Employees are working fewer hours than they have in the past few years, research from the Bureau of Labor Statistics shows. On average, employees worked 34.3 hours per week in May, down from a high of 35 hours in 2021, and even below the yearly average for 2019, the Wall Street Journal reports.
And, in an odd twist, a growing number of employers are just fine with this trend. If that’s not you–if you’re the kind of boss who expects your people to “give 110 percent” and work however many hours it takes to get the job done, you may soon start losing valuable team members to companies that place more value work-life balance.
The current employment trends are something of a mystery, economists say. In past years, a reduction in average hours worked meant employers didnt have enough work to go around. It was usually the first sign of a coming recession, because without enough work, employers would lay people off, spending would decrease, and the economy would spiral downward.
It looks like that’s not what’s happening this time, though. Instead of laying people off, employers are hiring more of them. In April, layoffs were at a lower level than in 2019, the last boom year before the pandemic. And total number of people on payrolls is up almost 1.6 million for 2023 so far.What the heck is going on here? There are three possible explanations…..
A four-day workweek is an arrangement where a workplace or place of education has its employees or students work or attend school, college or university over the course of four days per week rather than the more customary five.This arrangement can be a part of flexible working hours, and is sometimes used to cut costs.
The four-day week movement has grown considerably in recent years, with increasing numbers of businesses and organizations around the world trialing and moving permanently to a four-day working week of around 32 hours, with no less pay for workers.
Most of these businesses and organizations have found that a four-day week is a win-win for employees and employers, as trials have indicated that it leads to a better work-life balance, lower stress-levels, and increased productivity. An overwhelming majority of studies report that a four-day week leads to increased productivity and decreased stress.
The five-day workweek is a cultural norm; the result of early 1900s union advocacy to reduce the six-day workweek, which led to the invention of the weekend. In the early 20th century, when the average work week in developed nations was reduced from around 60 to 40 hours, it was expected that further decreases would occur over time.
In 1930, economist John Maynard Keynes estimated that technological change and productivity improvements would make a 15-hour work week possible within a couple of generations. Other notable people throughout history to predict continuing reductions in working hours include United States (US) Founding Father Benjamin Franklin, Karl Marx, British philosopher John Stuart Mill, and playwright George Bernard Shaw. In 1956, then US Vice President Richard Nixon promised Americans they would only have to work four days “in the not too distant future”.
Most advocates for a four-day working week argue for a fixed work schedule, resulting in shorter weeks (e.g. four 8-hour workdays for a total of 32 hours). This follows the 100-80-100 model: 100% pay for 80% of the time, in exchange for a commitment to maintain at least 100% productivity. However, some companies have introduced a four-day week based on a compressed work schedule: in the so-called “4/10 work week,” the widely used 40 weekly work hours are distributed across four days instead of five, resulting in 10 hour-long workdays (hence “four-ten”).
The resulting schedule may look different depending on the way the four-day week is implemented: in some variants Friday becomes the permanent non-working day, giving employees three consecutive days off over the weekend; some workplaces split the day off among the staff, with half taking Monday off and the other half taking Friday off; sometimes the day off is added in the middle of the week such as a Wednesday, allowing for a mid-week break; and, in some cases the day off changes from week to week, depending on the company’s current goals and workload.
Although it’s not an actual implementation of the four-day week, some companies encourage their employees to spend a portion of the paid time on work-related experiments or personal projects. Google’s “80/20 formula”—referring to the percentage of time spent on core and side projects, respectively—is an example of such policy….
New large language models will transform many jobs. Whether they will lead to widespread prosperity or not is up to us.Whether it’s based on hallucinatory beliefs or not, an artificial-intelligence gold rush has started over the last several months to mine the anticipated business opportunities from generative AI models like ChatGPT.
App developers, venture-backed startups, and some of the world’s largest corporations are all scrambling to make sense of the sensational text-generating bot released by OpenAI last November. You can practically hear the shrieks from corner offices around the world: “What is our ChatGPT play? How do we make money off this?”
