

          Like

  1. One can hope that Jacobin is right this time:

    “The Supreme Court Isn’t Coming for Your Condoms — It’s Coming for Economic Regulation

    By Harry Blain”

    https://jacobin.com/2022/12/supreme-court-conservative-legal-movement-abortion-economic-liberties-labor-law

    Like

    • This “money shot” paragraph makes me very aroused.

      Like “liberty of contract,” the “nondelegation” doctrine finds no explicit support in the text of the Constitution, but its potential impact on government is far-reaching. Virtually the entire machinery of the federal government is a product of “delegation”: administrative agencies that Congress has invested with deliberately vague legal mandates to, for instance, “set fair and equitable prices” or “just and reasonable rates,” and “issue whatever air quality standards are requisite to protect the public health.” A full-scale attack on delegation is an attack on government itself.

      I’m all for expanding the House if we can gut the Federal Agencies of rules making ability and return it to where it belongs… which is mostly the States when I think about it.

      Like

  2. It’s a fair point from criticism from the left.

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    • It’s amusing how often the MSM write pieces about how they need to stop giving Trump a platform and then turn right around and do that.

      His Truth Social account doesn’t have nearly the reach his Twitter account did and without the MSM reporting on and in the process reposting his Truth Social posts, most people wouldn’t even know about them.

      I’ve concluded that the MSM doesn’t really want to marginalize Trump at this point. They want to continue to leverage him for ratings (“ZOMG! Did you see the latest crazy thing Trump posted?!”) and simultaneously play the “do you condemn the latest crazy thing Trump posted” game with the rest of the Republicans.

      At which point it becomes an act of defiance for the Republicans to not condemn him vs bending the knee to the MSM and the Democrats. Which puts them right back on his side even if they would otherwise condemn what he said if it wasn’t such an issue for the MSM.

      Which is exactly how Trump wants it and how he maintains his relevance and potentially gets reelected again.

      Like

      • Donald Trump is literally the only thing that is keeping the MSM afloat and both know it. It’s an absolute blast to watch the MSM tsk-tsk Trump as if he’s a stain on their moral conscience. I’ve enjoyed the hell out of it and it shows zero sign of slacking off.

        Like

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