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COVID-19 Impact On Household Finances By State

Source: WalletHub
A ranking of financial distress per state based on 9 key metrics. The lower the number, the greater level of financial distress people in that state are experiencing, on average. By and large, people in states that voted red in 2016 showed greater levels of financial distress than blue states.

Economy / Business / Money


Employees Worldwide Share

Top COVID-19 Concerns

for the Workplace

    LOWELL, Mass. - (BUSINESS WIRE) - 9/15/2020 - In a sweeping survey of employees and business leaders across 11 nations, The Workforce Institute at UKG (Ultimate Kronos Group) found only a fraction of employees (20%) felt their organization met their needs during the initial months of the COVID-19 pandemic. But there is a silver lining: a third of employees globally (33%) say they trust their employer more now than before the pandemic began because of how organizations reacted.
   “Hindsight 2020: COVID-19 Concerns into 2021," commissioned by The Workforce Institute at UKG and conducted by Workplace Intelligence, explores how nearly 4,000 employees and business leaders1 in Australia, Canada, China, France, Germany, India, Mexico, Netherlands, New Zealand, the U.K., and the U.S. felt about their employer’s initial COVID-19 response and explores the top needs and concerns of the workforce through 2021.
   Findings of the survey:
  •    Clean and healthy workplaces are meaningless without job security, flexibility, and work-life harmony.
  •    Half of employees globally say they’ve been working either the same or more hours regularly since the start of the pandemic, which helps to explain why 43% call their organization’s ability to balance workloads to prevent fatigue and burnout a priority.
  •    Overall, three in five (59%) employees and business leaders say their organization has taken at least some measures to guard against burnout, though, overall, 29% of employees wish organizations would act with more empathy. Burnout and fatigue are equally concerning for employees working remotely (43%) and those in a physical workplace (43%).
  •    Three in 10 employees and business leaders wished their organization better leveraged technology to provide flexibility, especially when the pandemic was at its most chaotic. This is especially true for those with families (34%), though this technology-focused wish exposes a generational divide between youngest workers (31%) to Baby Boomers2 (19%).
  •   More than a third of employees and business leaders (36%) are concerned about future layoffs and furloughs due to economic instability created by COVID-19. This is most concerning in China (44%), followed by Mexico (41%), Canada (40%), and the U.S. (37%).
  •    Concerns about job security span all generations: Gen Z and younger Millennials (35%), older Millennials (37%), Gen Xers (36%), and Boomers (34%) are all equally worried.
  •    Nearly half of employees globally (46%) say quick notification about confirmed COVID-19 cases in the workplace is their top concern.
  •    Even though older workers are considered a higher risk population for COVID-19, interestingly, the younger the respondent, the more concerned they are with rapid notifications in the workplace: this is the biggest concern for more than half of Gen Zers and younger Millennials (51%), and then decreasing by generation from older Millennials (45%), to Gen Xers (44%), and then Boomers (42%).
  •    While employees and business leaders in India (58%), Mexico (53%), and China (48%) say sharing news of a positive test is a top concern, fewer people in Germany (39%) and Australia/New Zealand (38%) feel the same way.
  •    Respondents globally are slightly more concerned with encountering an asymptomatic visitor at work (45%) than being in close contact with an asymptomatic coworker (40%).
  • Only 13% of all employees are worried about movements being tracked at work to fight COVID-19 – including fewer than one in 10 Gen Zers and younger Millennials (8%) – signaling they may recognize the immediate safety benefits in this approach to aid contact tracing.
  •    As workplaces reopen, swift decisions are even more important, and small common areas – not open floorplans – commuting, and cleanliness concern employees and leaders.
  • A common complaint about the initial pandemic response? It was too slow, according to a third (36%) of employees and business leaders, who wished offices closed faster and safety measures for essential workers were implemented sooner.
  •    Nearly a third (32%) also yearned for more communication – both sooner and more transparently – which is a primary regret for more than a third (35%) of C-level leaders.
  •    While 45% of employees and business leaders say overall cleanliness is also a top concern going forward, they’re equally concerned with using shared common areas like lounges and restrooms (42%) as well as shared workspaces like conference rooms (37%).
  •    More than a third of employees (35%) also voiced concern about passing through high-traffic areas such as elevators, staircases, and lobbies. Only a quarter (26%) say being in an open floorplan environment is worrisome.
  •    Physical workplace concerns vary by country: In India and France, the top concern is safely commuting to the workplace (72% and 50%, respectively), while overall cleanliness and sanitation is most worrisome to those in Mexico (60%), Canada (50%), Germany (47%), Australia and New Zealand (46%), the U.S. (44%), and the U.K. (42%). In China, two-thirds (63%) are worried about passing through high-traffic areas while a third of employees in the Netherlands (35%) are nervous about shared common areas.
   “As organizations around the world operate through an unprecedented global pandemic, they need to double down on their employee experience strategy,” Workforce Institute Executive Director Chris Mullen stated. “However, instead of looking for trendy perks, they must get back to the foundational needs every employee requires: physical safety, psychological security, job stability, and flexibility.       Among employees who trust their organization more now than before the pandemic, 70% say the company went above and beyond in their COVID-19 response. By truly putting the employee first, a mutual trust will begin to take hold that will propel employee engagement – and the success of the business – to new levels.”


