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Mo Money Mo Problems
Credit-card debt rose to a record in the final quarter of 2019 as Americans spent aggressively amid a strong economy and job market. The downside? The proportion of people seriously behind on their payments increased. Total credit-card balances increased by $46 billion to $930 billion, well above the previous peak seen before the 2008 financial crisis, according to the Federal Reserve Bank of New York. But the proportion of credit-card debt in serious delinquency, meaning payments were late by 90 days or more, rose to the highest level in almost eight years. The serious-delinquency rate for borrowers from 18 to 29 years old rose to the highest level since the end of 2010, Yuka Hayashi reports.
WHAT TO WATCH TODAY
Philadelphia Fed President Patrick Harker speaks on the economic outlook at 8:30 a.m. ET and San Francisco Fed President Mary Daly speaks in Dublin at 9 a.m. ET.
Federal Reserve Chairman Jerome Powell testifies on monetary policy before the Senate Banking Committee at 9:30 a.m. ET. Follow our coverage here.
Treasury Secretary Steven Mnuchin testifies on the the White House’s FY2021 budget before the Senate Finance Committee at 1 p.m. ET.
U.S. federal budget figures for January are out at 2 p.m. ET.
Now Hiring … a Little Less
Job openings data suggest the tight U.S. labor market might be loosening a bit. There were 6.4 million job openings at the end of December, down 14.9% from a year earlier, the Labor Department said. That marks the largest annual drop since December 2009. Still, the number of job openings has exceeded the number of unemployed Americans for 22 consecutive months. And it’s not clear if companies have taken down postings because they don’t need as many workers, if they’ve given up because it’s so hard to find workers or if this is just a blip. “The trend in job growth has remained strong through January,” said J.P. Morgan economist Daniel Silver. “But the recent decline in job openings signals that job growth could slow at some point.” —Amara Omeokwe
It’s too soon to view a drop in openings as a sign the labor market is deteriorating. But if canceling plans to hire is an early whisper, then layoffs would be a louder grunt. There doesn’t appear to be much noise on that front, though one of the labor-market’s tried-and-true indicators ain’t what it used to be. The number of initial jobless claims in 2019 fell to the lowest level in half a century. The number of layoffs? The lowest since…2016. Jobless claims, which measure the number of people filing for unemployment benefits, have become increasingly detached from actual separations. That’s likely a function of several factors: Fewer jobs qualify for benefits, it’s harder to apply for benefits, benefits aren’t as generous and a strong labor market means fewer people bother.
Labor unrest reached its highest level in nearly two decades. The Labor Department reported 25 labor-related work stoppages—including strikes and lockouts—involving 1,000 or more workers in 2019, the most since 2001. The level of labor disputes has moved higher in the past two years—driven by work stoppages by teachers—and is well above the record low of five in 2009, the year the recession ended. Labor disputes tend to increase when the job market is tight and workers feel they have more leverage, Eric Morath and Nora Naughton report.
Focus on Coronavirus
Federal Reserve Chairman Jerome Powell said the central bank is closely monitoring the extent of global economic disruptions from the coronavirus in China. “The question for us really is what will be the effects on the U.S. economy? Will they be persistent? Will they be material? That’s really the question,” he said before the House Financial Services Committee. Mr. Powell told lawmakers it was too soon to say whether the outbreak would change the central bank’s view that the current level of short-term rates remains appropriate to support solid economic growth and hiring—but it is the kind of threat that illustrates why the Fed is more likely to cut than raise rates, Nick Timiraos reports.
The Reserve Bank of New Zealand on Wednesday left its cash rate unchanged at a record low 1.0% and said it expects the coronavirus epidemic to have a limited impact on the local economy: “We assume the overall economic impact of the coronavirus outbreak in New Zealand will be of a short duration, with most of the impacts in the first half of 2020.” Sweden’s Riksbank kept its key interest rate unchanged at zero and said that while the effects of the coronavirus are expected to reduce global growth in the short term, it is difficult at the moment to fully assess the economic consequences.
Global stocks and oil prices advanced Wednesday as concerns about China’s coronavirus and the potential economic fallout eased. Already, though, the outbreak has scrambled the global trade in commodities. Chinese companies have canceled orders for crude oil and other goods, and the country’s once-heaving ports are quieter. Prices for some natural resources plumbed multiyear lows, Benoit Faucon and Costas Paris report.
And the travel industry is set for a multibillion-dollar hit. Airlines have canceled flights between the world’s two biggest economies into April, while the U.S. has banned noncitizens who traveled recently to China from entry. That effective freeze on visitors from China is a blow to hotels, retailers and other businesses that have come to rely on their spending, Keiko Morris and Austen Hufford report. Chinese tourists contributed $35 billion to the U.S. economy in 2018, according to the U.S. Travel Association’s latest estimate.
WHAT ELSE WE’RE READING
Do you talk funny? “All of our estimators show that speaking with a distinctive regional accent reduces wages by an amount that is comparable to the gender wage gap. We also find that workers with distinctive regional accents tend to sort away from occupations that demand high levels of face-to-face contact, consistent with various occupational sorting models,” Jeffrey Grogger, Andreas Steinmayr and Joachim Winter write in a National Bureau of Economic Research working paper.
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