Publications

U.S. News

Bloomberg reports that new Japanese restrictions on exports to Korea threaten to disrupt global supply chains critical for the production of semiconductors and other electronic components. Resulting production cuts by Korean chipmakers could affect American electronics companies dependent on components from the region if the Japan-Korea dispute intensifies. Bloomberg

According to the Washington Post, nearly one in four Americans say they never plan to retire, despite factors such as illness, layoffs, and caregiving responsibilities often forcing older workers to leave jobs earlier than expected. Financial worries are a major cause of Americans remaining in the workforce, with just 29% of Americans over age 50 describing themselves as extremely or very prepared for retirement. WaPo

U.S. Economic Indicators

The U.S. economy added 224,000 jobs in June, well above consensus. The unemployment rate edged up to 3.7%, the labor force participation rate was little changed at 62.9%, and average hourly earnings annual growth remained at 3.1%. BLS Report

U.S. News

According to the Washington Post, the benefits of the current economic expansion are distributed far more unevenly than in previous growth cycles, with about 40% of Americans experiencing little or volatile wage growth despite rising costs for housing, health care, and education. Many families have yet to fully recover from the 2008 financial crisis and have a diminished ability to handle surprise expenses or a future economic downturn. WaPo

The Financial Times reports that a key measure of German manufacturing activity declined more than expected in May, adding to concerns about the health of the global economy and raising expectations that the European Central Bank will implement recession-era stimulus policies. Germany’s export-driven economy has been hard-hit by the U.S.-China trade conflict, with economists now predicting negative growth in Q2 with little hope of recovery in Q3. FT

U.S. News

The Financial Times reports that the current U.S. economic expansion has become the longest since at least 1854, surpassing the economic boom of the 1990s and more than twice as long as the average post-WWII expansion. The new record comes amid increasingly mixed global economic data that suggest even aggressive rate cuts by the Federal Reserve may not be able to keep growth on track. FT

The Wall Street Journal reports that the U.S. has increased the value of European goods being considered for tariffs to $21 billion as part of an ongoing dispute with the E.U. over domestic aircraft subsidies. Both sides are awaiting the outcome of parallel cases brought before the WTO, while the U.S. has stressed that the European aircraft subsidy dispute is separate from other ongoing trade conflicts. WSJ

U.S. Economic Indicators

The ISM Manufacturing Index edged down 0.4 percentage point to 51.7 in June. The Employment Index rose 0.8 percentage point to 54.5, while the New Orders Index declined 2.7 percentage points to 50.0. ISM Report

Construction spending declined 0.8% in May to an annualized rate of $1.29 trillion. Private construction fell 0.7%, while public construction decreased 0.9%. Census Bureau Report

U.S. News

The Wall Street Journal reports that OPEC and its Russia-led allies are likely to extend their agreement to cut oil output well into 2020, driven by concerns about softening demand from China. The threat to oil supplies due to the recent escalation of tensions in the Middle East has been more than offset by collective worries about the strength of the global economy, putting downward pressure on oil prices. WSJ

According to the Wall Street Journal, the U.S. and other advanced economies have experienced significant economic gains from an increasing share of older workers staying in the labor force rather than retiring. Driven by pension changes, better health, and increased education, the “gray wave” is helping offset obstacles to growth by stabilizing labor force participation. WSJ

U.S. Economic Indicators

Real disposable personal income rose 0.3% in May after rising 0.1% in April while real personal consumption expenditure (PCE) rose 0.2%. The PCE price index rose 0.2% (up 1.5% Y/Y) and the core price index rose 0.2% (up 1.6% Y/Y). BEA Report

The University of Michigan Consumer Sentiment Index fell 1.8 points to 98.2 in the final June reading and is unchanged from June of last year. The Index of Consumer Expectations declined 4.2 points to 89.3 while the Current Economic Conditions Index rose 1.9 points to 111.9. University of Michigan

U.S. News

According to the Wall Street Journal, the most recent Fed “stress test” of large U.S. banks found that all 18 banks reviewed are healthy enough to start reducing their capital stockpiles to make payments to investors. The results indicate that the current U.S. financial system is resilient enough to withstand an economic downturn. WSJ

Don Clark reports for the New York Times that U.S. chipmakers are concerned that the trade dispute between the U.S. and China will lead Chinese companies to permanently move away from purchasing American semiconductors, even if a deal between President Trump and President Xi eases tensions. U.S. bans on sales of tech components to certain Chinese entities is expected to induce Chinese companies to start producing more chips domestically. NYT