Report Unveils Consumer 

Sentiment and Shopping 

Patterns During Turbulent Times 

   NEW YORK - (BUSINESS WIRE) - 8/11/2020 - Global retail analytics and price optimization company Intelligence Node released its 2020 Consumer Buying Behavior Report on Aug. 6. The report tracks patterns in consumers’ shopping habits leading up to and during the COVID-19 pandemic to identify key trends and insights.
   The report is a go-to guide for retailers and brands looking to understand consumer sentiments and buying patterns during unprecedented events including the pandemic, the rise of counterfeit goods, global trade tariffs and the recession.
   “The retail industry is going through a wave of transformation and will never be the same,”  Intelligence Node CEO Sanjeev Sularia said. “Unprecedented external factors have carved out a sure-shot path for a data-driven, digital-first retail landscape. Consumers have never been more complex or had higher expectations, and it is critical for brands to have an intimate understanding of how consumer opinions and behaviors are shifting. The brands that pay close attention to the changing tide of consumer expectations and embrace the new digital wave will be the ones that win in the age of Amazon.”
   Key events and findings included in the report: 

Online Buying Like We’ve Never Seen It 
  • While it took 10 years for online shopping to grow from 5.6% to 16% of total retail sales, in the days following quarantine, e-commerce buying grew more than 10% in just 8 weeks, to 27%.
  • Even as stores start to reopen, Intelligence Node data shows that 82% of shoppers will continue their shopping online.
Recession Fears Curb Spending 
  • Millennials were among the majority of respondents changing their spending habits (58%). compared to the older generation (65+ years) accounting for only 36%.
  • 40% said they are most likely to cut back on footwear, clothing, and accessories.
The Counterfeiting Trap 
  • The counterfeit market now forms nearly 5-7% of global trade.
  • Consumers are most concerned about counterfeits in the electronics segment (25%).
  • A whopping 76% of consumers voted for eBay as the online retailer selling the most counterfeit products.
The Socially Conscious Consumer 
  • 71% of consumers in the 18-24 age group are paying attention to which brands have been proactive in helping pandemic relief efforts.
  • 48% of consumers say they are most likely to shift spending to help keep small businesses afloat.
  • 9 out 10 Gen Z customers believe companies have a responsibility to address social and environmental issues.
What’s Next? 
The report also reveals Intelligence Node’s predictions for e-commerce in 2H 2020 and beyond. These include:
  • Shopping by appointment, online consulting and the use of tech will become the new norm.
  • Comfort over beauty will prevail across fashion and wellness sectors.
  • Private labels will come to the forefront for their perceived economic value.
   The full Consumer Buying Behavior Report is available here.
   For more information on Intelligence Node, visit www.intelligencenode.com.

