Newsletter: The U.S. Labor Market Is Breaking Records

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The Record Store

A record-long stretch of job creation (110 months) has produced, well, some records. The share of the population age 65 and over in the labor force, for example, is the highest on record. At different times the unemployment rates for workers with less than a high-school diploma, black men, black women, hispanic men and hispanic women have all touched historic lows.

(For more on why older Americans are working longer, read John Stoll’s latest on retirement. Yes, there is some economic necessity. But…”With U.S. birthrates falling and membership in religious institutions at all-time lows, work is addressing a void once filled by children, churches or community organizations,” he writes.)

To be sure, not everyone is celebrating the daily grind. A report from Gallup last year showed about 60% of employed Americans say they’re stuck in a bad or mediocre job. And not everything is back to previous heights. The share of the prime-age (25-54 years old) population that is working or looking for work has picked up but was nearly two percentage points higher in the late 1990s.

That could suggest the labor market has further to run—if employers can pull more and more workers off the sidelines. One segment of the population where that’s been happening: Hispanic women. They’ve been driving gains in prime-age participation for the past several years.

WHAT TO WATCH TODAY

U.S. nonfarm payrolls for December are expected to rise 160,000 from the prior month, the unemployment rate is expected to hold steady at 3.5% and average hourly earnings are expected to rise 3.1% from a year earlier. (8:30 a.m. ET) Here’s what to watch from the WSJ’s Eric Morath.

U.S. wholesale inventories for November are expected to be unchanged from the prior month. (10 a.m. ET)

The Baker Hughes rig count is out at 1 p.m. ET.

TOP STORIES

I’m a Loser, Baby

What do upstart Tesla and old-school General Electric have in common? The pair are the two most valuable publicly traded loss-making companies, part of a shockingly high proportion of listed companies that have been losing money. While Tesla and GE couldn’t be more different, they are exemplars of two trends driving the rising number of loss makers. Tesla shows a desire by investors to back disruptive companies as they build their sales. GE represents a growing number of companies struggling to make money from traditional businesses. A third, worrisome, trend: Smaller companies are being dominated by bigger rivals, squeezing them out of markets and crushing their ability to invest for growth. The combination of forces has pushed the percentage of listed companies in the U.S. losing money over 12 months to close to 40%, its highest level since the late 1990s outside of postrecession periods, James Mackintosh writes.

Less Than Zero

If the U.S. economy entered a recession soon and interest rates fell in line with levels seen during the moderate downturns of 1990 and 2001, yields on longer-dated Treasury securities could fall to or below zero, according to new research from a senior Federal Reserve economist. The economist, Michael Kiley, looked at how far Treasury yields fell during those two earlier recessions. The results applied to today: Nominal interest rates would fall to unprecedented levels, making it harder for the Fed to stimulate growth even by resorting to the tools it used after the 2008 crisis. For example, if a recession were to begin in April, the yield on the 10-year Treasury would reach zero by 2022, assuming the average path from the 1990 and 2001 episodes. Shorter-dated Treasury securities turn negative sooner. —Nick Timiraos

As the economy stands, Fed officials don’t see much reason to change interest rates any time soon. “I believe that monetary policy is in a good place and should continue to support sustained growth, a strong labor market and inflation running close” to the Fed’s 2% target,” Fed Vice Chairman Richard Clarida said. 

That doesn’t mean all central bankers are sanguine about the outlook. Bank of Canada Gov. Stephen Poloz said heightened trade tensions have damaged the global economy. “This loss will likely be permanent, even if growth resumes from that lower level.”

China’s Auto Sales Sink

Chinese car sales dropped for a second consecutive year in 2019 but likely bottomed out, an industry group said. The number of passenger vehicles sold in the world’s largest auto market slipped to 20.7 million, down 7.4% from 2018, according to data released Thursday by the China Passenger Car Association. The slide is likely to continue this month, said Cui Dongshu, the secretary-general of CPCA. But full-year sales will improve, he predicted, adding that the easing of U.S.-China trade tensions could help consumer confidence recover.

Feel the Burn

Oil producers are setting billions of dollars on fire. Why? Natural gas is often an unwanted byproduct of an oil well, and it isn’t worth enough to sell. An estimated 5.1 trillion cubic feet of gas was flared world-wide in 2018, according to The World Bank—equivalent to the combined consumption of France, Germany and Belgium. The result: waste, greenhouse gas emissions and other forms of pollution. Unless the incentives are changed, the harmful practice will become even more common in the U.S., Spencer Jakab writes.

WHAT ELSE WE’RE READING

This week we’ll highlight research presented at the American Economic Association’s annual meeting, via the WSJ’s Greg Ip.

Users who quit Facebook as part of an experiment before the 2018 midterm elections spent less time online and more time watching TV and socializing, were less knowledgeable about the news and less polarized, felt better, and spent much less time on Facebook after the experiment, according to Matthew Gentzkow, Stanford University and three co-authors.

The introduction locally of Fox News during George W. Bush’s presidency causes local Republican-led firms to invest more, perhaps due to the network’s optimistic macroeconomic outlook, April Knill of Florida State University and two co-authors find.

Native-born American students’ test scores improve with increased exposure to foreign born students, Riccardo Marchingiglio of Northwestern University and four co-authors find.

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