| | | | | | | Presented By THE NORTHERN TRUST INSTITUTE | | | | Axios Markets | | By Emily Peck and Matt Phillips · Jul 11, 2022 | | 😎 Welcome back. Lots to catch up on. Elon Musk is trying to get out of his Twitter deal. Both sides are lawyering up. And Axios' Felix Salmon breaks down the situation with this handy flowchart. Now, on to the show. Today's newsletter, edited by Kate Marino, is 1,138 words, 4.5 minutes. | | | | | | 1 big thing: Government help (desperately) wanted |  Data: BLS via Julia Pollak, chief economist at ZipRecruiter; Chart: Erin Davis/Axios Visuals "We're losing staff and unable to replace them," a middle school teacher in New Jersey told Emily last week, helping explain what's going on with the government jobs recovery — it's lagging behind. Just look at the chart above. - While the number of private-sector jobs surpassed its pre-pandemic level, there are 664,000 fewer people employed in the public sector, according to the government jobs report released Friday.
Why it matters: Government employers are competing for workers in a super-tight labor market, and they have less to offer: The jobs typically pay less, for starters. - "The postal service and public schools can't offer workers higher pay," said Julia Pollak, chief economist at ZipRecruiter, in an email to Axios. "People have fled the public sector for the private sector, where signing bonuses and faster wage growth have been far more accessible."
Details: Government budgets set pay bands, which are harder to change in response to competition. - And while private-sector employers are offering hybrid and remote options, government work isn't typically as flexible.
- Meanwhile, in some areas, like education, the post-pandemic landscape is making the work a lot harder — more on this below.
The big picture: After the Great Recession, government employment also took longer to recover, but for a different reason: State and local governments were low on cash because tax receipts fell and the federal government cut funding. - That shouldn't be an issue now — the federal government has given out lots of stimulus dollars, and last year's economic growth made for windfall tax revenue.
Zoom in: Teachers are a good case study — education jobs make up most of state and local governments' employment — and they're not doing so great. - The middle school teacher, who asked not to be named, said they're teaching children with more behavioral problems, haunted by the specter of gun violence, and harassed by increasingly angry parents.
- "Today's teachers are navigating the threat of school shootings, a pandemic and intensifying political interference in their lesson plans — all while their wages remain stagnant," Axios' Erica Pandey and Alison Snyder wrote last month, explaining the crisis.
What's next: States are taking measures to alleviate shortages. - Arizona just passed a law allowing schools to hire teachers before they earn their college degree — almost a third of teaching positions were vacant as of January, Axios' Julia Shapero reports.
The bottom line: "My husband works in the tech industry, and they're paying recent college grads $120k to start," the middle school teacher said via a Twitter message exchange. "Who wants to teach for $50k, especially if they have student loans and the added risk of getting hit or shot in the building. My husband has never broken up a fight or been cursed at by a teen." |     | | | | | | 2. Charted: A whole lot of jobs |  Data: Bureau of Labor Statistics, JOLTS via Fred; Chart: Axios Visuals Demand isn't the issue in the public sector, Emily writes. Help is very much wanted. - There's an unusually high number of government job openings at the federal, state and local levels, according to the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics. (Hat tip to Axios Macro's Courtenay Brown for pointing us to the numbers.)
| | | | | | | | 3. Catch up quick | | 🏦 U.S. bank profits expected to fall sharply. (Reuters) ⚠️ Sri Lankan crisis may be bellwether for other indebted nations. (WSJ) 🚗 Leaked docs reveal Uber's history of misdeeds. (The Guardian) | | | | | | | | A message from THE NORTHERN TRUST INSTITUTE | | Market Currents podcast: listen now | | |  | | | | Market Currents, a new podcast from the Northern Trust Institute, explores today's most hotly debated investment topics. What's in it for you: Listen as Wealth Management CIO Kate Nixon and guests use evidence to answer big market questions and provide the insight you need. Learn more. | | | | | | 4. Gas trap |  Data: Rystad Energy; Chart: Jacque Schrag/Axios Surprisingly, the natural gas market is not as global as you might expect, Axios' Kate Marino writes. Why it matters: There's a limit to how much U.S. production can help European allies wean themselves off Russian gas. - This is a bummer for Europeans who need to heat and cool their homes — and for the West's ability to prevail in the economic war against Russia ... but, hey, it does help keep stateside prices low (relatively speaking).
Context: The European benchmark, known as Dutch TTF, is priced in euros per megawatt-hour, making it hard to see just how much more those on the continent pay versus Americans' average cost. The U.S. benchmark Henry Hub gas is priced in dollars per million British thermal units (mmBtu). - Research firm Rystad Energy crunched the numbers for Axios, converting the daily TTF price into dollars/mmBtu, for an apples-to-apples comparison going back to just before the pandemic.
The result: Yikes. - As of the end of last week, European prices were a staggering ninefold higher than U.S. costs.
- They started skyrocketing last year, on the heels of an unusually cold winter, and as Russia had already begun curtailing supply.
So why don't more U.S. producers send their gas over to Europe to tap into the potential profit bonanza? The answer has to do with the transport process: To ship it overseas, natural gas has to be liquefied. - The complex and expensive facilities that transform gas into LNG (liquified natural gas) are a relatively new thing in the U.S. — borne of the recent shale boom — and right now stateside producers are maxing out the available liquefaction capacity, Emily McClain, Rystad senior analyst, tells Axios.
- That traps much of our gas here — and means that U.S. prices are largely driven by regional dynamics rather than global arbitrage.
The oil market, on the other hand, is more global: Prices for U.S. and European benchmarks (known as WTI and Brent, respectively) track pretty closely to each other. - Oil's much easier and quicker to ship, so "the arbitrage dynamics are much tighter," says Rystad senior analyst Louise Dickson.
What's next: The West's antagonistic relationship with Russia has increased investor appetite for funding new U.S. gas liquefaction projects to fill the void that Russia may eventually leave. - At least two LNG projects have received a final investor go-ahead since the war began, McClain says — but they won't come online until 2025 and 2026.
- Other projects that Rystad once viewed as speculative now look more likely to move forward, she adds.
- All told, by 2030 the U.S. export capacity is now expected to more than double from current levels, she says.
What to watch: More exports shouldn't, alone, push U.S. prices higher — unless production doesn't keep up. | | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. E-commerce's $1 trillion year |  Data: U.S. Census Bureau/FTI Consulting; Chart: Will Chase/Axios Online retail sales growth may have slowed compared to its monster increase in 2020 — but the e-commerce share of retail continues to inch up, Kate writes. The big picture: FTI Consulting projects that annual online sales will cross the $1 trillion mark this year, according to a report published this morning. - The firm estimates that the dollar amount of online sales will increase 11.7% over 2021. That would follow an 18% increase last year, and a growth of 43% in 2020.
- The figures imply that the online share of total retail sales would move to 22%. That's 2 percentage points higher than 2020 — and about 7 points higher than the pre-pandemic world of 2019.
The bottom line: On the whole, behavior changes spurred by the pandemic aren't reversing. | | | | | | | | A message from THE NORTHERN TRUST INSTITUTE | | Prices, policy and portfolios — your questions answered | | |  | | | | Protect your portfolio against inflation with answers to common investor questions. The impact: Better understand the impact of inflation and how to fortify your portfolio and wealth plan in the face of uncertainty. Get the answers you need. | | | | 1 thing to watch: Join Axios' Javier E. David, Erica Pandey and Niala Boodhoo tomorrow at 3:30pm ET for a virtual event exploring the digitization of small business. Register. |  | | Why stop here? Let's go Pro. | | | | | | Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here.
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