On Friday, we expect the Bureau of Labor Statistics (BLS) to report that U.S employment is growing, albeit amid numerous concerns. Our forecast is for March nonfarm payrolls to rise by 125,000, which would be down from February's report of 151,000 new jobs and the three-month average of 200,000. The March consensus has been fluctuating between 125k and 130k. We expect the unemployment rate in March to tick up to 4.2%, which is still healthy and in line with consensus. We expect that average hours worked to remain at 34.1 hours and growth in average hourly earnings to remain at 4.0%. The median unemployment forecast from Fed governors and bank presidents in the Summary of Economic Projections is now 4.4% for 2025 (up from 4.3% at the time of the December Fed meeting). The 2026 and 2027 estimates are still 4.3%; the long-term estimate is still at 4.2%. Based on the Federal Reserve Bank of Atlanta jobs calculator, nonfarm payrolls would need to average approximately 113,000 a month to hold the unemployment rate at 4.1% over the next 12 months. If the unemployment rate rises to 4.4% over the next 12 months, consistent with the new estimate from Fed officials, monthly payrolls would average approximately 71,500, according to the Atlanta Fed calculator. Any meaningful uptick in layoffs would start to appear in initial jobless claims, which are reported every Thursday. The current four-week average of 224,000 is well below the 300,000 that might be a recession warning. With many job cuts announced by the federal government and the potential for additional job losses by government contractors and institutions that may lose funding, we will take a close look at our forecasts if the four-week average stays above 250,000 for a few weeks. The services sector is critical to our forecast for continuing GDP growth. Will be watching private service-providing payrolls on Friday as well as the ISM services indices, which will be reported on Thursday.

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Costco operates 897 stores, for paying members, averaging 147,000 square feet each. Fees from the company's cardholders provided about 2% of its $250 billion in total FY24 revenue. Based in Issaquah, Washington, the company will end 2024 with 617 stores in the U.S. and Puerto Rico, 109 stores in Canada, 41 in Mexico, 29 in the United Kingdom, 36 in Japan, 14 in Taiwan, 19 in Korea, 15 in Australia, five in Spain, one in Iceland, one in New Zealand, and one in Sweden, two in France, and seven in China. About 40% of sales are sundries (including candy, alcohol and tobacco); 14% fresh food; 26% non-food including hard-lines (such as electronics and appliances) and soft-lines (including apparel and jewelry); and 20% other ancillary businesses, including gas stations, pharmacy, optical, hearing aids and printing. International stores represent about 27% of total sales and 34% of operating income. At the end of FY24, Costco had approximately 131 million square feet of floor space. Online sales represent approximately 7%, and gas stations represent about 13% of company sales. The company's fiscal year ends on the Sunday closest to August 31. FY23 was a 53-week year. The company's fiscal calendar has 12 weeks in each of the first three quarters and 16 weeks in 4Q.

Costco operates a membership-based, no-frills retail model, predicated on offering a select product assortment in bulk quantities at bargain prices. The firm avoids maintaining costly product displays by keeping inventory on pallets and limits distribution expenses by storing its inventory at point of sale in the warehouse. Given Costco’s frugal cost structure, the firm is able to price its merchandise below competing retailers, driving high sales volume per warehouse and allowing the retailer to generate strong profits on thin margins. Costco operates over 600 warehouses in the United States and boasts over 60% market share in the domestic warehouse club industry. Internationally, Costco operates another 280 warehouses, primarily in markets such as Canada, Mexico, Japan, and the UK.