about 3 years ago • 3 mins
Please, no more free time: fresh data out on Friday showed the US economy only added a worse-than-expected 49,000 new jobs in January.
What does this mean?
So let’s start with the monthly report’s good news: the unemployment rate fell to 6.3%, below economists’ 6.7% estimate. Now for the bad: that was mostly down to a drop in the proportion of people who are either working or actively looking for a job – i.e. the “participation rate”.
There were job losses too, particularly in the hospitality and retail industries given the end of the holiday season and winding down of retail mania. That seasonal swing usually makes January a tricky month when it comes to interpreting jobs data, but revisions to previous reports – which saw almost 160,000 jobs cut from the last two months’ totals – left little doubt about it: the US economy is in freefall.
Why should I care?
For you personally: Prepare to spend your stimulus check.
Employment reports give an almost real-time temperature check on how the “real economy” is doing, and last week’s frosty update suggests America is in need of a hot cup of Joe. And that’s exactly what it’s getting: the US president’s $1.9 trillion spending plan took a big step forward last week, and a direct cash payment will probably warm the cockles of your heart before much more damage is done.
The bigger picture: The future is bright(ish).
Investors, for their part, seemed to shrug off the jobs report: they continued to buy up US stocks and drove the S&P 500’s best week since November. That might be because they’re looking past the immediate disruption, and instead focusing on a time when enough Americans are vaccinated against coronavirus. That probably won’t be until the end of this year, mind you, and impatient investors won’t take kindly to any delays.
Keep reading for our next story...
Snap Inc. and Pinterest both reported better-than-expected results late last week, but the companies’ futures have very different filters on them.
What does this mean?
There isn’t exactly much to do these days, and social media B-listers Snapchat and Pinterest have been happy to step into the void and pick up millions of new users. All those extra eyeballs made their platforms much more attractive places for advertisers to park their brands last quarter, which might be why Snap and Pinterest’s sales climbed 62% and 76% respectively compared to the same time the year before.
Still, there was one big difference between them: Pinterest’s expectations for this quarter topped analysts’ estimates, but Snap’s forecasts – hampered by recent privacy changes that’ll limit its ability to target ads – came in well below.
Why should I care?
The bigger picture: It pays to stay above the drama.
There was another reason Snap’s outlook took a hit: advertisers have temporarily been halting campaigns to protest its role in exacerbating the Capitol riots. And it’s not the only platform shedding ad dollars: Facebook has lost the tailwind it gained from the US election, and Twitter’s decision to ban the former president might dent this year’s activity and, with it, ad revenue. At least Pinterest didn’t report any such worries: its users' zealotry is directed more toward macramé than insurrection.
Zooming out: What’s ByteDance waiting for?
Social media investors were treated to a new investment opportunity last week: Chinese video app Kuasihou made its debut on the Hong Kong Stock Exchange on Friday, and its shares nearly tripled. That put its value at $160 billion – not far off TikTok-owner ByteDance, which might now be more tempted than ever to list as well.
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