A booming outlier in the pandemic economy š„
Also, a look at last week and next week š

On Friday, we learned U.S. employers added 199,000 jobs in December, bringing total employment to 148.95 million.
And while employment in aggregate remained below its pre-pandemic level of 152.52 million jobs in February 2020, some parts of the economy have been blasting through old records.
Take a look at warehousing.
Employment in warehousing and storage climbed to 1.51 million in December, up from 1.33 million in February 2020.

If you zoom out a bit and compare industry sectors, youāll see that the transportation and warehousing sector is one of the only categories above pre-pandemic levels. And as you can see from the chart below from Indeed Hiring Lab economist Nick Bunker, the boom is a clear outlier.
This trend is echoed in construction spending data.
According to Census Bureau data released last Monday, spending on warehouse construction was up about 22% from pre-pandemic levels. This compares to most other nonresidential categories where construction spending remains depressed.
āThe knock-on effects of the pandemic continue to be a boon for new warehouse development,ā Wells Fargo economists wrote on Monday noting that lockdown periods accelerated the shift to e-commerce.
āWarehouse construction will continue to expand, as the rise of e-commerce and congested supply chains continues to drive demand for warehouses, distribution centers and logistics facilities,ā the economists said in a December 20 research note outlining their forecasts for the year.
Indeed, e-commerce continues to trend higher as a percent of total retail sales, sitting at 13.0% as of Q3 2021; this is up from 11.4% in Q1 2020.1

Thereās nothing too surprising here. The growing popularity of online shopping is not new.
Itās just a reminder that as we talk and dream about returning to some pre-pandemic normalcy, there are some big things that were going to change regardless of the pandemic. Furthermore, some of those changes were actually accelerated by the pandemic, and they donāt look like theyāll be reversing any time soon.
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Recent stories from TKer:
š¢ Last year was an unusually calm one in the stock market. Donāt get used to it. (Link)
š¤ If you think the stock market is due for weakness just because it did well last year, youāre wrong. (Link)
Rearview šŖ
š Stock market stumble: The S&P 500 booked its first 4-day losing streak since September, closing at 4,677.03 on Friday. The index fell 1.9% during the week in what was the marketās worst start to a year since 2016. For more on sharp sell-offs, read this TKer piece that went out to paid subscribers on Tuesday.
š What the Fed said last month: According to the newly release minutes of the Federal Reserveās December 14-15 monetary policy setting meeting, U.S. central bankers acknowledged that the conditions have been met to dial back its emergency efforts more quickly than some expected. From the minutes: āā¦it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve's balance sheet relatively soon after beginning to raise the federal funds rate.ā
š¤ā¦thinking out loud: The Fedās minutes were released on Wednesday, a day that saw the biggest stock market sell-off in two months. Itāll be interesting if stocks donāt soon recover ā all other things being equal ā since the Fed is signaling something that wouldnāt occur for months, thereās a case to be made that aggressive central bank policy was already priced into the market, and stocks usually perform well around the beginning of Fed rate hike cycle.
ā Supply chains are improving: According to IHS Markit surveys conducted in December, manufacturing industry purchasing managers are saying that supplier delivery times have been improving, a sign that supply chains are loosening up a bit. Among other things, this is a sign inflation could cool.

Similarly, the ISM manufacturing and services surveys released this week confirmed that supplier delivery times have been improving. For more on tight supply chains, read this and this.
š Record quits: According to the BLSās Job Openings and Labor Turnover Survey, a record 4.53 million workers quit their jobs in November. For more on what this means, read this and this.

š¼ Job openings tick lower: According to that same BLS report, the number of job openings in the U.S. slipped to 10.56 million in November. For more on what this means, read this and this.

š Toyota > GM: Toyota sold more vehicles in the U.S. than General Motors in 2021. From The New York Times: āG.M. said on Tuesday that its U.S. sales slumped 13 percent in 2021, to 2.2 million trucks and cars. Toyota had access to more chips because it set aside larger stockpiles of parts after an earthquake and tsunami in Japan knocked out production of several key components in 2011. Its 2021 sales rose more than 10 percent, to 2.3 million.ā
Up the road š£
Weāll get a fresh update on the state of inflation on Tuesday with the release of the December consumer price index (CPI) report. Economists estimate CPI was up 7.1% from a year ago, or 5.6% when you exclude food and energy prices.
While these readings would represent multi-decade highs, they are largely expected and represent a big reason why the Fedās tone (see above) has become much more hawkish in recent weeks.

Earnings season! Americaās biggest companies will publish their Q4 financial results in the coming weeks. Things kick off on Friday with earnings announcements from the big financial services firms including JPMorgan Chase, Citigroup, Wells Fargo and BlackRock.
E-commerce spending as a percent of total retail sales spiked at the onset of the coronavirus pandemic as many consumers were either reluctant to spend or restricted from spending in many physical stores.
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