Business
U.S. economic growth remains impressive. It's the envy of the world, except at home
WASHINGTON — The last and most consequential report on the nation’s economic health before next week’s election provided more evidence of America’s resilient growth. Whether it will make a difference to voters is an open question.
The Commerce Department said Wednesday that U.S. gross domestic product, the broadest measure of economic output, expanded at a robust annual rate of 2.8% in the third quarter. A country’s GDP is a tally of the value of all goods and services produced in the nation.
The growth was a slight deceleration from the 3% annualized increase in the second quarter, but U.S. economic activity continued to far outpace almost every other developed nation. “The outlook is for more of the same with growth the envy of the world,” said Chris Rupkey, chief economist at Fwdbonds, a economic and markets research firm in New York.
The latest GDP increase was again powered by durable consumer spending as U.S. households have benefited from a solid job market, declining inflation and booming stock market.
“It’s impressive, phenomenal,” said Jeffrey Korzenik, chief economist at Fifth Third Bank, referring to the American economy’s exceptional run of strong output and full employment.
The Labor Department is set on Friday to release job creation and unemployment numbers for October, but analysts are discounting the report as the data are expected to be badly distorted by the temporary effects of two hurricanes and a strike by Boeing workers. In September, the American economy added 254,000 new jobs and unemployment ticked down to a historically low 4.1%.
With the third-quarter results, U.S. GDP is now projected to increase by nearly 3% for the full year, after posting similarly strong results in 2023 and the second half of 2022 . That compares with projected growth this year of about 1% or less for other leading advanced economies, including Germany, Japan, the United Kingdom and Canada.
U.S. GDP reached about $82,000 last year on a per-person basis — almost double the average of rich nations and more than six times that of China, the second largest economy after the U.S., and Russia, No. 11 in total output, according to World Bank data.
“The U.S. is still the standard among developed markets,” said Stephen Juneau, a senior U.S. economist at Bank of America.
Juneau sees some of the same underlying strengths in the latest report continuing to keep the economy on a steady if somewhat slower growth trajectory in the coming quarters.
The banking sector has been solid, as have corporate profits. Productivity has picked up in recent quarters. And an influx of immigrants, legal and undocumented, has boosted the labor supply, helping employers to keep growing and hold down wage inflation. “That’s been an exceptionalism of the U.S. economy — waves of immigration,” said Juneau.
They’ve also helped boost household spending, which accounts for about two-thirds of U.S. economic output. Consumer spending jumped 3.7% in the third quarter, as people bought more cars and spent money on healthcare services and to travel and eat out. Although lower-income and younger people are straining more to keep up with expenses and make debt payments, households on the whole are managing well.
Most people entered the sharp but brief pandemic recession in 2020 in good financial shape. And since then, their finances and spending have been supported by stable jobs — layoffs have remained unusually low — large government support, including stimulus checks, and appreciating assets. Most homeowners had locked in low mortgage rates before the Federal Reserve began jacking up interest rates in March 2022 to curb inflation.
Although job and wage gains are expected to moderate, the Fed has begun cutting interest rates now that inflation is closing in on its 2% target. That should help businesses and consumers, and give a lift to the housing market. In the third quarter, residential investment continued to be a drag on GDP, but businesses spent more for equipment especially to boost their information and transportation capabilities. That bodes well for future growth and productivity, which also has picked up in recent quarters.
U.S. imported more goods in the last quarter than it exported, which is a minus for GDP. But in places like Southern California, home to the largest warehousing and logistics operations in the U.S., that’s translated to more activity in the storage and movement of goods. The Port of Los Angeles, the busiest container complex in the nation, said it handled a record 954,706 containers in September, although some of the 27% increase reflected advanced purchases and diversions due to labor tensions at Eastern seaports.
“Right now the U.S. consumer is buying everything that isn’t nailed down,” said Rupkey. “The economy now is stronger than it was before the pandemic and trying to convince people otherwise is just completely foolhardy. The economy by almost every measure is better than it was four years ago.”
Yet while the U.S. economy may be the envy of the world, it isn’t so much at home. Polls have consistently shown Americans are mired in a sour, griping mood when it comes to the economy, which may prove to be a significant factor in the election.
Many analysts attribute the disconnect to two key elements: One is bad memories of high inflation especially in 2022, which means that prices for groceries and other goods, while now growing far more modestly, remain on the whole about 20% higher than before the pandemic. The second is that people’s feelings about the economy reflect their political leanings: Many Republicans, disregarding their own strong personal finances, have a jaundiced view of the economy under Democratic President Biden.
Korzenik, the Fifth Third Bank economist, suggests a third factor might be at play: He says there’s been a general worsening or shrinking of services for consumers, whether it’s a stay at a hotel where many now don’t do housekeeping unless requested, or a lack of experienced staff to help you at retail stores.
“I’m getting less for my money,” he said, calling it an overall “degradation of service quality.”
The American economy also has weak spots. Manufacturing activity remains soft. Strong growth in stocks and houses has come hand in hand with increased wealth inequality. And heavy federal spending in response to the pandemic added to the deficit and bloated public debts, which will crowd out investments and increase the government’s interest costs.
Of more immediate concern, there is a lot of uncertainty over the election outcome, especially because of Trump’s threats to ramp up tariffs and deport millions of undocumented immigrants, which would affect the labor market. For now, though, economists remain bullish about the outlook.
“The U.S. economy is firing on all cylinders at the current time and save a large external shock or domestic policy error, the U.S. economy is poised to close out the year on a strong economic note,” said Joseph Brusuelas, chief economist at the tax and consulting firm RSM US.
Business
U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders
The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.
The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.
Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.
The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.
The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.
Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.
“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.
The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.
Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.
Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.
Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.
Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.
Business
California-based company recalls thousands of cases of salad dressing over ‘foreign objects’
A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”
The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.
Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.
None of the 42 locations where the product was sold were in California.
Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.
“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”
The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.
The company recalled the following types of salad dressing:
- Creamy Poblano Avocado Ranch Dressing and Dip
- Ventura Caesar Dressing
- Pepper Mill Regal Caesar Dressing
- Pepper Mill Creamy Caesar Dressing
- Caesar Dressing served at Costco Service Deli
- Caesar Dressing served at Costco Food Court
- Hidden Valley, Buttermilk Ranch
Business
They graduated from Stanford. Due to AI, they can’t find a job
A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.
The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.
When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.
Top tech companies just don’t need as many fresh graduates.
“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”
While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.
Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.
“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”
The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.
Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.
“The industry for programmers is getting very oversaturated,” Akgul said.
The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.
Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.
It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.
In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.
Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.
Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.
A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.
“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”
To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.
Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.
Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.
Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.
As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.
“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”
After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.
Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.
“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”
-
Iowa6 days agoAddy Brown motivated to step up in Audi Crooks’ absence vs. UNI
-
Iowa1 week agoHow much snow did Iowa get? See Iowa’s latest snowfall totals
-
Maine4 days agoElementary-aged student killed in school bus crash in southern Maine
-
Maryland6 days agoFrigid temperatures to start the week in Maryland
-
Technology1 week agoThe Game Awards are losing their luster
-
South Dakota6 days agoNature: Snow in South Dakota
-
New Mexico4 days agoFamily clarifies why they believe missing New Mexico man is dead
-
Nebraska1 week agoNebraska lands commitment from DL Jayden Travers adding to early Top 5 recruiting class