Gregory Daco

Chief Economist @EYnews, @EY_US, @EY_Parthenon. Previously Chief Economist @OxfordEconomics, @IHSMarkit. Father of 3. Husband of 1. 🇺🇸 & 🇧🇪. Views are mine

[Gregory Daco @GregDaco]

📊US nonfarm business sector labor productivity growth revised -0.5pt to a marginal +0.3% q/q (annualized) in Q1 2026:
▶️Output +1.0%,
▶️Hours worked +0.7%.

📉Unit labor costs up a moderate 1.8%, as the 2.1% compensation gain was only partially offset by productivity growth

[Gregory Daco @GregDaco]

📉Panic, Productivity or Pretext?

Many AI-related layoff announcements feel less like a technology shock and more like a narrative shift: cost cutting framed as innovation, layoffs framed as productivity.

Welcome to a supply-driven world.

[Gregory Daco @GregDaco]

💡Layoff announcement justification, so far in 2026:

1️⃣ AI: 22%
2️⃣ Market and Economic Conditions: 18%
3️⃣ Closings: 17%
4️⃣ Restructuring: 13%
5️⃣ Contract Loss: 9%
6⃣ Cost-cutting: 8%

[Gregory Daco @GregDaco]

🚨 Challenger, Gray & Christmas: 97k #job cut announcements in May

🔺+16% m/m
🔺+3% y/y
⚠️40% of job cuts in Technology
⚠️Main factor behind layoff announcement: #AI (40%)

[Gregory Daco @GregDaco]

https://t.co/HIZOBhU1Tc

[Gregory Daco @GregDaco]

👀"Squeezing more life out of every dollar before deciding to spend it"

"Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as "squeezing more life out of every dollar before deciding to spend it"...

[Gregory Daco @GregDaco]

🇺🇸Fed Beige Book

📊Slight to moderate activity
🛒Consumer spending mixed & "bifurcated" with income squeeze
🏭Little to no change in employment
💲Wage growth modest/moderate
🔥Inflation moderate to strong: Middle East shock
😬Biz outlook little changed

[Schwab Network @SchwabNetwork]

EY-Parthenon Chief Economist @GregDaco joins @sam_vadas to discuss the economic backdrop, market growth themes, and the state of the consumer and spending.

For more market news, tune in at: https://t.co/trngMLWoJ8

[Nate Silver @NateSilver538]

Our World Cup projections are ready!

100,000 simulations of every stage of the tournament.

We hope you'll appreciate the level of detail. Here are our baseline ratings for each team.

Spoiler: USA/CAN/MEX are not in the top tier but get a boost from home-field advantage.

[Gregory Daco @GregDaco]

Kevin Warsh set to revamp Federal Reserve’s signaling to Wall Street

"Several former top officials said that they expected Warsh...to begin rolling back the central bank’s “forward guidance” on interest rates as soon as the mid-June FOMC meeting"

https://t.co/P4QDToRgmw

[Gregory Daco @GregDaco]

US proposes new #tariffs of +10% on imports from 60 trading partners, following Section 301 investigation into how trade partners handle goods allegedly produced by forced labor

10%: Can, Mex, EU, UK, Taiwan...

12.5%: Chn, Ind, Jap, S. Korea, Braz...

https://t.co/xyYXwcaV8z

[Nick Timiraos @NickTimiraos]

Bernanke reflects on the Powell Fed at a Brookings event offering early retrospectives

On the wins:
-“A terrific job defending the Federal Reserve during a very, very difficult time” for Powell personally and for the institution.
-Building up political capital with extensive outreach to lawmakers
-Noting his pride in introducing press conferences, he says Powell “made them less wonky and more democratic, and more effective. That was a very important contribution.”
-Powell made the Fed “more accessible” through skilled communications

On the flubs:
-He compares the Powell Fed’s mistake in describing inflation as “transitory” to his own misjudgment labeling subprime as “contained” and suggests following up such forecasts with “if” statements; ie, we think X, but if we are wrong, we are prepared to do Y.
-He says the main real-time critiques of the transitory inflation call were right for the wrong reasons. They didn’t get the diagnosis of what drove the inflation right and that is important for calibrating the proper response to the error.

Miscellaneous:
On the size of the balance sheet and the argument for reducing the Fed’s footprint in the market: “That’s a meaningless statement.”

[Gregory Daco @GregDaco]

While the job openings turnaround may signal labor market stabilization, hiring remains near 15-year low

✅Openings 4.6% (+0.4pt) 🆚 4.5% pre-Covid

🔻Hirings 3.2% (-0.3pt) 🆚 4.0% pre-Covid

🔻Quits: 1.9% (-0.1pt) 🆚 2.3% pre-Covid

✅Layoffs: 1.1% (-0.1pt) 🆚 1.2% pre-Covid

[Gregory Daco @GregDaco]

🇺🇸April #JOLTS: Openings rise to near-2-year high on surge in professional & business services openings, but hiring still soft

⬆️Job openings: 7.6mn (+731k)
🔻Hiring: 5.1mn (-419k) remains very low
🔻Quits: 3.0mn (-183k) remain very low
⬇️Layoffs low but uptrend: 1.7mn (-192k)

[Gregory Daco @GregDaco]

The manufacturing paradox: activity would appear to be strengthening but 25% of the comments from purchasing managers were positive versus 69% negative...

✅Strength mainly in computers/electronics, aerospace & electrical equipment & appliances

[Gregory Daco @GregDaco]

🇺🇸 @ISM #Manufacturing rises to 4-year high in May: orders/production expanding but sentiment downbeat??

✅ISM 54 (🔼1.3pt)
✅New Orders 56.8 (🔼2.7pt)
✅Production 54.3 (🔼0.9pt)
⛔️Employment 48.6 (🔼2.2pt)
✅Backlogs 52.2 (🔼0.8pt)
🔥Inflation 82.1 (🔽2.5pt)

[Gregory Daco @GregDaco]

#Fed Governor #Powell:

"If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well... The Fed's credibility would be lost... we have a duty to safeguard that priceless asset"

https://t.co/A4zPw9yXZk

[Gregory Daco @GregDaco]

🏆Déjà vu! A Chief Economist's World Cup Forecast

👇My @FIFAWorldCup model using a goal-probability framework calibrated on attacking quality, defensive strength, recent form, squad, players & market-implied expectations (+ my own take: Spain wins!)

https://t.co/2QQb8jt6c3

[Daily Chartbook @dailychartbook]

"Real disposable income (aka the money in our pocket after taxes & inflation) fell 1.1% y/y in April while consumer spending is up 2.1% y/y"

@GregDaco

[Gregory Daco @GregDaco]

⛔️Cause for concern

🔻Real disposable income (aka the money in our pocket after taxes & inflation) fell 1.1% y/y in April while consumer spending is up 2.1% y/y

🐖More & more are dipping into savings, using credit & leveraging wealth

⚖️Uneven & fragile picture