Student Loans Weigh as U.S.-China Trade Deal Falters
July 17, 2017
China seems to be unwilling to agree to terms that Secretary of Commerce Wilbur Ross claimed they would in May. Homeland Security has also stated that they will allow 15,000 more seasonal work visas to help with industries unrelated to agriculture. This all comes as student loans are reported to be the driving reason behind lower homeownership among millennials.
- U.S.-China trade deal falls short of spirit. In May, Commerce Secretary Wilbur Ross had celebrated the accomplishment of extracting promises from China to open markets in finance and agriculture that had long been restricted. Now, as the time for completing the agreement nears, many American companies say that China has fallen short of the spirit of the agreement, and claim that there has been only modest and slow improvement in some sectors and still unresolved obstacles in others. China has made good on at least one pledge by allowing Citigroup Inc. and J.P. Morgan Chase & Co to expand bond-market activities. In return for China’s promises, the U.S. had offered market opening gestures as well—for instance, with respect to previously blocked Chinese cooked-poultry imports. [WSJ]
- Homeland Security allows 15,000 more visas for seasonal workers. The Department of Homeland Security announced on Monday that it will increase the allowance of temporary visas granted this year for workers in seasonal nonagricultural industries, such as tourism. Homeland Security Secretary John Kelly and Secretary of Labor Alexander Acosta determined collectively that there were not enough qualified and willing U.S. workers to fill the needs of U.S. businesses. Congress gave the discretionary authority to provide temporary relief to American business suffering from lack of workers by providing a one-time increase in the congressionally set annual cap. The number of H2-B visas had been capped for this year at 66,000. Proponents of reduced immigration criticized the move, saying the U.S. workforce will suffer from the new permit for 15,000 additional visas for seasonal workers. [The Hill]
Economic Indicators & News
- U.S. oil-rig count edged up this week. On Friday, Baker Hughes reported that the number of active U.S. rigs drilling for oil increased by two to 756 rigs this week. The total active U.S. rig count, including oil and natural gas rigs, was unchanged at 952. August West Texas Intermediate crude rose 47 cents by around 1% to $46.55 a barrel on the New York Mercantile Exchange, which barely changed after the report was released. [Market Watch]
- Student debt is a major reason millennials aren’t buying homes. New research conducted by the Federal Reserve Bank of New York concluded that college tuition hikes and increases in student debt burdens in recent years have caused a significant drop in homeownership among young Americans ages 28 to 30. Student debt has doubled since 2009 to more than $1.4 trillion. Homeownership leads to additional spending on furniture and other items; therefore, this drop is likely affecting the economy in other ways beyond just the housing market. The research found that as much as 35% percent of the decline in young American home ownership from 2007 to 2015 can be attributed to student debt. The research also estimated that if tuition had stayed at 2001 levels, 360,000 additional young Americans would have owned a home in 2015. The increase in the cost of education may generate negative economic consequences through muted housing-related spending and lower wealth accumulation among millennial consumers in years in come. [Bloomberg]