As Sophocles said, nothing truly succeeds without pain. We suspect he wouldn’t have put much faith in soft landings, either. 

Nobody likes a tough job market or the high prices that consumers have seen for more than three years now, but it might be the lumps Americans have to take if inflation and high interest rates are ever going to ease.

Eat and Drink for Tomorrow We Die

The economy has remained rather strong in the face of interest rates that sit between 5.25% and 5.5% and stubborn — yet slowing — inflation. When the Fed adopted the mantra of “higher interest rates for longer,” consumers responded with a collective “yeah, whatever,” at least with their wallets. 

One of the Fed’s favorite inflation gauges, the personal consumer expenditures index, rose 0.3% in April, precisely in line with forecasts but still hugging a 2.7% annual rate, which isn’t the 2% the Fed is looking for in the way of sustainable, low-inflation growth. The cost of healthcare, food, housing, and transportation — all essentials — are still weighing heavily on consumers, but plenty of them are still living a combination of “bougie broke” and “pandemic revenge spending,” going on expensive trips and spending frivolously when it might not make the most financial sense.

However, YOLO might be reaching its apex:

• In the past week, the Atlanta Fed’s GPDNow estimation for GDP growth in the second quarter fell to 1.8% from 2.7%, and a survey from McKinsey and Co. found that consumer sentiment is diminishing, with 45% of respondents taking a pessimistic view of the economy. One male Gen Xer said, “I don’t see that changing anytime soon, and I don’t see us in a position to buy a whole lot of extras at this point.”
• Some of that sentiment is tied to a frustrating job market. The April job openings and turnover summary from the Bureau of Labor Statistics found that hires and separations ticked up slightly, signaling workers have some confidence to move around, but the overall findings didn’t paint the most hopeful outlook. Job openings in April fell to 8.06 million — down by roughly 300,000 from March, a 19% decrease and the lowest since February 2021.

Everybody Takes a Beating Sometime: The surprising part isn’t that the economy is slowing, but rather that it’s taken so long to get to this point. This was the Fed’s goal when it started raising interest rates in March 2022: Make the cost of borrowing so expensive so that Americans ease their spending and inflation comes down. We’ve gone from expecting three rate cuts to maybe just one this year. It’s all part of the plan… potentially a really, really painful plan.

The commercial aircraft manufacturing industry is a duopoly, and the sky is falling for one half, but geopolitics may dictate how much Airbus can take advantage of Boeing’s epic woes. 

While Boeing skirts disaster, rival Airbus is negotiating a major deal to send more than 100 A330neo aircraft to major Chinese airlines, sources told Bloomberg on Tuesday. But Airbus may be in a race against time as broader trade tensions simmer between Beijing and the European Union.

Up in the Air

China represents a major emerging market for Boeing and Airbus, but thanks to the twin deadly crashes of 737 Max aircraft in 2019, Boeing has effectively been boxed out. In fact, the firm just resumed deliveries to China in January for the first time in nearly five years, just to see Beijing regulators almost immediately flash the red light again amid the company’s current woes.

For French-based Airbus, it’s a massive opportunity. In 2023, Airbus eclipsed Boeing’s global deliveries for the fifth straight year, shipping 735 aircraft compared to Boeing’s 528. Now, roughly two years since its last major sale to Chinese airlines, Airbus is looking to widen its global lead — so long as EU and Chinese leaders can continue to play nice:

• The EU’s antitrust regulators have been investigating China’s booming, and subsidy-rich, electric vehicles industry, and the bloc is considering steep tariffs on China-made EVs. Beijing, unsurprisingly, isn’t taking the news lightly, and has privately threatened retaliatory tariffs on the EU’s aviation industry, sources told Bloomberg.
• That would be a tough road for Airbus, which has benefited from previously friendly business-minded diplomacy. Last year, Airbus and Chinese officials agreed to develop a second major Airbus manufacturing plant in the country, with operations due to begin as soon as late 2025; a factory there already produces the A320neo aircraft and completes the interiors of the A330 aircraft.

United We Fall: While Airbus may benefit from Boeing’s myriad struggles, US airlines suffer. United said Tuesday it would hire fewer-than-expected employees this year due to delays in deliveries from Boeing. The news comes after a meeting last week between Boeing and the Federal Aviation Administration, in which the regulatory body declined to increase the monthly production cap it put on the manufacturer. If it wasn’t clear before, it’s clear now: Where Boeing goes, so goes the rest of the US aviation industry. Let’s just hope that isn’t crashing into the ground.

We’ll meet again, don’t know where, don’t know when…

Unfortunately for many UK citizens, that line sums up their relationship with the country’s nationalized healthcare system. With National Health Service backlogs at record levels, Brits are turning to private healthcare in record numbers, according to a report released by Private Healthcare Information Network (PHIN), an NGO that monitors the UK’s private healthcare sector. It’s an uncomfortable figure for the UK government, just four weeks before a general election.

The Doctor Will See You in 18 Weeks 

The NHS was founded in 1948 and has long been a national point of pride. It is, however, struggling. Its target is to get 92% of patients starting treatment within 18 weeks of first going to the NHS. But 43% of the 7.5 million people waiting for treatments have been on that list for 18 weeks or more.

Unsurprisingly, British patients are forking over cash to circumvent these backlogs, and they’re doing it in droves:

• According to PHIN 2023 saw the highest number of private in-patient admissions since records began in 2016, totaling roughly 900,000, a 7% increase from 2022.
• Some people are using private health insurance (those admissions saw a 7% rise from 2019) while some are paying out of pocket. Such “self-pay admissions,” when people pay without insurance, are 39% more common now than before the pandemic.

This is not a good look for the conservative government, which has got into multiple scrapes with NHS staff striking. Nurses, junior doctors, and senior doctors have gone on strike over the course of the current administration.

Living Rent-Free in Voters’ Heads: Another area of UK life that is increasingly corporatizing is the rental market. The Financial Times reported on Tuesday that private equity giant Blackstone has struck a deal to buy 1,750 homes for rent to the tune of £580 million ($740 million). The FT notes that the UK rental market is largely dominated by small, private landlords. That market is also pretty top of mind for voters — the current government did have a bill ready to push through bolstering renters’ rights, but sadly that got binned after Prime Minister Rishi Sunak called the election, meaning all pending legislation got tabled.