But while companies and executives see a clear chance to cash in, the likely impact of the technology on workers and the economy on the whole is far less obvious. Despite their limitations—chief among of them their propensity for making stuff up—ChatGPT and other recently released generative AI models hold the promise of automating all sorts of tasks that were previously thought to be solely in the realm of human creativity and reasoning, from writing to creating graphics to summarizing and analyzing data.
That has left economists unsure how jobs and overall productivity might be affected. For all the amazing advances in AI and other digital tools over the last decade, their record in improving prosperity and spurring widespread economic growth is discouraging. Although a few investors and entrepreneurs have become very rich, most people haven’t benefited. Some have even been automated out of their jobs.
Productivity growth, which is how countries become richer and more prosperous, has been dismal since around 2005 in the US and in most advanced economies (the UK is a particular basket case). The fact that the economic pie is not growing much has led to stagnant wages for many people.What productivity growth there has been in that time is largely confined to a few sectors, such as information services, and in the US to a few cities—think San Jose, San Francisco, Seattle, and Boston.
Will ChatGPT make the already troubling income and wealth inequality in the US and many other countries even worse? Or could it help? Could it in fact provide a much-needed boost to productivity?
ChatGPT, with its human-like writing abilities, and OpenAI’s other recent release DALL-E 2, which generates images on demand, use large language models trained on huge amounts of data. The same is true of rivals such as Claude from Anthropic and Bard from Google. These so-called foundational models, such as GPT-3.5 from OpenAI, which ChatGPT is based on, or Google’s competing language model LaMDA, which powers Bard, have evolved rapidly in recent years.
They keep getting more powerful: they’re trained on ever more data, and the number of parameters—the variables in the models that get tweaked—is rising dramatically. Earlier this month, OpenAI released its newest version, GPT-4. While OpenAI won’t say exactly how much bigger it is, one can guess; GPT-3, with some 175 billion parameters, was about 100 times larger than GPT-2.
But it was the release of ChatGPT late last year that changed everything for many users. It’s incredibly easy to use and compelling in its ability to rapidly create human-like text, including recipes, workout plans, and—perhaps most surprising—computer code.For many non-experts, including a growing number of entrepreneurs and business potential
people, the user-friendly chat model—less abstract and more practical than the impressive but often esoteric advances that been brewing in academia and a handful of high-tech companies over the last few years—is clear evidence that the AI revolution has real potential.
Venture capitalists and other investors are pouring billions into companies based on generative AI, and the list of apps and services driven by large language models is growing longer every day. Will ChatGPT make the already troubling income and wealth inequality in the US and many other countries even worse? Or could it help?
Among the big players, Microsoft has invested a reported $10 billion in OpenAI and its ChatGPT, hoping the technology will bring new life to its long-struggling Bing search engine and fresh capabilities to its Office products. In early March, Salesforce said it will introduce a ChatGPT app in its popular Slack product; at the same time, it announced a $250 million fund to invest in generative AI startups. The list goes on, from Coca-Cola to GM. Everyone has a ChatGPT play…..Continue reading…
Small retailers shop for dry fruits in a wholesale market, in New Delhi, Oct. 10, 2022. A record drop in the rupee -- on top of higher raw material and shipping costs - has made the nuts much costlier for Indian consumers. Manish Swarup—AP
The cost of living in Cairo has soared so much that security guard Mustafa Gamal had to send his wife and year-old daughter to live with his parents in a village 70 miles south of the Egyptian capital to save money. Gamal, 28, stayed behind, working two jobs, sharing an apartment with other young people and eliminating meat from his diet. “The prices of everything have been doubled,” he said. “There was no alternative.”
