Stop blaming Millennials 👀

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Stop blaming Millennials 👀

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Tonight: All eyes are on our boy Jay Powell, the Silver Fox of the Fed. Plus, it's time to stop blaming Millennials for the labor shortage. Let's get into it.

By Allison Morrow

📉 OK BOOMER

One of the more insidious myths making the rounds this year was that young people didn't want to work because they were getting by just fine on government aid. People had too much money, went the narrative from a handful of politicians and pundits.

Only trouble is, the numbers don't back it up.

Here's the thing: Early retirement — whether forced by the pandemic or made possible otherwise — is having a huge impact on the labor market. And data show that retiring boomers, far more than "lazy" millennials, are the biggest force behind the labor shortage.

People have left the workforce for myriad reasons in the past two years. But among those who have left and are least likely to return, the vast majority are older Americans who accelerated their retirement.

As one labor economist explained: Last month, there were 3.6 million more Americans who had left the labor force and said they didn't want a job compared with November 2019. A whopping 90% of them were over 55.

There are few reasons why this is the case.

The strong stock market and soaring home prices have given higher-income people, especially Boomers, more options, says ADP Chief Economist Nela Richardson.
The nature of the pandemic means the risks of going to work are higher for older people.
Employers aren't doing enough to lure people out of retirement. They're creating jobs, just not the ones people want.
Key quote: "I can want a 65-inch TV for $50, but it doesn't mean there's a TV shortage, it means I'm not willing to pay enough to get somebody to sell me a TV," says Aaron Sojourner, a labor economist and professor at the University of Minnesota's Carlson School of Management.

Even the White House has recognized how the retirement issue is distorting our read of the labor economy. Jared Bernstein, a member of President Joe Biden's Council of Economic Advisers, said that once "non-prime age" workers — those over 55 — are excluded from the metrics, a much clearer picture of how the labor recovery is doing emerges because it strips out the retirement narrative.

My colleague Anneken Tappe and I dived into the data here.

#️⃣ NUMBER OF THE DAY

$20

Here's a marketing scheme I can get behind: For a few days, Kraft will literally pay you $20 to not make cheesecake. The problem is that Kraft, which makes Philadelphia cream cheese, is in the midst of shortage and can't keep shelves stocked. So it's attempting to appease people who can't find cream cheese for their cheesecakes by encouraging them to buy some other dessert on Kraft's dime. It's a win-win in my book, because this way no one has to pretend to like cheesecake and we can save the last box of Philly for its true purpose, which is to top a bagel. Don't @ me, people, I will die on this hill.

📈 TAKE A HIKE

In normal times, the monthly Fed policy meeting ain't exactly thrilling. But in this economy, especially for us nerds, the news conference that follows is basically the Super Bowl or a Britney Spears concert or a carnival, or all of those things rolled into one.

The Big News: The central bank is admitting that inflation has been a bigger pain in the ass than anyone predicted. So to get a handle on price surges, the Fed will scale back the easy-money policies it implemented back in March 2020, when the world was, like, imploding.

First, it'll speed up the pace at which it winds down its massive asset purchases — the policy that's kept Wall Street flush with cash for the better part of two years. And, it'll likely raise interest rates a few times next year.

Fed officials now predict the benchmark interest rate, which has been near zero since the start of the pandemic, will rise to 0.9% in 2022, up from the 0.3% expectation from September.

Normally, that's the kind of talk that sends investors into a tailspin. But not today. The Dow gained 380 points, or 1.1%. The S&P 500 and Nasdaq were up 1.6% and 2.2% respectively.

Why? At first glance, it appears investors are relieved that Jay Powell is no longer using "transitory" to describe higher prices. It is a sign that the Fed is taking inflation seriously.

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WHAT ELSE IS GOING ON?

⚠️ A critical flaw in widely used software known as "Log4j" has cybersecurity experts raising alarms and big companies racing to fix the issue.

💵 The Labor Department sharply criticized Dollar General's "troubled history" on worker safety, saying the retailer has been putting its more than 150,000 workers in harm's way for years.

✈️ The CEOs of American Airlines and Southwest, two of the nation's largest carriers, say they don't think wearing masks on planes does much to help limit exposure to Covid.

🇬🇧 Britain's nightmare economy of the 1970s may be making a comeback.