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WHAT A RECESSION MEANS FOR WOMEN — The pandemic recession hit women hard, battering industries in which they make up a disproportionate share of workers.
While many women have returned to the labor force and seen bigger wage gains in recent months, they’ve grappled with soaring inflation and now face the prospect of another slowdown and possible recession, which could cut their recovery short.
Your MM host led a Women Rule discussion yesterday with a stellar panel of economic and business experts about the progress women have made since the pandemic, the outlook for the coming year and policies to mitigate the effects of a slowdown. Here are some key takeaways:
Supporting women business owners
“During the pandemic there were a number of women who left the workforce to start their own businesses — some out of necessity, some for the need of flexibility, being able to do remote work from home,” said Tene Dolphin, executive director of the National Women’s Business Council. “What we did see is huge growth in women-owned businesses and even minority women-owned businesses.”
“I think what’s going to be important are the resources that support that continued growth,” she said. “A lot of them are solo entrepreneurs … So the need for them to grow and to increase their workforce is going to be critical.”
“After the heavy job losses for women during the pandemic, particularly around hospitality and leisure industries, and of course all the impacts for working mothers, we’re seeing the same bounceback … but that’s been particularly strong among college-educated women,” said Kristen Silverberg, president and COO of the Business Roundtable.
“We still think we have a lot of work to do in terms of helping women without college degrees get back to the workforce,” she added. “So that’s where BRT is spending a lot of our efforts to help make sure we’re opening up jobs to those women as well.”
A short or shallow recession
“We are actually anticipating a brief yet shallow recession in the U.S. starting in the fourth quarter of this year and extending into the first quarter of next year,” said Dana Peterson, chief economist at The Conference Board. “So slightly negative numbers in terms of quarterly annualized GDP growth. But then that’s going to be anchored by periods of stagflation, where you still have very weak growth and very elevated inflation.
“With inflation, we think that the target that the Fed is looking at, which is 2 percent, is probably not going to be reached until 2024,” she added.
“We conduct a quarterly survey of our members,” Silverberg said. “This last quarter we saw one of the sharpest declines … in the history of the survey. But interestingly the index still was above the threshold we normally look at to indicate a recession. So it was a little bit ambivalent. Much more pessimistic than it was the quarter before, but still unclear whether we’re solidly heading into recession territory.”
“While the biggest part of the job around inflation falls to the Fed, there’s a lot that the administration and Congress ought to be thinking about,” Silverberg added, including encouraging more domestic energy production, investing in domestic production of chips to help with semiconductor shortages, and easing the China tariffs. “So obviously risky territory, but we think there’s still room for some sound economic policy to try to keep our economy on solid footing.”
Even without recession, less educated women are vulnerable
“It’s almost always the case that more educated workers survive recessions better,” Peterson said.
“Amid the labor shortages that we’ve been seeing, many companies — and even our own surveys of CEOs and C-suite members — have said, ‘Well, we’re willing to lower our requirements and lessen the amount of experience and education that you need,’” she said. “But if businesses start saying, ‘Well, we don’t need all of these workers, then it’s certainly going to be very difficult for workers who don’t have the education or the training, to get the remaining jobs that are available.”
Fed Chair Jerome Powell participates in a discussion with global central bankers at the European Central Bank Forum in Sintra, Portugal, at 9 a.m. … Final first-quarter GDP data released at 8:30 a.m. … House Financial Services hearing on long-term impacts of the hot housing market at 12 p.m.
CHAMBER TARGETS CFPB’S CHOPRA — Our Katy O’Donnell: “The Chamber of Commerce is going after Consumer Financial Protection Bureau Director Rohit Chopra in a public campaign, accusing him of attempting to ‘radically reshape’ American finance.
“The trade group, which represents businesses throughout the country, announced Tuesday it was launching an advertising drive targeting Chopra — an ally of Sen. Elizabeth Warren — for his efforts to rein in what he views as abuses in the financial industry. … The extraordinary move by the Chamber comes after Chopra has repeatedly incensed the industry since taking over as the head of the CFPB in October.”
MM’s two cents: It’s hard to see how this move does anything to actually change Chopra’s agenda or approach.
Isaac Boltansky, policy analyst at BTIG, said the campaign is “akin to a stellar mid-year review for someone like Rohit.”
“I don’t know who advised an attack of this nature, but they clearly haven’t followed Director Chopra’s career,” he said. “These attack ads are the type of things that Rohit will use to fuel himself and to feed to the Bureau’s true believers. Just when some of the CFPB’s issues seemed too nuanced for the front page, the Chamber and others changed the terms of the battle and gave Director Chopra new life to air his grievances.”
An industry insider was more blunt, telling MM: “Desperate groups do desperate things to try to stay relevant. This campaign only stokes Chopra’s flames and does little to effectively influence policy.”