NRF Chief Economist Says Recovery 

‘Being Tested Daily’ With COVID Rise


   WASHINGTON - (BUSINESS WIRE) - 8/4/2020 - Despite broad indications that the economy has begun to recover as businesses reopen from the coronavirus pandemic, conflicting data makes it difficult to say how steadily the comeback will continue, National Retail Federation Chief Economist Jack Kleinhenz said on Aug. 3.
   “Optimism about the economy and retail spending is being tested daily with the spread of the coronavirus,” Kleinhenz said. “Big questions are looming, and we are all grappling to discern what incoming data is telling us about the health of the economy and consumers. Depending on the data selected, the answers are not entirely clear.”
   Kleinhenz’s remarks came in the August issue of NRF’s Monthly Economic Review, which said monthly indicators showed the economy improving in May and June but that more frequent data showed the pace of recovery flattening by mid-July.
   “A key question is whether the pace of growth and momentum will carry forward over the next few months,” Kleinhenz said. “Based on quarterly and monthly data, the U.S. economic recovery continues despite elevated COVID-19 cases. But in examining weekly data, the pace of improvement appears to be slowing. Could it be that we are at or heading back to the same spot we were at two months ago?”
Economists traditionally look at monthly and quarterly numbers to gauge the status of businesses and consumers. But the release of that data lags weeks behind when it is collected. And with the situation changing rapidly since the outbreak of the coronavirus early this year, more frequent information has been needed to keep up. In response, the Federal Reserve and others have begun tracking some indicators as often as weekly.
   Consumer spending was up 8.2 percent in May, for example, ending two consecutive months of decline, and up another 5.6 percent in June. Meanwhile, retail spending as calculated by NRF – excluding automobile dealers, gasoline stations and restaurants to focus on core retail – was up 4.9 percent in June. Monthly numbers for July are not available yet. But the Federal Reserve Bank of New York’s Weekly Economic Index – a composite of indicators – worsened from -6.65 percent on July 18 to -7.24 percent as of July 25, with officials citing a decrease in retail sales. The weekly Mobility and Engagement Index from the Federal Reserve Bank of Dallas also showed the economy leveling off in mid-July.
   In the labor market, 4.8 million jobs were added in June as the unemployment rate ticked down to 11.1 percent from 13 percent in May. The monthly jobs data, however, was collected before the recent resurgence in COVID-19 cases. By contrast, weekly data showed that 1.4 million initial unemployment claims were filed the week of July 18. That was a rise of about 100,000 from the week before and reversed a steady decline in claims since a peak of 6.9 million the last week of March.
   While many of the weekly reports initially agreed with the monthly data and “showed the economy on a good start down the recovery runway, they now suggest that the economy is moving sideways,” Kleinhenz said. “Time will tell, but the bottom line is that the economy is far from being out of the woods. The question is whether it is re-entering the woods.”
   With many economists saying the timeline of the recovery will be determined by the efforts to control the virus, the Federal Reserve Bank of Cleveland conducted a survey in early July that found 89.9 percent of those polled wear a mask for activities such as shopping in a grocery store. The bank said it conducted the survey because masks “have the potential to help reduce the spread of COVID-19 without greatly disrupting economic activity.”

