U.S. stocks rose at the start of trade Friday, with Wall Street hopeful that the Federal Reserve will take aggressive action to stamp out signs of stress in the economy, even as the Fed attempted to moderate dovish comments made Thursday by the New York Fed President John Williams.
All three benchmarks, however, remain set to book slight losses on the week.
How are the major benchmarks performing?
The Dow Jones Industrial Average
DJIA, +0.20%
rose 78 points, or 0.3%, at 27,299, the S&P 500 index
SPX, +0.14%
edged 8 points higher, or 0.3%, at 3,003, while the Nasdaq Composite index
COMP, +0.22%
gained 28 points, or 0.4%, at 8,236.
For the week, the Dow is on pace to fall 0.1%, the S&P 500 was set for a 0.3% weekly slide, while the Nasdaq was on track for a weekly loss of 0.1% in early trade Friday. A decline will mark the first time the equity indexes have logged a weekly fall since the week ended June 28.
What’s driving the market?
The Federal Reserve attempted to walk back statements made by New York Federal Reserve President John Williams on Thursday that the market read as decidedly dovish and which caused Fed funds futures markets to place much a higher probability of an unusual 50 basis-point cut to the federal-funds rate at the July 30-31 meeting of the rate-setting Federal Open Market Committee. The benchmark rates currently sits at between 2.25% and 2.5%.
However, the Wall Street Journal, citing a Fed spokesman, referred to Williams comments as merely academic in nature and not predictive of future policy: “This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting,” the New York Fed spokesman told the paper late Thursday.
Some market participants viewed the attempt to walk back the comment by the New York Fed as atypical. “This unusual step by New York Fed officials suggests a concern that markets are getting ahead of themselves in pricing in the prospect of a 50 basis point rate cut at the end of the month,” said Michael Hewson, chief market analyst at CMC Markets, in a Friday research note.
Federal -funds futures are showing a still-high 41.1% probability of a half-a-percentage point rate reduction compared with a 54% chance of a 25 basis-point cut to key rates at the end of the month, according to CME Group data. The market’s expectations for a 50 basis-point cut hit a peak at 60.2% after Williams’ comments.
Good earnings from the heavyweights like Microsoft Corp.
MSFT, +1.84%
, however, also are helping to bolster markets. Microsoft blew away earnings expectations late Thursday thanks to strong growth from its Azure cloud offering and LinkedIn.
In trade policy news, senior U.S. and Chinese officials, including U.S. trade representative Robert Lighthizer and Treasury Secretary Robert Mnuchin, spoke via phone this week, a USTR spokesman confirmed, according to Bloomberg.
There were no details provided on the talks and no plans released for face-to-face meeting, potentially underscoring the lack of substantive progress made in trade negotiations since talks between the two sides collapsed in May.
Looking ahead, Investors will also be watching for University of Michigan’s July consumer confidence data due at 10 a.m. Eastern Time.
Which stocks are in focus?
Boeing Co.’s stock
BA, +3.53%
was in focus after the aeronautics and defense contractor said it would take a $4.9 billion second-quarter charge related to its 737 Max groundings. Shares of the company were up 2.5% early Friday.
BlackRock Inc.
BLK, +0.30%
reported second-quarter earnings and revenue that fell below expectations, as the investment management and advisory company said it had lower base fees as a result of lower securities and lending revenue and lower performance fees. Shares rose 1.7% Friday morning.
Microsoft MSFT, +1.84%
now America’s most valuable company, was up after it topped analysts’ estimates.
Shares of American Express Co.
AXP, -2.55%
fell 1.2%, after the payment-processing company reported second-quarter earnings and revenue that slightly surpassed expectations. The stock has rallied 33.2% year-to-date.
Shares of Schlumberger NVSLB, -2.50%
fell 0.5% before the bell Friday, after the oil services company reported second-quarter revenue that beat expectations and revenue that was in line and announced that CEO Paal Kibsgaard will retire and step down as chairman of the board.
How are other markets trading?
The yield on the 10-year U.S. Treasury rose two basis points to 2.053% early Friday.
In commodities markets, the price of U.S. crude oil
CLQ19, +0.42%
jumped 0.6% at $56.65 a barrel as Iran denied that the U.S. Navy downed one of its drones in the Strait of Hormuz, while gold
GCQ19, +0.95%
extended its gains, up 0.6% to $1,436.80 an ounce, extending its climb to a six-year peak.
The U.S. dollar index
DXY, +0.25%
meanwhile, rose 0.3%, after tumbling about 0.5% on Thursday.
In Asia, stocks closed mostly higher, with the China CSI 300
000300, +1.05%
rising 1.5% , Japan’s Nikkei 225
NIK, +2.00%
jumping 2%, while Hong Kong’s Hang Seng Index
HSI, +1.07%
added 1.1%. In Europe, stocks were slightly higher, with the Stoxx Europe 600
SXXP, +0.14%
up 0.2%.
