More Americans Plan to Retire After 70
Some 23 percent of Americans with jobs said they planned on being septuagenarian employees, up from 16 percent in 2009, according to Willis Towers Watson, a human resource consulting firm. While the average employee calculates he or she will retire at age 65, as a group they place the odds that they’ll still be working at age 70 at 50 percent. (…)
“The decline of defined benefit plans and employer subsidies for early retirement removed one tool that encouraged that orderly rate of workers retiring,” said Steve Nyce, a senior economist at Willis Towers Watson. (…)
Employees in the U.S. are more pessimistic about whether their generation will be “much worse off in retirement” compared with their parents’ generation. In America, 76 percent agreed or strongly agreed with that statement. Globally, 66 percent agreed. “The U.K., Japan, the U.S.—the more developed economies—tend to be less optimistic about the next generation,” said Nyce. (…)
The percentage of men 65 or older still on the job in the U.S. was 22 percent last year, up from 15 percent in 2003. Old age labor participation rates should rise a fair bit over the next decade or two, said Nyce. In the 1960s, the participation rate of older workers in the labor force was around 25 percent, he said. (…)
Banks Warned of Tougher Capital Requirements Fed officials signaled they will toughen big-bank capital requirements even further, a move that will intensify pressure on the largest U.S. banks to consider shrinking.
The biggest American banks will likely have to bulk up their balance sheets further to protect against possible financial shocks, Federal Reserve officials said Thursday.
The new requirements could crimp profitability and dividend payouts at those firms, while increasing pressure on them to shrink.
Fed governors Daniel Tarullo and Jerome Powell, in separate public comments, said the central bank would probably decide to require eight of the largest U.S. banks to maintain more equity to pass the central bank’s annual “stress tests,” exams designed after the financial crisis to measure the ability of banks to weather a severe downturn.
“I have not reached any conclusion that a particular bank needs to be broken up or anything like that,” Mr. Powell said at a banking conference. The point is to “raise capital requirements to the point at which it becomes a question that banks have to ask themselves.” (…)
“That’s not good for us,” J.P. Morgan Chase & Co. Chief Executive Officer James Dimon said Thursday at a financial-investor conference in response to the comments. (…)
Mr. Dimon also reiterated his view that J.P. Morgan doesn’t need to break up. “I’m like a broken record on this,” he said. The bank has defended itself more intensely for the past 18 months after analysts and investors have asked more pointed questions about whether the bank would be worth more in parts.
“We’re not running [the businesses] because we just love to be a big company,” he said. “We’re running them because it actually works for the customer….That shows up in market share and results; not because I said so.” (…)
“Effectively, this will be a significant increase in capital,” Mr. Tarullo said on Bloomberg television. He said the extra capital was necessary in case big banks face a danger that the Fed’s annual stress test didn’t predict. (…)
Mr. Powell also said the benefits of such rules are likely to outweigh the risk that they would hamper the smooth functioning of markets, by forcing banks to pull back from their market-making role. “I don’t believe that it will have a significant negative effect on liquidity,” Mr. Powell said of the Fed’s next move.
The specific change that Messrs. Tarullo and Powell previewed Thursday involves taking the higher capital requirements big banks now face during normal times—the “surcharge” for being big—and forcing them to meet those standards during periods of stress as well. That effectively forces those institutions to hold even more capital on their books throughout the business cycle, as capital levels would likely fall during a recession when losses would rise. Fed officials have long said they were considering such a requirement, but these were the most explicit comments confirming that they are likely to impose that rule. (…)
What Deleveraging?
From Pimco via Business Insider’s 22 charts that define our outlook for the global economy: :
U.S.-China Trade Troubles Grow The U.S. and China, facing mounting political pressures at home, are seeing economic tensions flare to their worst point in years over currency and trade practices.
China has pushed the yuan to a five-year low against the dollar, reviving charges from American firms of currency manipulation to gain a competitive advantage for Chinese goods. The Obama administration has fired off a series of trade complaints and levied duties on several Chinese industries, from chicken feet to cold-rolled steel used in appliances and auto parts. (…)
U.S. Treasury and State Department officials fly to Beijing early next week for two days of talks to try to calm some of the trade irritants and address ongoing geopolitical tensions, particularly over the South China Sea, where their militaries are operating in sometimes dangerous proximity. (…)
China’s Vice Finance Minister Zhu Guangyao, while acknowledging at a media briefing Thursday major challenges for China’s economy, insisted Beijing would adhere to its reform agenda and commitments made by the Group of 20 against competitive currency devaluation. (…)
The U.S. recently slapped Chinese cold-rolled steel imports with duties worth 267%, accusing the country of selling products below production cost.
By supporting excess production capacity, the Chinese government is “engaged in economic warfare against the U.S.,” said John Ferriola, chief executive of North Carolina steel giant Nucor Corp. “Thousands of hardworking Americans have lost their jobs because of these illegal, unfair trade practices.” (…)
China acknowledges it has an excess-capacity problem. “But we have to prevent massive unemployment,” Premier Li Keqiang said in March. (…)
Chinese officials also are eyeing the U.S. political scene warily, concerned about making commitments the next administration could backtrack on.
Recent articles in China’s controlled media have raised questions about who is in control of U.S. economic policy. (…)
And now that U.S. car sales have peaked out, in spite of record low interest rates, everything linked to car manufacturing, including steel demand, will slow down some more. Add the fact that the share of imports is rising owing to the strong dollar, and that demand for highly profitable SUVs could wane as gas prices recover, you get a pretty tough outlook for that important manufacturing sector.
J.P. Morgan Chief James Dimon Sounds Alarm on Car Loans Bank’s head warns that the fast-growing auto loan market, which has boomed along with rising car sales, a decline in gasoline prices and a consistently growing economy, may not remain a bright spot for long.
J.P. Morgan Chase & Co. Chief Executive James Dimon on Thursday called the auto-lending market “a little stretched,” the latest warning about a part of the economy that has boomed this decade. (…)
Mr. Dimon said that while he doesn’t see an auto-market downturn as imminent, he does see increased risk due to higher default rates from increased subprime lending, the growing use of longer repayment periods for borrowers and the potential for used-car prices to drop in coming years, which could hurt the value of lenders’ collateral when borrowers default.
Zerohedge has a good post on banks today including this:
Meanwhile, CEO Citigroup Mike Corbat indicated that the company’s second-quarter net income will be roughly 25% lower than the same period a year earlier, roughly the same as the abysmal first quarter.