E-newsletter: Bracing For One other Downturn?


That is the net model of the WSJ’s e-newsletter on the economic system. You’ll be able to join daily delivery here.

Gross sales Are Up However Possibly Not For Lengthy

U.S. retail gross sales rose strongly in June for the second straight month as shops and eating places reopened. Sales were up a seasonally adjusted 7.5% on the month, Harriet Torry stories. The approaching months may look grimmer, nonetheless, because the surge of recent instances has triggered states and companies to close down once more.

Gross sales could also be up however that received’t be sufficient to maintain many shops open. Retailers are on monitor to close as many as 25,000 shops this yr, up from 9,832 final yr, because the pandemic pushes extra buying on-line, write Luis Santiago and Suzanne Kapner.

In the meantime, new filings for unemployment benefits, that are launched each week, have stabilized at 1.Three million, a worrying signal that the restoration within the labor market has stalled. That’s round 5 occasions greater than the variety of weekly claims that had been routinely filed within the weeks earlier than the pandemic began. The labor market nonetheless has an extended approach to go and the previous few weeks haven’t been encouraging, economists mentioned.

The financial downturn attributable to the pandemic has tested food banks as they wrestle to maintain up with a surge in demand. Greater than 82% of U.S. meals banks have seen demand enhance with a median enhance of 50%, stories Jennifer Smith. Donations of things like rice and soup have dried up, forcing the meals banks to compete with retailers and different meals banks to purchase canned items. Elevated volumes to fulfill rising demand has additionally put stress on their warehouse area. And sustaining social distancing necessities is making it more durable for them at hand out donations effectively.

What to Watch As we speak

U.S. housing begins for June are launched at 8:30 a.m. ET and are anticipated to point out an 18.1% enhance over the earlier month.

The College of Michigan’s index of client sentiment for July comes out at 10 a.m. ET and is predicted to put up 77.8.

U.S. regional and state employment figures are launched at 10 a.m.

U.S. Treasury Secretary Steven Mnuchin testifies earlier than the Home Small Enterprise Committee at 10:30 a.m.

Prime Tales

Document Charges

Right here’s one other signal of how the pandemic is shaking up the economic system: U.S. mortgage charges have crossed below the 3% threshold for the primary time on report. The typical fee on a 30-year fastened mortgage fell to 2.98%, Orla McCaffrey stories. That’s partly as a result of low yields on authorities debt. Normally, low charges increase residence gross sales however that isn’t the case now. Extra persons are out of labor and those that do have jobs are being extra cautious. And in case you’re seeking to purchase, you may discover folks aren’t in a rush to promote their houses proper now, retaining stock tight and costs excessive.

Bubble Bubble

The world’s largest asset bubble is getting bigger, regardless of the coronavirus pandemic. China’s property increase is now bigger than the U.S. housing bubble of the 2000s, many economists say. Within the 12 months via June, buyers poured $1.Four trillion into Chinese language housing, write Stella Yifan Xie and Mike Chicken. After a short pause in shopping for in February throughout the peak of the pandemic in China, the market has resumed and is firing on all cylinders. City residence costs had been up 4.9% in June from the earlier yr. The Chinese language authorities has tried to maintain a lid on housing costs however hasn’t up to now succeeded in bringing the shopping for frenzy beneath management.

China on the Mend

China’s economic system grew by 3.2% within the second quarter, an indication that the nation’s aggressive efforts to regulate the pandemic are paying off. With different international locations, most notably the U.S., nonetheless mired in an financial downturn, Chinese language factories have been in a position to step in and fill the gaps in international provide chains. However there are causes to warning. Retail gross sales and actual disposable earnings are down and tensions with the U.S. are flaring up once more, stories Jonathan Cheng.

No Transfer From the ECB

The European Central Financial institution left its stimulus program unchanged and mentioned it might proceed to assist the area’s economic system because it recovers from the pandemic-induced downturn. ECB President Christina Lagarde struck an upbeat observe however warned the restoration could be sluggish and uneven, Tom Fairless stories.

Extra Cash For Cops

Regardless of nationwide calls to defund the police, some cities are boosting their police department budgets. Houston, Phoenix and San Diego have all raised police funding ranges, contrasting with a bigger variety of cities which have lower spending or mentioned they plan to chop spending, report Talal Ansari and Jennifer Calfas.

What Else We’re Studying

The coronavirus pandemic may accelerate the shift to automation, as companies look to guard themselves from future illness outbreaks, write Alex Chernoff of the Financial institution of Canada and Casey Warman of Dalhousie College. They determine native labor markets and demographic teams liable to shedding jobs based mostly on their work’s automation potential and transmission danger. Ladies are about twice as seemingly as males to work in jobs that may be automated and the place the danger of an infection is larger, they conclude. Most in danger are customer support representatives, licensed sensible nurses, medical assistants, correctional officers and pharmacy technicians, they discover.


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