In a House hearing on monetary policy last week, Federal Reserve Chair Jerome Powell made a telling confession in response to a question from Rep. Alexandria Ocasio-Cortez (D-NY). The topic was the so-called natural rate of unemployment: the idea, believed by many economists and policymakers, that there is a rate at which unemployment could get so low that it could trigger ever-rising inflation.
It’s an idea that has governed decades of monetary policymaking, often prompting the Fed to keep interest rates higher than it should — slowing down the economy in the process — out of fear of accelerating inflation.
Ocasio-Cortez didn’t waste time poking holes at it. She pointed out that the unemployment rate, now 3.7 percent, has fallen well below the Fed’s estimates of the natural rate, which it forecast at 5.4 percent in 2014 and 4.2 percent today. And yet, she noted, “inflation is no higher today than it was five years ago. Given these facts, do you think it’s possible that the Fed’s estimates of the lowest sustainable unemployment rate may have been too high?”
Powell’s response, to his credit, was as simple and direct as you’ll ever hear from a central banker: “Absolutely.” He elaborated: “I think we’ve learned that ... this is something you can’t identify directly. I think we’ve learned that it’s lower than we thought, substantially lower than we thought in the past.”
Powell’s response was commendable, perhaps even groundbreaking; here was the Fed chair challenging decades of conventional economic wisdom. It was a welcome sign of a policymaker’s willingness to question age-old assumptions that have dictated policy and affected millions.
And it’s not the only economic “iron law” that we need to revisit. In the spirit of Powell’s act, I’d like to dig deeper into some assumptions that have defined economic policymaking these past few decades, assumptions that have needlessly caused a lot of economic pain.
The natural rate of unemployment that AOC questioned is one such idea (more on that below). There are three others worth singling out:
that globalization is a win-win proposition for all, an idea that has deservedly taken a battering in recent years;
that federal budget deficits “crowd out” private investments; and
that the minimum wage will only have negative effects on jobs and workers.
Economists and policymakers have gotten these ideas wrong for decades, at great cost to the public. Especially hard hit have been the most economically vulnerable, and these mistakes can certainly be blamed for the rise of inequality. It’s time we moved on from them.
The mandate of the Federal Reserve is to achieve maximum employment at stable prices. It has interpreted the latter to mean an inflation rate of 2 percent. For decades, the Fed has used the benchmark interest rate it controls to target that inflation rate, and it’s done so by trying to keep actual unemployment close to its estimate of what’s called the natural rate of unemployment — a rate below which it was believed inflation would spiral up.
The problem is that the core relationship behind this model — the negative correlation between unemployment and inflation — has been weakening for years, and with it any ability to reliably estimate the natural unemployment rate. Moreover, as Powell acknowledged, there’s been an asymmetry: Because the estimates of the natural rate have been too high, the Fed has often intervened in the direction of raising or failing to cut interest rates.
The cost of this asymmetry has been steep. Since 2009, the average of the Fed’s natural rate estimate has been about 5 percent. As Powell stressed, we can’t accurately identify the natural rate of unemployment, but suppose it’s actually 3.5 percent. Targeting 5 percent unemployment when we could achieve 3.5 percent with little risk of spiraling inflation would mean 2.4 million people unnecessarily out of work. Even targeting the Fed’s current natural rate (4.2 percent) would sacrifice a million potential workers to the altar of an empirically elusive concept.
And the unemployed are just one subgroup that gets hurt in such a scenario. Muchresearch has shown that in slack labor markets, middle- and low-wage earners lack the bargaining clout they have in tight labor markets. As such, they face lower pay, fewer hours of work, higher poverty, and wider racial economic gaps.
By contrast, high-income households are little affected — which means that labor market slack can deepen inequality. The figure below, from a recent paper by Keith Bentele and me, shows the acceleration — the difference between wage growth in strong versus weak labor markets — for real annual earnings.
For low-income workers, we found earnings rose at about a 2 percent annual pace in hot labor markets and fell at about a 4 percent pace in cool ones (the difference, 6 percent, is the first bar). Clearly, the benefits of moving from slack to taut conditions are much more important for low- than for high-earning households.
Such are the costs of over-estimating the natural rate.
Source: Jared Bernstein and Keith Bentele
Back in the 1990s, when the Clinton administration was trying to sell NAFTA, the view that expanded trade was virtually all upside began to pervade the rhetoric and politics of both parties. They were supported by economic arguments that exporting industries would expand into markets and add new jobs, and consumers would have cheaper goods. By dint of their superior productivity, US manufacturers and their communities wouldn’t be hurt. Any disruption to workers’ livelihoods was either dismissed as an impossibility or placed under the antiseptic rubric of “transition costs.”
