Slowing in biotech investment

From economics blog Marginal Revolution, a statistic from the Financial Times: 

Just nine biotech companies have listed in the US this year, raising a total of $1bn, according to LifeSci Capital, a boutique investment bank. Almost 60 companies did so in the same period last year, tapping investors for $7.4bn.

 This corroborates what we've been seeing in the biotech media, including this recent article from FierceBiotech: 

The massive $15.9 billion haul for biopharma technology deals in 2021 was always going to be tough to beat, but dealmaking in 2022 is off at a snail's pace, with M&A, IPOs and fundraising all plummeting, according to a new report.

Funding for the world’s biopharma technology companies totaled $2.8 billion in the first quarter of the year, down 10%, according to CB Insights’ State of Biopharma Tech Q1’22 Report. This was the fourth consecutive quarter with a decline in deals, with just 66 signed for the months of January through March.

We already know that M&A has been slow—just ask anyone who came out of the J.P. Morgan Healthcare Conference in January disappointed with the slew of licensing deals. But the CB Insights report has the details: There was a 60% drop in M&A exits in the first quarter, with just six recorded, compared to 15 in the fourth quarter of 2021.

I imagine this will not really affect hiring per se, but it may slow down some of the wage growth that we're seeing for the Boston or San Francisco area for entry-level scientists... 

Can the Fed engineer a soft landing?

Via the New York Times, thoughts about the current state of the economy: 

When it comes to the economy, more is usually better.

Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession.

But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades...

And some thoughts within from progressive economist Mike Konczal: 

...The Fed’s efforts to cool off the economy are already bearing fruit, Mr. Konczal said. Mortgage rates have risen sharply, and there are signs that the housing market is slowing as a result. The stock market has lost almost 15 percent of its value since the beginning of the year. That loss of wealth is likely to lead at least some consumers to pull back on their spending, which will lead to a pullback in hiring. Job openings fell in April, though they remained high, and wage growth has eased.

“There’s a lot of evidence to suggest the economy has already slowed down,” Mr. Konczal said. He said he was optimistic that the United States was on a path toward “normalizing to a regular good economy” instead of the boomlike one it has experienced over the past year.

My broad prediction continues to be that the job market for entry-level chemists in fall of 2022 will be less good than the fall of 2021, but how much less is the question that is truly difficult to answer. I suspect that it will be "somewhat less good" (0-10% fewer job openings?), but not "significantly less good" (10-25+%), but I genuinely have no good way to measure this, other than the Faculty Jobs List (?). Perhaps Organic Chemistry Jobs is the place to monitor. 

Anyway, this is something that I am continuing to watch, so if you would like to enter a prediction with falsifiability in the comments, I would welcome that. 

The precariat?

Via Marginal Revolution, this economics paper abstract: 

There is a widespread belief that work is less secure than in the past, that an increasing share of workers are part of the “pprecariat”. It is hard to find much evidence for this in objective measures of job security, but perhaps subjective measures show different trends. This paper shows that in the US, UK, and Germany workers feel as secure as they ever have in the last thirty years. This is partly because job insecurity is very cyclical and (pre-COVID) unemployment rates very low, but there is also no clear underlying trend towards increased subjective measures of job insecurity. This conclusion seems robust to controlling for the changing mix of the labor force, and is true for specific sub-sets of workers. 

It would be fascinating to get a chemistry-specific measurement of worker-perceived precarity in chemistry, either firm-specific or field-specific. I imagine that workers of the last 20 years have felt more precarious (especially between 2003-2015 or so). I suspect we're at a relative global minima in "chemist-perceived precarity", but we shall see... 

NYT: Life sciences real estate is hot

Via the New York Times, good news for scientists:

But there is hope for anxious landlords: The life sciences industry, flush with cash from a record $70 billion of private and public capital investments in North America last year, is swooping in to claim that empty space.

Across the six largest U.S. life sciences markets, more than 20 percent of the laboratory spaces being built are conversions from offices. In San Francisco, Chicago, Boston and Raleigh, N.C., asking rents for lab space have increased more than 60 percent since the beginning of 2016, while office rents have crept up only 15 to 30 percent.