Around the world, people are sharing Gamal’s pain and frustration. An auto parts dealer in Nairobi, a seller of baby clothes in Istanbul and a wine importer in Manchester, England, have the same complaint: A surging U.S. dollar makes their local currencies weaker, contributing to skyrocketing prices for everyday goods and services. This is compounding financial distress at a time when families are already facing food and energy crunches tied to Russia’s invasion of Ukraine.
“A strong dollar makes a bad situation worse in the rest of the world,’’ says Eswar Prasad, a professor of trade policy at Cornell University. Many economists worry that the sharp rise of the dollar is increasing the likelihood of a global recession sometime next year.
The dollar is up 18% this year and last month hit a 20-year high, according to the benchmark ICE U.S. Dollar Index, which measures the dollar against a basket of key currencies.
The reasons for the dollar’s rise are no mystery. To combat soaring U.S. inflation, the Federal Reserve has raised its benchmark short-term interest rate five times this year and is signaling more hikes are likely. That has led to higher rates on a wide range of U.S. government and corporate bonds, luring investors and driving up the U.S. currency.
Most other currencies are much weaker by comparison, especially in poor countries. The Indian rupee has dropped nearly 10% this year against the dollar, the Egyptian pound 20%, the Turkish lira an astounding 28%.
Celal Kaleli, 60, sells infant clothing and diaper bags in Istanbul. Because he needs more lira to buy imported zippers and liners priced in dollars, he has to raise prices for the Turkish customers who struggle to pay him in the much-diminished local currency.
“We’re waiting for the new year,” he said. “We’ll look into our finances, and we’ll downsize accordingly. There’s nothing else we can do.”
Ordinarily, countries could get some benefit from falling currencies because it makes their products cheaper and more competitive overseas. But at the moment, any gain from higher exports is muted because economic growth is sputtering almost everywhere.
A rising dollar is causing pain overseas in a number of ways:
— It makes other countries’ imports more expensive, adding to existing inflationary pressures.
— It squeezes companies, consumers and governments that borrowed in dollars. That’s because more local currency is needed to convert into dollars when making loan payments.
— It forces central banks in other countries to raise interest rates to try and prop up their currencies and keep money from fleeing their borders. But those higher rates also weaken economic growth and drive up unemployment.
Put simply: “The dollar’s appreciation is bad news for the global economy,’’ says Capital Economics’ Ariane Curtis. “It is another reason why we expect the global economy to fall into recession next year.’’
In a gritty neighborhood of Nairobi known for fixing cars and selling auto parts, businesses are struggling and customers unhappy. With the Kenyan shilling down 6% this year, the cost of fuel and imported spare parts is soaring so much that some people are choosing to ditch their cars and take public transportation.
“This has been the worst,” said Michael Gachie, purchasing manager with Shamas Auto Parts. “Customers are complaining a lot.’’
Gyrating currencies have caused economic pain around the world many times before. During the Asian financial crisis of the late 1990s, for instance, Indonesian companies borrowed heavily in dollars during boom times — then were wiped out when the Indonesian rupiah crashed against the dollar. A few years earlier, a plunging peso delivered similar pain to Mexican businesses and consumers.
The soaring dollar in 2022 is uniquely painful, however. It is adding to global inflationary pressures at a time when prices were already soaring. Disruptions to energy and agriculture markets caused by the Ukraine war magnified supply constraints stemming from the COVID-19 recession and recovery.
In Manila, Raymond Manaog, 29, who drives the colorful Philippine mini-bus known as a jeepney, complains that inflation — and especially the rising price of diesel — is forcing him to work more to get by.
“What we have to do to earn enough for our daily expenses,” he said. “If before we traveled our routes five times, now we do it six times.”
In the Indian capital New Delhi, Ravindra Mehta has thrived for decades as a broker for American almond and pistachio exporters. But a record drop in the rupee — on top of higher raw material and shipping costs — has made the nuts much costlier for Indian consumers.
