Deere Workers Reject Second Contract Offer As striking production employees at 12 plants vote down a tentative offer, the farm equipment and construction machinery company says it will continue to maintain operations with nonunion employees.
(…) The Moline, Ill., company’s union workers walked out Oct. 14 at 14 plants, Deere’s first strike in 35 years. (…) Union employees at 12 Deere facilities voted against the tentative contract offer agreed to by their negotiators Oct. 30, the company said late Tuesday. Deere said that employees at two parts plants in Denver and Atlanta, who work under a separate contract, voted to approve the offer that had identical economic terms as the one that the company’s other employees rejected.
Deere said its investment in the employees under the failed proposal would have cost the company an additional $3.5 billion. (…)
Union members have been urging their negotiators to broaden the scope of the bargaining to include work rules, scheduling and other compensation that workers say have eroded in recent years and weren’t adequately addressed in the failed proposals. (…)
The proposal for a new six-year contract was voted down by a margin of 55% to 45%, the auto workers union said. It would have given more than 10,000 Deere workers on strike an immediate 10% pay raise and an $8,500 bonus for each worker if the deal had been ratified Tuesday. The company also offered 5% raises in 2023 and 2025. For the other three years of the contract, Deere employees would receive lump-sum bonuses amounting to 3% of their pay. (…)
Deere workers said they were more willing this year to reject the company’s offers than in previous negotiations, when Deere’s business or the U.S. economy was weak. Higher prices for corn, soybeans and other farm commodities are being propelled by stronger U.S. exports, and poor harvests in major breadbaskets in North and South America. (…)
Inflation is running at its highest level in more than decade, prompting Deere workers to ask that provisions for cost-of-living adjustments be returned to the contract after being stripped out of the last deal signed in 2015.
In the contract workers rejected Tuesday, Deere also agreed to provide lump-sum bonuses to employees’ pensions and backed off an earlier attempt to enroll future employees in a 401(k)-style pension program. (…)
Bloomberg, which noted that the rejected deal “also offered a $35,000 retirement bonus for workers with 10 to 24 years on the job and a $50,000 bonus for workers with at least 25 years), added this comment:
“Thirty five years ago, workers at Deere lost a lockout and took a deal that froze and reduced wages,” said University of Chicago historian Gabriel Winant. “Today they rejected an offer that starts with a 10% raise. It’s the biggest downward shift in the economic balance of power in my lifetime.”
- Workplace strikes are surging. Here’s why they won’t stop anytime soon. Economists say the walkouts could contribute to near-term inflation but, over time, fundamentally change the economic standing of millions of workers.
Factory workers, nurses and school bus drivers are among the tens of thousands of Americans who walked off jobs in October amid a surge of labor activism that economists and labor leaders have dubbed “Striketober.”
The strike drives, experts say, stem from the new leverage workers hold in the nation’s tight job market: Having seen the massive profits their companies collected during the coronavirus pandemic, they want their contributions acknowledged in the form of better pay and working conditions. (…)
Some 17,400 U.S. workers went on strike in October, according to a Bloomberg Law work stoppage database. Of the 119 union strikes so far this year, 15 are “major” strikes involving 1,000 or more individuals, according to the database. That compares with nine major strikes in 2020, when the pandemic took hold, and 30 in 2019. (…)
Small Business Jobs Index
Using aggregated payroll data from businesses with fewer than 50 workers, the index offers a monthly, up-to-date measure of change in small business employment. Paychex business solutions reach 1 in 12 American private-sector employees, making the Small Business Jobs Index report an industry benchmark. The national jobs index uses a 12-month same-store methodology to gauge small business employment trends on a national, regional, state, metro, and industry basis.
National job growth was on the rise for the fifth consecutive month in October and wages are increasing dramatically too, according to aggregated payroll data of approximately 350,000 clients provided by Paychex. (…) the Small Business Jobs Index for October increased to 100.45, up 0.50 percent in October and 6.50 percent over a year ago. In response to labor market pressures, hourly earnings growth improved to 3.85 percent in October, a new record level since reporting began ten years ago. One-month annualized weekly hours worked growth was positive in October (1.17 percent) for the first time in six months.
Industry Wage Report
CONSUMER WATCH
Chase’s Consumer Card Spending Tracker suggests strong expenditures in October:
It’s control sales tracker through October 25 is only slightly slower than September’s:
Meanwhile, vehicle sales have stopped declining:
- October Vehicles Sales Increased to 13.0 Million SAAR Wards Auto released their estimate of light vehicle sales for October. Wards Auto estimates sales of 12.99 million SAAR in October 2021 (Seasonally Adjusted Annual Rate), up 6.8% from the September sales rate, and down 20.8% from October 2020.
Bill Dudley: The Fed Has More to Do Than the Market Recognizes The central bank might need to raise interest rates more than twice as high as investors anticipate.