As it has across a number of industries, the pandemic accelerated a trend that was already in motion.

“It’s been a wild 15 months,” said Austin Barrett, head of the life sciences division for the advisory firm Savills. “The office market and the lab market are a tale of two cities right now.”

This can't last forever, but it's nice to see. Best wishes to all of us.  

Grim projections about manufacturing from BLS

The explanatory article from the Bureau of Labor Statistics that accompanies the biennial employment projections has some grim things to say about the manufacturing economy and employment: 

Most rapidly declining employment 

The manufacturing sector is projected to lose the most jobs and have the most rapid employment decline of any sector over the projections decade. The large manufacturing sector contains 10 of the 20 industries projected to have the most rapid employment declines. Some factors contributing to the loss of jobs in the manufacturing sector are international competition and the adoption of new productivity-enhancing technologies, such as robotics. The tobacco manufacturing industry is projected to have the most rapid declines in industry employment, falling 4.6 percent annually. 

The decline in employment in the manufacturing sector is expected to decrease employment over the projections decade in a number of occupations concentrated in manufacturing. Production occupations are projected to experience the strongest employment decline of any occupational group, because of a combination of automation and offshoring. Of the 30 occupations with the fastest employment declines, 13 are in the production occupational group and include various machine and tool setters, assemblers, and operators. Although their employment is projected to decline rapidly, they are relatively small occupations and are projected to lose only about 56,200 jobs in total.

Why do I mention this? The manufacturing sector employs a large percentage of the nation's chemists. (42%, to be exact). This bears watching - and it is worth noting that BLS aren't soothsayers.

Chemical Activity Barometer Is Flat In June

From the American Chemistry Council (the trade group for large chemical companies):

WASHINGTON (June 25, 2019) – The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), was flat (0.0 percent change) in June on a three-month moving average (3MMA) basis, following three monthly gains. On a year-over-year (Y/Y) basis, the barometer is up 0.3 percent (3MMA). 

The unadjusted measure of the CAB retreated 0.2 percent in June and fell 0.3 percent in May. 

The diffusion index rose to 65 percent in June. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for May was revised downward by 0.38 points and that for April by 0.22 points. 

“The slowing economy and rising trade tensions have weighed on business confidence and investment, resulting in mixed manufacturing activity,” said Kevin Swift, chief economist at ACC. “In summary, the CAB reading continues to signal gains in U.S. commercial and industrial activity through late 2019, but at a moderated pace.” 

The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators...

This isn't the greatest news, and of a piece with recent economic news that led the Fed to signal that it will be cutting rates soon.

A couple of crazy questions from a milquetoast economic doomsayer:

• 2019 is turning out to be a seemingly decent economic year, as measured by GDP. Does anyone expect 2020 to carry this along? 
• When will the next recession be? I got a dollar that the next recession (casually) two consecutive quarters of negative GDP growth) will happen in the next 2 years. 
• What is the American Chemical Society doing to prepare its members for that next recession? 

Here's hoping that 2020 will be a decent economic year, especially for those looking for jobs this coming fall and spring...

(For those students/postdocs who will be forwarded this post, in general, I'm pessimistic on the economy. Watch the trends, not the data points.)

Hmmmmmmmm slowing economy signs?

From the inbox, the ACC's Chemical Activity Barometer:

WASHINGTON (March 26, 2019) – The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 0.1 percent in March on a three-month moving average (3MMA) basis, the first gain in five months. On a year-over-year (Y/Y) basis, the barometer is down 0.3 percent (3MMA). 

The unadjusted measure of the CAB rose 0.3 percent in March following six months of shrinking activity. It declined 0.1 percent in February and had a flat reading in January. The diffusion index rebounded to 65 percent in March, up from 57 percent in February. A year earlier, it was 71 percent. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. 

“The CAB continues to indicate gains in U.S. commercial and industrial activity through mid-2019, but at a markedly slower rate of growth, as measured by year-earlier comparisons,” said Kevin Swift, chief economist at ACC.