In August, India imported 400 containers of almonds, down from 1,250 containers a year earlier, Mehta said.“If the consumer is not buying, it affects the entire supply chain, including people like me,’’ he said.
Kingsland Drinks, one of the United Kingdom’s biggest wine bottlers, was already getting squeezed by higher costs for shipping containers, bottles, caps and energy. Now, the rocketing dollar is driving up the price of the wine it buys from vineyards in the United States — and even from Chile and Argentina, which like many countries rely on the dollar for global trade.
Kingsland has offset some of its currency costs by taking out contracts to buy dollars at a fixed price. But at some point, “those hedges run out and you have to reflect the reality of a weaker sterling against the U.S. dollar,” said Ed Baker, the company’s managing director.
Translation: Soon customers will just have to pay more for their wine.
The surge in the value of the US dollar against other major currencies under the impact of the Federal Reserve’s interest rate hike is raising concerns about its effect both on the financial system and the global economy.
According to an index compiled by the Wall Street Journal (WSJ), the dollar has risen 13 percent this year against a basket of currencies. But the movement is even more marked in relation to other major currencies.
So far this year the dollar has risen 17 percent against the pound, sending the British currency to its lowest point since 1985.
The Japanese yen has fallen to its lowest against the dollar in 24 years, amid expectations that its precipitous slide will go further, prompting hints from the government that official intervention may be necessary. The euro is now trading at below parity against the US currency for the first time since its launch in 1999.
Warnings about the continued dollar surge are being sounded in the financial press. Over the weekend the Financial Times (FT) published an editorial comment under the headline “Currency shifts add to global woes.”
It said that in the midst of an energy crisis and the highest inflation in four decades the “global economy is also being rattled by big realignments in exchange rates.” Under conditions of war in the Ukraine, the European energy crisis and concerns over how some emerging markets will manage high oil and food prices, there was a move to seek security in US assets, which are regarded as “the least unsafe option.”
The surging US dollar, which is fueling price hikes in the rest of the world via imported goods, is one of the factors driving interest rate hikes by central banks, particularly in Europe.
For so-called emerging market economies in addition to rising food and energy prices, the rise in the dollar increases the burden of dollar-denominated debt and threatens to spark capital outflows. According to the International Monetary Fund, around 20 emerging markets have debt now trading at “distressed” levels. This proportion can be expected to rise.
The WSJ noted that because the dollar is at the centre of world financial markets its rise can have unforeseen consequences. Investors and policy makers, it said, were being forced to “consider history’s unkind lessons…….to be continued
There’s a reason why the phrase “timing is everything” doesn’t make us cringe quite as hard as other real estate cliches. (We’re looking at you, “location, location, location.”) Here’s why: It’s accurate. Homebuyers are always trying to time the real estate market so they can make the best possible deal—and it’s often difficult to do.
Time is the common thread between questions about mortgage rates (Should I lock in my mortgage rate now before they rise in a month’s time?), housing inventory (Should I put off buying until next month to see if there are more houses for sale?), and even relocating (Should we buy now so we can move before the new school year starts?).
At the current moment, homebuyers face a perplexing mix of realities: mortgage rates are still up and inflation is still putting pressure on everyone’s bottom line, but the median listing price actually fell (yes, fell) to $435,000 in August, down from an all-time high of $450,000 in June. So with all these question marks in the air, it’s hard not to wonder if it would be downright foolish to buy a house right now, or if the timing is actually good.
This week we clocked a particularly interesting discussion floating around on the r/RealEstate subreddit after one user posted the following question point-blank: “I was just told it’s the single worst time to buy real estate in U.S. history. How far off are they?”Reddit users chimed in with a variety of entertaining hot takes and personal anecdotes on the matter.
What experts think about buying a house right now
We’ve heard what the people have to say, now let’s bring a little data into the mix.“It’s true that home prices are high in 2022, so that perspective suggests that now might not be a great time to buy,” says Realtor.com Chief Economist Danielle Hale. “On top of that, the cost to borrow money right now—the interest rate you’ll pay on a mortgage—is also not far off of its highest level in more than 13 years.
