Elgin Area Chamber Of Commerce: Stocks Tumble On Fed Chair Comments, Small Business Hiring Hits New High, Consumer Confidence Drops

Elgin IL

02 December, 2021

2:30 AM

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Press release from the Elgin Area Chamber of Commerce: December 01, 2021 By Richard Lawson CoStar News Stocks Fall on Powell's Comments Stocks tumbled on Tuesday on the prospect that the Federal Reserve may scale back stimulus policies faster than planned as inflation persists for longer than anticipated. The major indices dropped nearly 2% after Fed Chairman Jerome Powell told a Senate committee the central bank was discussing the possibility of accelerating the tapering of bond buying that had been done to stimulate the economy. Powell said the bond-buying could end months earlier than planned both to tame rising inflation and because of the economic recovery's strength. That was a surprise to investors who then started shifting out of stocks and into the relative safety of government bonds. Powell also said the threat of omicron, the latest coronavirus variant, could curb the economic recovery. But the economic impact won't be nearly as severe as the shutdowns that came in March 2020 when the coronavirus was first deemed a pandemic, Powell told lawmakers. President Biden tried to ease concerns over omicron in an address from the White House on Monday, saying it was "cause for concern, not a cause for panic." Biden urged Americans who haven't been vaccinated to get the shot and those who have been vaccinated to get a booster shot. So far, omicron hasn't been detected in the United States. Health experts say it probably will end up in the United States eventually as other variants have done. Meanwhile, new cases of the delta variant have started to rise again with the colder weather. Small Business Hiring Hits New High Small business hiring rose for the sixth consecutive month in November to the highest level since March 2017. Paychex reported that its index with data analytics firm IHS Markit rose to 100.72 from 100.45 in October, which had marked the first time it was above 100 since 2017. The payroll company pulls data from some 350,000 clients employing fewer than 50 people. A reading above 100 means that hiring is at or better than the benchmark year of 2004 when economic growth was deemed "normal" for the purposes of creating the index. Weekly and hourly wages also rose, which Martin Mucci, Paychex's CEO, said in a statement shows that "employers are responding to tight labor conditions with higher wages" and coming at time when they are "seeing higher costs for goods this holiday season due to supply chain and inflation pressures." Leisure and hospitality, one of the hardest hit industries early in the pandemic, once again led hiring with a reading of 104.23. And Texas was the top state with a reading of 102.92, though it did slow for the month.   Consumer Confidence Drops Consumers grew more pessimistic in November about current business conditions from the previous month, giving retailers hope for a strong holiday sales season. The closely watched consumer confidence index from The Conference Board dropped to 109.5 from 111.6 in October. Compared to October, fewer consumers said business conditions were good and more said conditions were bad, which The Conference Board said was the result of rising cases of the coronavirus delta variant. The cut-off date for the survey was Nov. 19, a week before Black Friday. Consumers, however, showed high confidence in job prospects now and six months out. Their confidence in business conditions six months from now rose as well. Still, "the proportion of consumers planning to purchase homes, automobiles, and major appliances over the next six months decreased," Lynn Franco, The Conference Board's senior director of economic indicators, said in a statement. Source: www.CoStar.com This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author's own.