A Closer Look At The Pandemic-Era Retirement Boom
1 hr 58 min ago
Older workers are retiring in greater numbers than ever and reshaping the economy, according to new research by economists at the Federal Reserve Bank of San Francisco.
One of the defining economic trends of the post-pandemic era is that the economy is running on a smaller workforce, relative to the population, than it did before 2020. That’s one reason unemployment has stayed low and wage growth has stayed high despite the Federal Reserve’s interest rate hikes intended to slow economic growth.
One of the main reasons for this was a wave of early retirements among workers over 55, who were more vulnerable to COVID-19 and eager to get out of the workforce, and on top of that were able to retire because of a surging stock market fattening up retirement accounts.
The increase in retirements is being driven mainly by workers without college degrees, and, disproportionately, by White workers compared to other racial groups, according to Nicolas Petrosky-Nadeau, Brandon Miskanic, and Cindy Zhao, researchers at the Federal Reserve Bank of San Francisco, who analyzed data from the Bureau of Labor Statistics.
“Other research suggests that this may be due to higher wealth saved for retirement among White workers compared with workers of other races and ethnicities, in combination with the safety and physical concerns associated with the occupations of workers without college degrees,” the researchers wrote.
This highlights the long shadow that the pandemic has cast over American life, especially for people who were more vulnerable to COVID-19 in the first place.
“People ages 55 and older reported higher rates of social distancing and other mitigation behaviors, both during the initial onset of the pandemic and after its peak,” the researchers wrote. “Moreover, measures of anxiety and fear rose more among older populations and remained elevated well after vaccines were widely available and social activities progressively resumed.”
Texas Manufacturing Weakened in March, Expectations Remain High
3 hr 23 min ago
Manufacturing in Texas declined in March, reversing from February’s gains, while manufacturer sentiment over future production moved higher, according to data from the Dallas Federal Reserve.
The monthly Texas Manufacturing Outlook Survey showed its production index fell five points to a negative reading of 4.1, meaning more respondents reported decreasing manufacturing output and turning back gains from February.
The survey also showed new orders reversed February’s positive reading to fall 17 points, showing demand could be softening, while capacity utilization and shipments also declined. The employment index remained positive but dropped four points to 1.5, while wages and prices increased.
Expectations for future manufacturing activity in Texas improved in March, with the future production index jumping 10 points to 32.3, while other projections for upcoming business activity in the region also moved higher.
Recent surveys in New York and the Philadelphia areas also showed dips in manufacturing recently.
-Terry Lane
Fed’s Cook Says Inflation and Labor Markets in ‘Better Balance’
5 hr 29 min ago
Following more than a year of declining inflation rates, there’s a “better balance” between the Federal Reserve’s dual mandates of maintaining maximum employment and taming inflation, said Fed Governor Lisa Cook Monday.
This balance requires the central bank to take a “careful approach” as it considers future interest rate cuts, she said.
“With inflation having fallen substantially, even as the labor market has remained strong, it is worth considering how economic developments may have shifted policy tradeoffs and associated risks,” Cook told the audience at a Harvard University conference.
When inflation was at its peak, the Federal Reserve had to make “forceful” interest rate hikes to bring inflation down, Cook said in her remarks. Price pressures have reduced since then, however, Cook warned keeping interest rates too high could impact the labor market.
“Easing too late could also do unnecessary harm by holding back the economy and depriving people of economic opportunities,” Cook said.
Cook’s remarks come after the Federal Reserve voted to keep interest rates at their 23-year high last week. The Fed also kept in place its median forecast of three rate cuts this year.
In an interview with Yahoo Finance on the same day, Cook’s colleague Chicago Fed President Austan Goolsbee said three rate cuts were “in line” with his thoughts on how the Federal Reserve should act on interest rates this year.
In projecting stronger economic growth and lower unemployment in the years ahead, Federal Reserve officials think they’re approaching a “soft landing” where inflation is brought back to 2% without sending the economy into recession.
“The path of disinflation, as expected, has been bumpy and uneven, but a careful approach to further policy adjustments can ensure that inflation will return sustainably to 2% while striving to maintain the strong labor market,” Cook said.
-Terry Lane
New Home Sales Fell in February
7 hr 44 min ago
Fewer newly built homes were sold in February, moving in the opposite direction than their previously owned counterparts.
If new homes continued to sell at the same rate as February, 662,000 homes would be sold this year, according to data from the U.S. Census Bureau. Economists surveyed by the Dow Jones Newswires and Wall Street Journal expected an annual rate of 675,000.
That number is 0.3% below January’s revised annual rate, however still 5.9% above the same time last year.
This is in contrast to last week’s report on existing homes, which showed slightly lower interest rates loosened some of the gridlock the market has been experiencing. Existing home sales jumped 9.5% in February.
High interest rates have made homeowners hesitant to sell and buy new homes with a much higher mortgage rate. That’s resulted in fewer homes for sale, and many economists have said building more new homes would be the way to unlock the market.
“We expect the pace of new home sales to trend higher over the balance of 2024 with sales supported by lower mortgage rates, increased supply, and a relative scarcity of existing homes for sale,” wrote Oxford Economics’ Nancy Vanden Houten in an analysis of the report.
This blog post has been updated to include a comment from an economist.
