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Presented by American Bankers Association: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Kate Davidson and Sam Sutton | | | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. PROGRAMMING NOTE: Morning Money will not publish on Monday in observance of the federal holiday. We will return on Tuesday. One of the biggest puzzles of this economy is why the labor market has proved so resilient to rising interest rates even as economic output has clearly slowed. How long will the gap persist? Maybe not much longer, according to Morgan Stanley economists. They and others have attributed the divergence between economic growth and payroll growth in part to employers “backfilling” open positions after struggling to find workers in the months and years since the pandemic first hit. Now, as economic growth has softened and the outlook worsened, “the boost to jobs growth from backfilling may end sooner rather than later,” wrote Ellen Zentner, Julian Richers, Sarah Wolfe and Lenoy Dujon. One clue: Average weekly hours. When employers had to rely on their existing workforce to meet demand, average weekly hours shot up, peaking at 39 in January 2021. But they’ve since begun to normalize, the Morgan Stanley team points out, from 34.8 hours a year ago to 34.5 in August.
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A now hiring sign is posted on the side of a road in Willow Grove, Pa., in June. | Matt Rourke/AP | The upshot: “Given the slowing in labor demand we foresee coming from higher interest rates should continue, removing the pillar of support that labor backfilling has provided so far this year could lead to a faster collapse in jobs growth than normal,” they wrote. How fast? We’ll know more today when the Labor Department releases its September jobs report. The Morgan Stanley team expects that payroll growth slowed to 250,000 last month from 315,000 in August, a bit below consensus. Beyond that, they predict average monthly job growth could slow from 444,000 in the first half of the year, to 264,000 in the second half. If payrolls come in where they expect for August, that implies average job growth of 184,000 a month through the rest of the year. That would be a dramatic step down, but it’s still above average monthly job growth in the second half of 2019, when the jobless rate was near 3.6 percent. Just another reminder of how strong the labor market still is. IT’S FRIDAY — And the Willie Nelson tunes I play at dinner are going to hit a little different tonight. Got tips, story ideas and feedback? You know what to do: kdavidson@politico.com and ssutton@politico.com.
| | A message from American Bankers Association: The ABA Foundation’s annual Community Commitment Awards recognize banks for making a difference in the communities they serve. Congratulations to the 2022 bank winners as well as Lola Pol, recipient of the George Bailey Distinguished Service Award that honors a non-CEO banker who has demonstrated extraordinary community commitment. | | | | | | Jobs report released at 8:30 a.m. … New York Fed President John Williams speaks at 10 a.m. WHEN THE SHITPOST HITS THE SYNDICATE — WSJ’s Alexander Saeedy, Laura Cooper and Ben Dummett: “Banks that agreed to fund Elon Musk’s takeover of Twitter Inc. are facing the possibility of big losses now that the billionaire has shifted course and indicated a willingness to follow through with the deal, in the latest sign of trouble for debt markets that are crucial for funding takeovers.” — Musk’s going to to get a bit more time to figure it out, per POLITICO’s Rebecca Kern: “Elon Musk and Twitter now have until the end of the month to finalize the $44 billion deal for the billionaire to purchase the platform, a judge ruled on Thursday.” DO NOT CALL IT LEGALIZATION — POLITICO’s Eugene Daniels and Natalie Fertig: “President Joe Biden on Thursday granted a pardon to all people convicted of simple marijuana possession under federal law, in what amounts to the most extensive White House action taken to date on U.S. drug policy.” ORSZAG: WE SHOULD OIL CAP — Peter R. Orszag and Theodore Bunzel in an op-ed for The Washington Post: “The Biden administration’s proposed price cap on Russian oil, which the European Union agreed to on Wednesday, might seem too clever by half. But it’s worth trying for a simple reason: It’s better than any alternative.” IRAN — POLITICO’s Kelly Garrity: “The Treasury Department on Thursday announced new sanctions against seven senior leaders in Iran in response to the government’s violent crackdown on large-scale protests and its internet restrictions across the country.” BLOCK BUTTON — Our Gavin Bade: “The Biden administration will release two new federal rules on Friday aimed at stopping the transfer of advanced technology to the Chinese government and firms there, according to four industry and Capitol Hill sources with knowledge of the action.” PROGRESSIVES TAKE AIM AT BUYBACKS— Rep. Jesús “Chuy” García (D-Ill.) — along with fellow Progressive Caucus members Reps. Ro Khanna (D-Calif.), Peter DeFazio (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.), Jan Schakowsky (D-Ill.), Ilhan Omar(D-Minn.), Bonnie Watson Coleman (D-N.J.) and Del. Eleanor Holmes Norton (D-D.C.) — is introducing a bill that would ban stock buybacks and require public companies to reserve one-third of their board seats for representatives chosen by employees. “Companies buy back their stock using funds that could be used to increase worker pay or invest in resources needed to provide high-quality goods and services, leading to higher levels of inequality and business practices that can harm everyday people,” García said in a statement.