(…) Markets still see a peak in [interest rates] this business cycle of less than 2%. I think there’s a good chance they’re mistaken. (…)
The lowest peak on record — between 2.25% and 2.5% — occurred during the last expansion, which was very different from the current one. First, the pandemic cut the last business cycle short, which was one reason why the Fed had no inflation problem to combat. Second, the economy faced significant headwinds — including collapsed home prices and restrictive fiscal policy — that don’t exist this time around. Finally, financial conditions were a lot less accommodative than they are now: The stock market has been hitting record highs, bond yields are unusually low and credit spreads are very narrow. (…)
Even as rising prices and wages have brought the expected liftoff date closer, stocks have kept going up and bond yields have increased only modestly. Homeowners and corporations are largely insulated from higher short-term rates: Most residential mortgages have fixed rates, and companies lock in much of their funding via longer-term borrowing. All this suggests that to actually rein in financial conditions and economic activity, the Fed will have to raise short-term rates by considerably more than what’s currently anticipated. The last time the central bank faced unresponsive markets, between 2004 and 2006, it had to increase rates at 17 consecutive policy-making meetings, to 5.25% from 1%. That episode may be a better template than the last business cycle. (…)
EARNINGS WATCH
We now have 323 reports in, an 83% beat rate and a +11.1% surprise factor. But surprises are very unequally distributed in Q3:
Deutsche Bank’s strategist excludes the reversal of banks loan losses to find that this quarter’s earnings beat is in line with the historical average.
Trailing EPS are now $196.98. 2021e: $201.33. 2022e: $220.74.
Negative Bond Yields Recede in Europe French, Irish, Dutch and Swiss yields have all either turned positive or flirted with the line in recent weeks and months, shrinking the pool of debt that pays back less to investors than they put in.
(…) The moves have helped shrink the total stock of negative-yielding debt to $10.7 trillion this week, down from a peak of $18 trillion last December, according to a Bloomberg Barclays index. In addition to the eurozone, Switzerland and Japan are other economies with negative rates.
Behind the rise in yields is a bet that the European Central Bank will have to raise interest rates sooner than it wants. Inflation across Europe has hit multiyear highs during the coronavirus pandemic, driven by booming demand and supply-chain bottlenecks as economies reopen. (…)
Other countries in Europe, including Norway and Poland, have already raised rates. In the U.S., the U.K. and Canada, where inflation is also rising, central banks signaled interest-rate increases are likely in 2022. In the U.K. it could come as early as Thursday.
In the eurozone, ECB President Christine Lagarde last week dismissed making a move next year, betting prices will fall again once the effects of the pandemic subside. (…)
(…) “In our forward guidance on interest rates, we have clearly articulated the three conditions that need to be satisfied before rates will start to rise,” she told an event in Lisbon. “Despite the current inflation surge, the outlook for inflation over the medium term remains subdued, and thus these three conditions are very unlikely to be satisfied next year.” (…)
“An undue tightening of financing conditions is not desirable at a time when purchasing power is already being squeezed by higher energy and fuel bills, and it would represent an unwarranted headwind for the recovery,” she said. (…)
The problem is that inflation uncertainty is unusually high and even Lagarde admitted last week that the current spike will be higher and longer than thought even just a few weeks ago.
- ECB’s Vasle Sees Growing Risk That Inflation Will Stay Elevated “What I expect is that prices will increase further, by the end of this year, and then slowly moderate in 2022,” Vasle said in an interview. “However, the risks that inflation will stay elevated for longer are growing, since one can’t exclude a shift in expectations and second-round effects on the labor market.”
China’s Latest Delta Outbreak its Most Widespread Since Wuhan
The highly-infectious delta variant is hurtling across the country despite the increasingly aggressive measures that officials have enacted in a bid to thwart it. More than 600 locally-transmitted infections have been found in 19 of 31 provinces in the latest outbreak in the world’s second-largest economy.
China reported 93 new local cases on Wednesday, and 11 asymptomatic infections. Three more provinces detected cases: central Chongqing, Henan, and Jiangsu on the eastern coast.
Officials in China say they are committed to maintaining a so-called Covid Zero approach, even though flare-ups are coming faster, spreading further and evading many of the measures that previously controlled the virus. (…)
Millions and Millions of Millionaires Don’t mistake them for billionaires, who are far richer and fewer.
The U.S. minted 1.73 million new millionaire households last year, lifting its total at year-end 2020 to 21.95 million, according to the Credit Suisse Global Wealth Report.
For the first time, 1% of adults world-wide are millionaires. Although the term can apply to any currency, the U.S. dollar is considered the standard gauge. (The British sometimes snarkily refer to upper-middle-class Americans as “dollar millionaires.”) (…)
Credit Suisse, which unlike other researchers includes the value of residences in calculating net worth, projects another 6.1 million American millionaires by 2025. (…)
(Forbes now lists 724 billionaires, compared with a mere 13 when it first tallied in 1982.) (…)