This excerpt from the 1994 economic report of the president nicely captures the zeitgeist:
As economists have long predicted, freer trade has been a win-win strategy for both the United States and its trading partners, allowing all to reap the benefits of enhanced specialization, lower costs, greater choice, and an improved international climate for investment and innovation. American industries—both their workers and their owners—have benefited from increased export markets and from cheaper imported inputs. American consumers have been able to purchase a wider variety of products at lower prices than they could have without the expansion of trade.
When pressed as to how expanded trade could truly be “win-win,” advocates like Clinton’s economics team above cited the economic theory of comparative advantage: When trading partners produce what they’re best at producing, both countries will come out ahead.
But the theory never said expanded trade would be win-win for all. Instead, it (and its more contemporary extensions) explicitly said that expanded trade generates winners and losers, and that the latter would be our blue-collar production workers exposed to international competition. True, the theory maintained (correctly in my view) that the benefits to the winners were large enough to offset the costs to the losers and still come out ahead. But as trade between nations expanded, policymakers quickly forgot about the need to compensate for the losses.
The era of free trade eventually led to large trade deficits with countries with comparatively productive factories to ours but with much lower wages, most notably Mexico and China. As in every other advanced economy, the share of US manufacturing employment had long been drifting down. But the number of US factor jobs held pretty constant around 17 million — until around 2000, when, over the next decade, almost 6 million such jobs were lost. Economists who’ve studied the period now refer to it as “the China Shock.”
Once again, these impacts didn’t just translate into just job losses; wages were hit, too. Between the late 1940s and the late 1970s, when production workers were relatively insulated from foreign competition, blue-collar manufacturing compensation more than doubled. By contrast, it’s grown only 5 percent since then.
Did the winners from trade — the multinational corporations that relocated production, the finance sector that made the deals, the retailers that profited from “the China price” — compensate the losers? Of course not. They argued that “everyday low prices” were reward enough.
But not only did the winners fail to help the losers — say, through serious employment-replacement programs, robust safety net assistance, direct job creation, and investments to make our manufacturers more competitive — they instead used their winnings to invest in politicians to cut their taxes and write ever more trade deals favoring investors over workers.
Let me be very clear. Both the US and developing countries have significantly benefitted from global trade. But because of the demonstrably false view that free trade is all upside — win-win — considerable economic pain has been meted out, pain that has not been met with anything approaching an adequate policy response.
For decades, economists argued that when the federal government runs a budget deficit, it pushes up interest rates and slows economic growth. It’s a theory known as “crowd-out,” suggesting government borrowing from a relatively fixed stock of loanable capital crowds out private borrowing, which in turn raises the cost of capital — i.e., the interest rate.
But this is yet another relationship that has failed to hold up, though not before its adherents created considerable hardship, both here and even more so in Europe, through austere budget policy in the wake of the Great Recession. The belief in this idea prompted policymakers to reduce government spending to avoid alleged crowd-out effects well before the private sector had recovered and could generate enough growth on its own.
There were certainly periods in the past when crowd-out did indeed appear in the data. The 1970s and early 1980s saw larger budget deficits (i.e., more negative) and higher interest rates. But since then, deficits have swung significantly up and down while interest rates have consistently drifted down.
Most recently, we’ve been posting very large budget deficits given the state of the economy (due to both deficit-financed tax cuts and spending) and interest rates arenonetheless hitting historic lows — precisely the opposite of crowd-out predictions.
Source: Federal Reserve and Bureau of Economic Analysis
This all sounds pretty abstract, but it has stark implications on the ground. Based on the deeply embedded notion (at the time) that the deficits built up in the Great Recession needed to come down quickly, the federal government pivoted to deficit reduction well before our private sector had recovered.
As a member of the Obama economic team at the time, I can confirm that crowd-out fears were a motivation for the pivot. According to this analysis by the Brooking’s Institute, between 2011 and 2014, fiscal policy cut about 1 percentage point per year from real GDP growth. Based on the historical correlation between growth and jobs, this austerity added 2 points to the unemployment rate in those years, or about 3 million jobs.
I tend not to give Trump a lot of credit for economic policy, and I believe his tax cut will exacerbate inequality and rob the Treasury of needed revenue. But the fiscal economics of Trump’s tax cuts are revealing in ways that relate both to crowd-out and the natural rate of unemployment. As noted, deficits are up and interest rates are down. Meanwhile, the positive fiscal boost has helped drive the unemployment rate down to 50-year lows while inflation remains low and stable. These developments clearly undermine long-held economic doctrines, and they’ve been a boon to working families.