| | | | JOIN NEXT WEDNESDAY FOR A TALK ON U.S.-CHINA AND XI JINPING’S NEW ERA: President Xi Jinping will consolidate control of the ruling Chinese Communist Party later this month by engineering a third term as China’s paramount leader, solidifying his rule until at least 2027. Join POLITICO Live for a virtual conversation hosted by Phelim Kine, author of POLITICO’s China Watcher newsletter, to unpack what it means for U.S.-China relations. REGISTER HERE. | | | | | | | | FORECAST FLUBS — Bloomberg’s Reade Pickert and Craig Torres: “Fed officials have failed to correctly predict how high joblessness would increase during, or in the wake of, almost every recession over the past 50 years.” MARKET BUNGEE — WSJ’S Caitlin McCabe and Justin Baer: “At the start of the week, weakness in the labor market and manufacturing sector made some investors think that the Fed could pump the brakes on its aggressive rate increases. But a series of strong data releases Wednesday, combined with hawkish comments by Fed officials, persuaded many that the central bank’s current path will likely be undeterred.” WELL, MOSTLY HAWKISH — NYT’s Jeanna Smialek: “Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said she could potentially support a half-point move at the central bank’s meeting next month … Ms. Daly is less aggressive than the majority of her colleagues.”
| | | | A message from American Bankers Association:   | | | | | | BLINKING RED — NYT’s Alan Rappeport: “The head of [the] International Monetary Fund warned on Thursday that recession risks across the globe are rising as a toxic mix of inflation, higher borrowing costs and lingering supply chain disruptions continue to batter the global economy.” STEP UP — Our Victoria Guida: “Treasury Secretary Janet Yellen on Thursday acknowledged that higher interest rates in the U.S. and Europe are putting greater stress on developing countries and said major economies must stand ready to provide debt relief to those nations.” OH YEAH? NAME ONE FILM BY GODARD — NYT’s Liz Alderman: “The French government on Thursday unveiled its biggest energy conservation measures since the 1970s oil crisis … President Emmanuel Macron has started appearing on French television and Twitter in a black turtleneck instead of a shirt and tie.”
| | | STAY CLASSY — Bloomberg’s Emily Nicolle and Jeremy Hill: “Top executives at Celsius Network LLC withdrew at least $30 million of cryptocurrencies in the month before suspending customer withdrawals from the platform.” THE BOURNE LEGACY — AdAge’s Asa Hiken: “In the months that followed [the crypto market crash], Crypto.com quietly downsized many of the partnership deals intended to garner mainstream attention for the brand, and in some cases the firm has attempted to pull out from these deals altogether … The exchange also saw a reduction in its headcount of previously unreported scale, with 30% to 40% of its pre-summer workforce.”
| | | | SUBSCRIBE TO POWER SWITCH: The energy landscape is profoundly transforming. Power Switch is a daily newsletter that unlocks the most important stories driving the energy sector and the political forces shaping critical decisions about your energy future, from production to storage, distribution to consumption. Don’t miss out on Power Switch, your guide to the politics of energy transformation in America and around the world. SUBSCRIBE TODAY. | | | | | | | | As President Xi Jinping marches toward his second decade in power, predictions abound that he’ll ease policies that have sealed China’s borders, battered stocks and blown up the dollar-bond market. There’s little sign any such shift is in the works. — Bloomberg’s Sofia Horta e Costa and Rebecca Choong Wilkins Amazon.com plans to hire 150,000 people in its regular annual hiring spree to meet demand during the holiday shopping season. — WSJ’s Sebastian Herrera Republican Sen. Chuck Grassley on Thursday called for punishing OPEC for its production cut by passing legislation that would hold foreign oil producers accountable for colluding to fix prices. — CNN’s Matt Egan
| | A message from American Bankers Association: America’s banks do more than serve their customers—they serve their communities.
For more than 10 years, the ABA Foundation’s Community Commitment Awards have recognized individual banks for community initiatives that go above and beyond.
Award categories cover affordable housing, community & economic development, economic inclusion, financial education, protecting older Americans, supporting military families and volunteerism. The Foundation also recognizes one extraordinary non-CEO bank employee with the George Bailey Distinguished Service Award.
Congratulations to our 2022 winners —Bremer Bank (MN), Republic Bank & Trust (KY), Wintrust Bank (IL), First Commonwealth Bank (PA), Simmons Bank (AR), F&M Bank (TN) and Pathward (SD)—as well as George Bailey winner Lola Pol of Capital Bank in Maryland.
Lola is dedicated to making the dream of homeownership a reality for low- to moderate-income borrowers. With her comprehensive, hands-on approach, she has helped thousands of D.C.-area residents purchase a home.
See how Lola and all the CCA winners are making a difference. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