Index: House Price Appreciation

Likely to Accelerate Through Summer


SANTA ANA, Calif. - (BUSINESS WIRE) - 7/27/2020 - First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the May 2020 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.
   “As the coronavirus pandemic continues to wreak havoc on global and domestic economies, housing has thus far proven resilient, managing a V-shaped recovery from the low point reached in April,” said Mark Fleming, chief economist at First American. “The strong rebound is largely a result of two dynamics that existed before the pandemic and have continued or even gained strength in the last few months.
  “Mortgage rates were falling before the pandemic, and just last week they fell below 3 percent for the first time ever. Demographic demand from millennials aging into their prime homeownership years continues to benefit housing as well. Both of these dynamics help boost demand,” said Fleming. “However, another key trend has also strengthened amid the pandemic – an already tight inventory of homes has now reached record low levels and continues to move lower. The housing market amid the pandemic faces a significant supply and demand imbalance, and the result is accelerating price appreciation. In fact, based on current trends, we expect house price appreciation nationally to remain strong, and even accelerate in many markets this summer.
   “House-buying power, how much home one can afford to buy given their income and the prevailing 30-year, fixed mortgage rate, continues to outpace nominal house price appreciation nationally, resulting in a 7.3 percent improvement in affordability in May relative to one year ago,” said Fleming. “Fast forward to July, and mortgage rates are now below three percent, and it’s possible that they could fall further. With rates falling, but house price appreciation anticipated to increase, what is likely to happen to affordability over the next few months?”

Can House Price Appreciation Weather the Summer Surge in COVID-19?

   “Nominal house prices increased by 7.4 percent in May compared with one year ago and we expect that June year-over-year growth will be even higher. However, there has been a resurgence of COVID-19 in major states and in many major housing markets in June and July,” Fleming said. “The question is whether the pace of house price appreciation is sustainable under these conditions.

   “In times of economic trouble, weakness in the labor market negatively impacts the housing market – household income growth typically slows or declines and economic uncertainty reduces supply and demand. Yet, housing also usually benefits from lower mortgage rates as monetary policy eases and investors flee to the safety of treasury bonds,” he said. “These two factors, household income and mortgage rates, will ultimately drive house-buying power and whether or not house-buying power can keep up with house price appreciation in the weeks and months ahead.

   “To assess how house prices may react this summer, we ran three labor market and mortgage rate scenarios for July and August. Under an optimistic scenario with continued labor market improvement and consistently low rates, continued strong demand against a limited supply of homes for sale pushes house price appreciation to accelerate in July and remain strong in August,” Fleming said. “If the labor market limps along, the demand will not be quite as strong, but the momentum of house price appreciation remains. Even under a pessimistic outlook for the labor market, the housing market would benefit from a house-buying power boost as mortgage rates are likely to be pressured lower. In this case, house price appreciation remains strong, but doesn’t accelerate. The supply and demand imbalance that existed entering the pandemic has persisted, and even worsened, meaning house price growth will likely remain strong this summer.”

The Role of Mortgage Rates in Boosting House-Buying Power

   “Nominal house price appreciation benefits the existing homeowner, as their home increases in value, their equity increases. However, nominal house price appreciation hurts the prospective first-time homebuyer,” said Fleming. “As house prices go up, it becomes harder for buyers to afford a home, unless house-buying power can keep up with house prices.

   In July, house-buying power got a big boost as the 30-year, fixed mortgage rate made history by moving below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased house-buying power by nearly $15,000,” said Fleming. “It’s been said that mortgage rates could fall to as low as 2.7 percent. If that happens, house-buying power nationally would increase to $488,000, a $32,000 boost to affordability compared with May.”

The Interplay Between Rates, Income, and Nominal House Price Appreciation

   “We expect that house price appreciation will persist, and even accelerate, for the remainder of the summer. However, even assuming a 1 percent decline in household income (relative to May), a mortgage rate of 2.9 percent, and house price appreciation growth of 8.0 percent (compared with 7.4 percent in May), our Real House Price Index (RHPI) would still be 2.4 percent lower than in May, meaning affordability would still improve,” said Fleming. “Obviously, the pandemic continues to impact the labor market and economy, but our analysis indicates that potential buyers remain positioned to reap the benefit from the historically low rate environment.”

