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After months of a remarkably strong US labor market and economy, everything seems to be slowing down.

The latest high-frequency data shows that the consumer could be running out of steam, hiring activity is moderating, business activity is softening, interest-rate sensitive sectors are pulling back and housing is suffering.

The question is whether Friday’s monthly jobs report, easily the most anticipated piece of data out this week, will confirm the trend.

The unflinching resilience of the US labor market is one of the greatest sources of tension in today’s economy. Federal Reserve officials have said employment numbers and the pace of wage increases need to shift lower before “sticky” inflation can be overcome.

Over the past year, the Fed has raised interest rates from nearly zero to a range of 4.75% to 5% to cool the economy. But jobs numbers have blown past expectations for the past 11 months. Unemployment currently sits near historic lows at 3.6%.

A slowdown in the official US jobs report Friday could signal an economic sea change.

Slowly cooling: “Recent labor market evidence, along with our conversations with business executives, indicate that hiring efforts have been scaled back notably across numerous sectors,” wrote Gregory Daco, chief economist at EY, in a note on Wednesday. That could mean payrolls for March come in well below the 240,000-consensus estimate, he added.

More jobs data released this week shows that hiring may be slowing. ADP estimated that private sector employment rose by 145,000 jobs in March, below the 200,000 consensus forecast; and ADP’s measure of year-over-year wage growth slowed to 6.9% from 7.2%.

The February JOLTS Report, meanwhile, showed that job openings dropped 632,000 to 9.93 million in February, from 10.56 million in January. That’s the lowest level of job openings since May 2021.

The strength of the American consumer — which Bank of America CEO Brian Moynihan has previously said was single-handedly propping up the US economy — also appears to be waning.

Spending momentum cooled in February, and analysts are expecting more weakness in March.

The US Treasury publishes daily data for tax refunds, and “the level of tax refunds to households tells us something about how much support there is to consumer spending,” said Torsten Slok, chief economist at Apollo Global Management. Tax refunds in recent weeks have been coming in at a lower rate than in the previous two years.

“Credit conditions are tightening and the recent banking sector stress will only further exacerbate the impact, leading to slower spending on big-ticket items and services,” wrote Daco.

Existing home sales, meanwhile, have plunged more than 20% over the past year and the latest ISM manufacturing survey shows that business investment is slowing. Commercial real estate is in trouble and while major US stock indexes are up this year, there’s underlying weakness in market fundamentals.

Wrapping it up: “The economy is unwell. It’s not the flu, but it is a throat ache. And it’s unlikely to get better in the coming months,” wrote Daco.

Friday’s job report will give us a better idea of how sick the economy actually is.

Strained ties between China and the United States and Russia’s invasion of Ukraine have led to an increase in financial isolation over the past few years.

Those tensions have slowed international investments and hurt payment systems and asset prices, undermining global financial stability, wrote the International Monetary Fund in a new report on Wednesday. “This in turn fuels instability by increasing banks’ funding costs, lowering their profitability, and reducing their lending to the private sector,” they said.

The report comes as credit lines tighten in the wake of the Silicon Valley Bank collapse and subsequent financial system crisis.

Rising geopolitical tensions add to that, wrote the IMF. “Imposition of financial restrictions, increased uncertainty, and cross-border credit and investment outflows triggered by an escalation of tensions could increase banks’ debt rollover risks and funding costs,” according to the report, led by Mario Catalán, deputy chief in the Monetary and Capital Markets Department of the IMF.

Those tensions, wrote researchers, “could also drive up interest rates on government bonds, reducing the values of banks’ assets and adding to their funding costs.”

At the same time, geopolitical tensions also affect banks through the real economy. Supply chain and commodity market disruptions hurt growth and lead to elevated inflation, which reduces banks’ profitability.

“The stress is likely to diminish the risk-taking capacity of banks, prompting them to cut lending, further weighing on economic growth,” said the report.

Walmart

(WMT) plans to slow its pace of hiring in the coming year and focus on building out AI technology to serve customers.

The retailer announced at its annual investor meeting this week that it intends to depend heavily on automation to achieve its goal of adding more than $130 billion, or 4%, in sales over the next five years.

“We’ll grow our top line, improve our margin and improve our return on investment,” CEO Doug McMillon told investors Wednesday. “That’s reflected in our five-year plan. We think growing a company of this size in the 4% range over time and growing profit faster than sales is achievable.”

Walmart also said it plans on servicing about 65% of its stores by automation by 2026. The company also announced that it expects 55% of fulfillment center volumes to go through automated warehouses in the next three years, which it said would lower unit cost prices by 20%.

Shares of Walmart stock closed Wednesday up 1.7%.

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