In recent times, there has been a shift in the dynamics of the labor market. Initially, economists believed that employees held the most power in the market. However, with economic challenges, inflation, and significant job losses, the landscape seems to be changing. Professor Jeremy Siegel, an expert in finance, suggests that the fear of layoffs has actually had a positive impact on productivity.
According to the Bureau of Labor Statistics, productivity has been surging, with a 4.7% annualized growth rate in the third quarter. Professor Siegel argues that this increase is partly due to workers putting in extra effort to secure their jobs. The mentality of "doing nothing because the boss can't fire me" is fading away. In addition to this increased motivation, Professor Siegel believes that advancements in artificial intelligence will further contribute to productivity growth.
Despite this positive trend, Professor Siegel expresses disappointment that the Federal Reserve doesn't seem to be giving enough attention to productivity in the broader macroeconomic context. He believes that the heightened productivity of workers is one of the factors behind the surprising GDP growth in the third quarter.
However, Fed Chair Jerome Powell has not explicitly linked the increase in productivity with his decision on interest rates. He has previously expressed concerns about the tight labor market and suggested a possible delay in scaling back rates. In Professor Siegel's view, the labor market sentiment is changing, with recent results indicating softness.
Referring to the latest Employment Situation Summary released by the Labor Department, Professor Siegel considers the job data to be weaker than expected. While some aspects, such as nonfarm payrolls, exceeded estimates, the overall picture suggests a softening labor market.
As a result, Professor Siegel believes that the case for increasing or maintaining interest rates has been dealt a "powerful 1-2 punch," with labor statistics playing a role. Fed Chair Powell has remained cautious about the timing and possibility of rate adjustments.
Uber reported third-quarter results Tuesday that missed analysts’ expectations on top and bottom lines but showed strength in other areas, like gross bookings, which exceeded the company’s guidance from the second quarter.
Here’s how the company did:
- Earnings per share: 10 cents vs. 12 cents expected by LSEG, formerly known as Refinitiv.
- Revenue: $9.29 billion vs. $9.52 billion expected by LSEG.
Uber’s revenue for the quarter was up 11% from the same quarter last year. The company reported net income of $221 million, or 10 cents per share, compared with a net loss of $1.2 billion, or 61 cents per share, in the same quarter last year. That includes a $96 million headwind from revaluations of Uber’s equity investments.
In a prepared statement, CEO Dara Khosrowshahi said Uber’s third quarter was “very strong” and he saw accelerations in the company’s gross bookings, trips, and monthly active platform consumers. He added that the platform is seeing the continued benefits of consumers shifting spending from retail to services.
“These results demonstrate that Uber continues to drive profitable growth at scale—and why we believe we’re well positioned for the journey ahead, in good or bad macro environments,” he said.
Uber reported adjusted EBITDA of $1.09 billion, up $576 million year-over-year and above the $1.02 billion expected by analysts polled by StreetAccount. Gross bookings for the quarter came in at $35.3 billion, up 21% year over year and above the company’s guidance last quarter.
For the fourth quarter of 2023, Uber said it expects to report gross bookings between $36.5 billion and $37.5 billion, compared to StreetAccount estimates of $36.5 billion, and adjusted EBITDA of $1.18 billion to $1.24 billion.
Here’s how Uber’s largest business segments performed:
Mobility (gross bookings): $17.90 billion, up 31% year-over-year
Delivery (gross bookings): $16.09 billion, up 18% year-over-year
Uber’s mobility segment reported $5.07 billion in revenue, compared with delivery’s $2.93 billion. Its freight business booked $1.28 billion in sales for the quarter, a 27% decline year over year. The figure is also in line with the $1.28 billion Uber reported last quarter when Khosrowshahi told CNBC freight has remained a challenging spot for the company.
The number of Uber’s monthly active platform consumers reached 142 million in the second quarter, up 15% year over year. There were 2.44 billion trips completed on the platform during the period, up 25% year over year.