May 2020 Real House Price Index*

  • Real house prices decreased 0.3 percent between April 2020 and May 2020.

  • Real house prices declined 7.3 percent between May 2019 and May 2020.

  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 1.3 percent between April 2020 and May 2020, and increased 15.9 percent year over year.

  • Median household income has increased 4.5 percent since May 2019 and 62.8 percent since January 2000.

  • Real house prices are 21.8 percent less expensive than in January 2000.

  • While unadjusted house prices are now 12.5 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 44.5 percent below their 2006 housing boom peak.

   *NOTE: This month’s report reflects a revision to the income series, which may result in revised historical RHPI values.


Company Debts Soared To $8.3T In 2019  

Are Estimated to Jump By Further $1 Trillion

   DENVER - (BUSINESS WIRE) - 7/13/2020 - Janus Henderson Investors (NYSE/ASX: JHG) announced recently the results of its first annual Corporate Debt Index survey. Key findings include:
  • Company borrowings around the world surged to a record $8.3 trillion in 2019, up 8.1 percent year-on-year, the fastest increase in at least 5 year
  • Companies borrowed to fund takeovers, share buybacks and dividends, as well as to invest.
  •  Debts have risen significantly faster than profits over the last 5 years.
  • In 2020, bond market analysis shows a sharp increase in borrowing to meet challenges posed by the pandemic.
  • Janus Henderson expects company debts to rise by $1 trillion in 2020.
  • Volkswagen is the world’s most indebted company, owing almost as much as South Africa, though this partly reflects a huge car finance business.
  • Company debts have grown fastest in the US and Switzerland
  • German debts are the second highest in the world after the US, thanks to the car manufacturers and their financing businesses.
  
Even before the pandemic began to batter company balance sheets, company debts were soaring to new highs, according to the new annual Corporate Debt Index from Janus Henderson (JHCDI). Net borrowings1 around the world surged to a record $8.3 trillion in 2019, an increase of 8.1 percent year-on-year. Company resources were depleted by debt-financed acquisitions, large share buybacks, record dividends, and the chilling effect on profits caused by trade tensions and a global economic slowdown. Collectively net debts jumped by $625 billion last year, easily the largest increase of any of the last five years. Growth in borrowing has been spurred on in recent years by very low interest rates that make servicing debts cheap, urged on by central bank attempts to stimulate economies.
   Companies included in the Corporate Debt Index (the largest 900 non-financials in the world) today owe almost two fifths (37 percent) more than they did in 2014, and growth in debt has comfortably outstripped growth in profits. Pre-tax profits for the same group of companies have risen a collective 9.1 percent to $2.3 trillion. Gearing, a measure of debt relative to shareholder finance, rose to a record 59 percent in 2019, while the proportion of profit devoted to servicing interest payments also rose to a new high.
   These trends all accelerated in 2020 as the Covid-19 pandemic struck. Janus Henderson’s analysis of bond markets shows that companies in its index owe half their debts in the form of listed bonds. They issued an additional $384bn in bonds between January and May, an increase of 6.6% compared to the end of December balances. Borrowing from banks has also increased sharply, though precise figures are not yet available. Janus Henderson estimates net borrowings overall will jump by up to $1 trillion this year, an increase of 12 percent.
   More than half of the companies in the index took on more borrowing in 2019, but a very large impact was made by relatively few of them. Just 25 companies between them borrowed an additional $410bn last year, equivalent to one third of the increase in borrowings of all those companies that added to their debts.
   The most indebted company in the world is Volkswagen - its eye-watering $192bn net borrowing is not far behind the sovereign debt of South Africa or Hungary, though this is inflated by its large car finance business. Not all companies borrow. A quarter of the companies in Janus Henderson’s index have no debt at all, and some have vast cash reserves. The biggest of these stands at $104bn and belongs to Google’s owner Alphabet. What seems like prudence, however, is often unpopular with shareholders, who may have better uses for this capital.