This means that borrowing to buy a home is more expensive than it has been.”But Hale says these shouldn’t be buyers’ only considerations. With rents at an all-time high and still rising, buying a home and being your own landlord has advantages.
“You may think of owning a house as not having to pay rent, but economists view this as paying rent to yourself,” says Hale. “Taking on a mortgage with a fixed rate of interest (at least for a period of time) means that the homeowner has locked in the lion’s share of their housing costs—a nice hedge against inflation that is still running at just under 9%.”
She says that even if you don’t see any future home price appreciation, it can make more sense to buy than rent, especially in markets where the monthly cost of owning a home is lower than the monthly cost of rent.
“There aren’t as many of those markets, but there are still some, predominantly in the South and Midwest, as we found in our recent rental report,” Hale says.
Is it a good or bad time to buy a house?
With that information in mind, let’s go back to our initial question: Is now the worst time in history to buy a house?
“The data points to the ‘worst’ being behind us,” says Hale. “The number of homes for sale is up more than 26% compared to one year ago, which means that today’s shoppers have more homes to choose from than last year’s shoppers. Perhaps more importantly, the share of sellers making a price cut has risen, suggesting that today’s shoppers may have more negotiating room than before.”
Hale does acknowledge that homes are still more expensive than last year, but the price growth rate is slowing and is likely to slow further. Another positive indicator for buyers? Homes are lingering on the market longer.
“Time on market is beginning to increase, signaling that the days of having to make an offer as soon as possible—perhaps even before seeing the home—are behind us,” Hale says.Ultimately, buying a home is a wholly personal decision and the right timing varies from buyer to buyer.
“While market conditions couldn’t be called the best for buyers, they are somewhat improved,” says Hale. “Each of these indicators points to better balance than the housing market has seen over the last year, an advantage for today’s shoppers.”
Natalie Way is the senior editor at Realtor.com who covers news and advice stories about real estate, design, and celebrity homes. Natalie produces and co-hosts the “House Party” podcast. She can be reached at natalie.way@move.com.
Property investment is a process, not just an event. So rather than just talking about going out and buying a property in 2022, the right time for you to consider investing is when you have all your ducks in a row.
This means you have:
a strategic property plan, so you know where you’re heading and what you need to do to achieve your financial goals,
set up the right ownership structures to protect your assets and legally minimise your tax,
a robust finance strategy with a rainy day buffer in place to buy you time
Of course, for some 2022 will be a great year to invest, but in a moment I’ll explain why that will not be the case for others. Sure interest rates are rising, but there is more to property price growth than that. It’s likely that you’ve heard me talk about the drivers of property price growth over the years.
There are so many things that determine a property’s price performance and growth trajectory, many of which are well outside of your control, and some of which also have nothing to do with the property itself. These include, but are not limited to:
The economy – the performance and state of the broader economy impact people’s ability to buy and sell property as well as …
Consumer Confidence – when people feel comfortable about their financial situation and their future job prospects they are more likely to make big purchases like moving home or buying an investment property.
Employment levels – if the community at large is experiencing high levels of unemployment, then fewer people can afford to pay a mortgage, which reduces demand for property
Government policy – aspects to do with tax, depreciation, and homeownership grants will work to boost or reduce demand for property, particularly new property in recent years, which is where the federal government’s primary agenda has been.
Population growth – or household formation to be more exact, as when more people move into an area this equals more demand for housing, whether it’s to buy or rent.
Local Demographics – things like average incomes, average age, household structure, crime rates, and employment opportunities.
Supply – The basic economic principle of supply and demand is a fundamental property market driver of price growth.
Availability of credit – property investment is a game of finance with some houses thrown in the middle, but even owner-occupier demand is very much driven by the availability of finance and the cost of money, in other words, interest rates.