ALSO FROM THE CHAMBER: NEW SMALL BUSINESS INDEX — Small businesses are feeling pretty optimistic about their own circumstances, despite anxiety about inflation and uncertainty about the macroeconomic outlook. That’s the takeaway from MetLife and the U.S. Chamber’s latest Small Business Index, which actually improved slightly from the first quarter.
The index, released this morning, found:
- Nearly half of business owners said they are very concerned about the impact of inflation on their businesses
- But two in three small business owners say their business is in good health, a five-point increase from last quarter and on par with the first quarter of 2020, before the pandemic
- Two-thirds say they expect revenue to increase over the next year, and 43% plan to hire more staff, the highest number recorded in the past two years
U.S. TIGHTENS SANCTIONS — Our Doug Palmer: “The U.S. Treasury Department on Tuesday announced new sanctions targeting Russia’s defense industrial base and said the United States — along with three G-7 members: the U.K., Canada and Japan — will ban imports of Russian gold. The sanctions target 70 entities, including State Corporation Rostec, which the Treasury described as the the cornerstone of Russia’s defense, industrial, technology and manufacturing sectors, as well as 29 Russian individuals.”
EU OFFICIALS EYE HUNGARY WORKAROUND — Our Brian Faler: “A top German tax official said Tuesday that it’s possible European countries could adopt a proposed minimum tax on big corporations despite objections from Hungary. Though the European Union normally needs unanimous support to adopt such a proposal, Martin Kreienbaum, director general of international taxation at Germany’s finance ministry, said officials are now eyeing a workaround.”
SEC FINES EY — Katy again: “The SEC on Tuesday fined accounting giant Ernst & Young $100 million over what the agency said was cheating by its auditors on Certified Public Accountant license exams. The SEC also accused EY of withholding evidence of the misconduct from the SEC during its investigation of the firm.”
FED’S WILLIAMS SEES 50 OR 75 BASIS POINT HIKE DEBATED IN JULY — Bloomberg’s Jonelle Marte and Catarina Saraiva: “Federal Reserve officials played down the risk that the US economy will tip into recession, even as they raise interest rates with another 75 basis-point hike on the table next month. New York Fed President John Williams and San Francisco’s Mary Daly both acknowledged on Tuesday they had to cool the hottest inflation in 40 years, but insisted that a soft landing was still possible.
“‘I see us tapping on the brakes to slow to a more sustainable pace, rather than slamming on the brakes, going over the handlebars and having the proverbial recession,’ Daly told an online event hosted by LinkedIn.
ECONOMISTS SAY CHANCE OF RECESSION IS ‘UNCOMFORTABLY HIGH’ — NYT’s Isabella Simonetti and Jason Karaian: “High inflation, rising interest rates, shaky economic activity and volatile markets have raised the probability that the U.S. economy will slip into a recession, according to economists.
“But the range of their forecasts is wide, from a relatively remote chance of a recession — commonly defined as a shrinking of the economy for two consecutive quarters — to more confident predictions that a downturn is imminent.”
WALL STREET’S GREAT INFLATION TRADE IS PEAKING ACROSS ASSETS — Bloomberg’s Denitsa Tsekova: “A tentative victory for a Federal Reserve under constant attack: Inflation bets on Wall Street are cooling from historic highs at long last. Bond-derived expectations for price growth over the next decade are falling, the value stock boom is reversing and the industrial commodity supercycle is easing. These are tell-tale signals that the great inflation trade of 2022 is likely peaking — a regime shift that threatens to disrupt the cross-asset trading game while challenging naysayers including Bill Ackman.”
LESS TAKEOUT, MORE PRODUCE SWAPPING — NYT’s Tara Siegel Bernard: “To cope [with inflation], people around the country are changing their consumption habits. Some are starting budgets and shopping at discount stores. Others are skipping red meat and fish, walking dogs for extra cash, canceling subscription meal kits or, like Harold Topper of Stamford, Conn., resorting to psychological tricks to blunt the pain.”
Michael Held, the former general counsel at the New York Fed, is joining WilmerHale as a partner in its New York office, starting July 18. Held, who joined the New York Fed in 1998 as a staff attorney, played key roles in the bank’s responses to the 2008 financial crisis and the market turmoil that resulted from the pandemic, and also helped shepherd the industry’s LIBOR transition. He was named general counsel and executive vice president in 2016.
U.S. consumer confidence slipped to its lowest level in 16 months as persistent inflation and rising interest rates have Americans as pessimistic as they’ve been about the future in almost a decade. — AP’s Matt Ott
Credit Suisse Group AG plans to cut technology expenditure to spend more targeting ultrarich customers, in its latest effort to stabilize an operation hobbled by scandals and missteps. — WSJ’s Margot Patrick
A nearly $17 billion JPMorgan fund is expected to reset its options positions on Thursday, potentially adding to equity volatility at the end of a dismal first half for stocks. — Reuters’ Saqib Iqbal Ahmed
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