Labor Market Continues to Surge
July 11, 2017
The recent JOLTS report shows that hiring in May was the strongest it has been since 2004. The housing market is also rebounding, as bankruptcies are wiped from consumer’s records. The White House has nominated a new Federal Reserve Bank Regulator. The CFPB has also proposed a rule that would allow consumers to bring class-action lawsuits against banks.
- Trump nominates Randal Quarles as Fed Bank Regulator. Former Treasury official Randal Quarles has been nominated to be the first Fed vice chairman of supervision, as confirmed by White House officials on Monday. If confirmed by the Senate, Quarles would spearhead the Trump administration’s goal of rethinking many financial regulations adopted during the Obama administration. Quarles has always advocated for a monetary-policy rule to guide rate decisions and has criticized the Fed’s low-interest rate. He previously served in the Treasury Department under President George W. Bush, and since leaving Treasury in 2006 has been a managing director at Cynosure Group, an investment firm. Analysts and officials state that this nomination is a sign that the White House favors incremental rather than radical change to the Fed. [WSJ]
- New rule requires U.S. banks to allow consumer class actions. Under a rule released by the Consumer Financial Protection Bureau on Monday, U.S banks and credit card companies could be prevented from blocking customers from initiating class action suits. The rule, which will go into full effect in eight months, will bar financial firms from forcing customers to agree to settle disputes solely through arbitration as a condition of opening new accounts. As an effect, the rule could potentially decrease the products and services offered to consumers while raising their costs. The CFPB also requires financial companies to give customers the option of pursuing arbitration or class actions. [Reuters]
Economic Indicators & News
- Home-price rebound aids banks out of loan crisis. In the run-up to the financial crisis, banks let home-equity lines of credit flow freely, often leading to borrowers with bad credit living in overvalued homes. The past few years, banks worried that these borrowers would not be able to keep up when the lines reset, which can raise monthly payments significantly. Currently, more than halfway through the resets, banks are becoming more optimistic as borrowers with HELOCs taken out in 2007 are not falling behind as quickly as anticipated, according to credit reporting firm Equifax. There was only a 3.8% delinquency rate among these borrowers, while it had previously been above 4% in the past three years. Decreasing unemployment has also made banks more comfortable with extending credit. [WSJ]
- Jolts show hiring in May was strongest since 2004. The number of job openings in the U.S. fell sharply after May, after the strongest surge in hiring since 2004. Job openings currently sit at 5.66 million, after falling by 301,000. The quits rate also rose to match a post-recession high of 2.2%. As the quits rate measures people leaving jobs by their own will, the rise suggests that Americans are more confident in the current state of the economy to move jobs. In all, these numbers for May indicate a strong labor market, with the unemployment rate at 4.4% and with layoffs near decade lows. [Market Watch]