Now, as a result of these factors – which are by no means an exhaustive list, but they give you a general indication of some of the major influences on property prices – our property markets move through cycles, from booms to busts and back again.
Last year rising property values around Australia were driven by a combination of pent-up demand and historically low-interest rates leading to FOMO (fear of missing out), which led many home buyers and investors to make take shortcuts just to get in the market.
A highly watched economic indicator with a good track record in predicting recessions cut its forecast for second-quarter gross domestic product growth this week, implying the nation has fallen into a technical recession despite economists widely calling for a return to growth in the second quarter.
The Federal Reserve Bank of Atlanta’s GDPNow model on Thursday projected the U.S. economy shrank 1% in the second quarter, slipping into negative territory after economic data showed consumer spending dropped in May, while domestic investments, another component of GDP growth, also fell.
The model, which estimates GDP growth using a methodology similar to the one used for the Bureau of Economic Analysis’ official estimates, has been steadily trimming its second-quarter GDP forecast based on updated economic data that’s fueled concerns of a prolonged economic downturn in recent weeks.
The U.S. economy unexpectedly shrank 1.6% in the first quarter as the omicron variant fueled a record surge in Covid cases, so another negative quarter would indicate the nation has slipped into a technical recession, which is defined as two consecutive quarters of negative GDP growth.
“The model’s long-run track record is excellent,” DataTrek analysts wrote in a note to clients Thursday night, pointing out its average error has been just 0.3 points since the Atlanta Fed started running it in 2011—but was zero through 2019, before the unprecedented volatility around the pandemic.
With an error margin of 1.2 points one month before the government’s first GDP estimate, the model may still ultimately forecast positive growth for the quarter, DataTrek’s Nicholas Colas and Jessica Rabe noted, though they add the indicator will be “important to watch” as its predictive ability improves with time.
Most economists are still predicting a return to growth, with average projections calling for GDP to increase more than 3% last quarter, but many have become increasingly bearish in recent weeks, with Bank of America’s Ethan Harris on Friday downgrading his forecast to zero growth last quarter (from 1.5% previously) after the weak spending data for May.
What To Watch For
The Bureau of Economic Analysis unveils its first estimate of second-quarter GDP growth—or decline—on July 28, but it won’t release a final estimate until September. Adjusted for inflation, consumer spending fell for the first time this year in May, according to Thursday’s data. The worse-than-expected decline makes a second straight quarterly decline in GDP “much more likely,” Pantheon Macro chief economist Ian Shepherdson wrote in a Friday note, forecasting that GDP would fall 0.5% in the second quarter.
However, he notes the National Bureau of Economic Research—“the semi-official arbiter” whose declarations are accepted by the government—“very probably will not” declare a recession unless employment, which remains one of the economy’s strongest pillars, starts declining as well. Rather than purely going off technical recessions, the NBER vaguely defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
Despite growing bearishness, many economists aren’t convinced the U.S. will fall into recession—at least not imminently. In a research note on Monday, analysts at S&P Global Ratings said the economy has enough momentum to avoid a recession this year, but warned “what’s around the bend next year is the bigger worry.” The economists put the odds of a recession in 2023 at 40%. One week earlier, Morgan Stanley put them at 35%.
Fueled by government stimulus and the war in Ukraine, prolonged levels of high inflation pushed the Fed to embark on the most aggressive economic tightening cycle in decades—crashing markets and sparking recession fears. “People are really suffering from high inflation,” Fed Chair Jerome Powell testified before Congress last week, noting it remained “absolutely essential” for the Fed to restore price stability, before acknowledging it would be “very challenging” to avoid a recession while doing so.
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The current employment trends are something of a mystery, economists say. In past years, a reduction in average hours worked meant employers didnt have enough work to go around. It was usually the first sign of a coming recession, because without enough work, employers would lay people off, spending would decrease, and the economy would spiral downward.