Hmmm - what are you seeing, readers? I kinda think I agree, but I'd love to know what you're seeing.  

How are your animal spirits?

Via the New York Times, an interesting article about optimism in the corporate sector:

Potential perils are in plain sight: An intense and unpredictable tariff battle is alarming businesses across the country. The annual federal deficit is heading toward $1 trillion. Credit card debt is soaring. And the synchronous wave that lifted every world economy at the year’s start has dissipated. 

So what? 

Such risks have done little to puncture the exuberant optimism that is encouraging American businesses to ramp up hiring and consider new investment. 

The confidence is rooted only partly in hard-nosed data, like the rapid pace of growth expected for the second quarter and record low jobless rates. It is also a sign of harder-to-measure sentiment. “Animal spirits are high,” said Tim Ryan, United States chairman of the global accounting and consulting firm PwC, referring to the gut feelings and impulses that can drive economies to elation or despair.

So what's it like where you are? Where I am, things seem pretty good, and we expect to have a decent year next year. Who knows what 2020 brings?

I expect GDP numbers in 2019 to be lower than 2018's, but my crystal ball is pretty fuzzy. Yours?  

How is your economy going?

From the American Chemistry Council (the trade association for the big chemical companies), this update on their outlook for 2018:

Credit: the American ChemistryCouncil

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), notched an increase over September’s reading both on a three-month moving average (3MMA) basis and an unadjusted basis. The CAB was up 0.2 percent and 0.7 percent, respectively. The increases reflected a bounce back from the effects of Hurricanes Harvey and Irma. Compared to a year earlier, the CAB is up 3.0 percent on a 3MMA basis, a slower pace than the previous nine months, but one that continues to suggest further gains in U.S. business activity into 2018.

The Chemical Activity Barometer has four primary components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

So looks like things are kinda going vaguely okay. It's not clear to me that US GDP will break out of its 2-3% range any time soon.

So here's my question for you? How is your economy going? Mine is going all right - we are (my family is) keeping our heads above water, and 2018 looks to be fine.

So, readers, are you getting hired? Decent pay? How about your friends? Are they finding positions? How is your organization (academic institution, company, etc) doing? Any layoffs in the present/future?

How is your economy going, readers? 

Time for bold Fed predictions: CJ sez "up" today, twice next year.

Via Marketwatch, some comments about today's Federal Reserve news: 

The Federal Reserve is set to lift interest rates for the first time in over nine years on Wednesday at 2 p.m. Eastern. 

The announcement, scheduled to come out of what’s called the Federal Open Market Committee, will be followed by a news conference with Federal Reserve Chairwoman Janet Yellen, who will speak at 2:30 p.m. 

The Fed has kept interest rates in a band between zero and 0.25% since December 2008, when it lowered rates in the midst of the Great Recession.

Now that the U.S. economy has been growing steadily for years, the central bank is poised to begin lifting rates. 

The likely rate hike has been well choreographed. Markets were pricing in an 83% chance of a rate hike, as of Monday afternoon. 

One of the big questions awaiting Yellen is how quickly the Fed will follow up the first rate hike with another — some say it could be as little as three months later...

Of course, I predict (like darn near everyone) a 0.25% hike today.

I predict for 2016:

1. There will be at least 2 rate hikes next year.
2. Both of them at the 0.25% level.

My reasons: the Fed has to signal to the US and the rest of the world that the era of zero-interest rates is over, and raising rates at least once more before the election is likely, probably in March or so, so no one is thinking "this is intended to influence the election one way or another."

All of this said, I personally feel there hasn't been a ton of evidence that we have a great economy right now. The Conference Board forecast is for 2.6% growth next year, and I'd take the under on that one. (of course you would, CJ. - ed.) GDP was up and down for this year, and wage growth is meh at best. (maybe I'm pessimistic on that one.) So I don't see evidence for cranking up interest rates.

Readers, I'd love comments, but I'd value predictions for 2016 more. We'll check in again next year and see who wins - maybe a picture of Paul Volcker as a prize?

UPDATE: Going up! From the FOMC:

Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.