That said, a final point must be underscored: The absence of crowd-out doesn’t mean deficits no longer matter. Even with low rates, we’ll still be devoting more tax revenue to financing our debt, and even more worrisome is the fact that we’re almost certain to enter the next recession with a debt-to-GDP ratio that’s twice that of the historical norm. This will likely lead Congress to be more timid in fighting the next recession. But this is a political constraint, not an economic one.
Another big mistake with lasting consequences has been the assumption that minimum wage increases will hurt their intended beneficiaries: low-wage workers.
The theory is that free markets set an “equilibrium” wage that perfectly matches supply and demand given employers needs and workers’ capabilities. Force that equilibrium wage up and rampant unemployment will result.
When I was coming up in the profession, our textbooks argued that believing minimum wages could help low-wage workers was akin to believing that water flowed uphill. Their message was particularly comforting to conservative politicians who wanted to protect the profits of employers of low-wage workers.
Today, decades of high-quality research (much of it initiated by the late, great economist Alan Krueger) have introduced a much more nuanced view about the true impacts of minimum-wage hikes. But years of economists’ opposition to the policy have left us with a national minimum wage of $7.25 per hour, a level far too low to support the many families that depend on the minimum wage. (Another myth was that only teenagers earned the minimum; David Cooper’s work shows the main beneficiaries of higher minimum wages are working adults.)
How the consensus began to change is instructive. To their credit, some state policymakers decided to ignore the economists and raise minimum wages in their states. This provided researchers like Krueger with quasi-natural experiments of a type too rare in economics. The positive results of these studies led many more states and cities to raise their wage floors (29 states plus DC now have minimums above the federal level), and this fed back into the experimental research, creating a powerful loop.
Summarizing a large and still contentious body of research, a fair conclusion is that, conditional on their magnitude, minimum wage increases accomplish their goal of raising pay for low-wage workers without large job-loss effects. But the broader point is that an economic relationship believed to be steadfast was tested and was found wanting.
The changing consensus can be seen in a new report from the Congressional Budget Office — a bastion of mainstream economics — that found an increase in the minimum wage to $15, phased in by 2025, would benefit 27.3 million workers, with an average gain of $1,500 per year, reduce the number of the poor by 1.3 million, but also cut employment of affected workers by 1.3 million. Yes, some would lose jobs, but so many more would benefit — hardly the “everybody loses” prediction that prevailed among economists for decades.
Pegging the “natural rate” too high, ignoring the harm from exposure to international competition, austere budget policy, low and stagnant minimum wages — all of these misunderstood economic relationships have one thing in common.
In every case, the costs fall on the vulnerable: people who depend on full employment to get ahead; blue-collar production workers and communities built around factories; families who suffer from austerity-induced weak recoveries and under-funded safety nets, and who depend on a living wage to make ends meet. These groups are the casualties of faulty economics.
In contrast, the benefits in every case accrue to the wealthy: highly educated workers largely insulated from slack labor markets, executives of outsourcing corporations, the beneficiaries of revenue-losing tax cuts that allegedly require austere budgets, and employers of low-wage workers.
In this regard, there is a clear connection between each one of these mistakes and the rise of economic inequality.
I cannot overemphasize the importance of recognizing who benefits and who loses from these economic mistakes, because that difference is why these mistakes persist. Every one of the wrong assumptions described here benefits conservative causes, from reducing the bargaining clout of wage earners, to strengthening the hand of outsourcers and offshorers, to lowering the labor costs of low-wage employers. These economic assumptions are thus complementary to the conservative agenda and that, in and of themselves, makes them far more enduring than they should be based on the facts.
It is no coincidence that the assumptions are being so rigorously questioned by a new group of highly progressive politicians, like Rep. Ocasio-Cortez. They are making the critical connections in our political economy to challenge old assumptions that have hurt working people for too long. The vast majority of us will be better off for their work.
Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities and was the chief economic adviser to Vice President Joe Biden from 2009 to 2011.
WARREN, Mich. (AP) — When you first lay eyes on the new 2020 Corvette, a modern version of the classic American sports car isn't the first thing that pops into your head.
Instead, you think Lamborghini, Lotus, McLaren.
The eighth-generation 'Vette, dubbed C8, is radically different from its predecessors, which for 66 years had the engine in the front. This time, engineers moved the General Motors' trademark small-block V8 behind the passenger compartment. It's so close to the driver that the belt running the water pump and other accessories is only a foot away.
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Also gone are the traditional long hood and large, sweeping front fenders, replaced by a downward-sloping snub nose and short fenders. In the back, there's a big, tapered hatch that opens to a small trunk and the low-sitting all-new 6.2-liter, 495 horsepower engine.
So why change the thing?
"We were reaching the performance limitations of a front-engine car," explains Tadge Juechter, the Corvette's chief engineer, ahead of Thursday night's glitzy unveiling in a World War II dirigible hangar in Orange County, California.
With a mid-engine, the flagship of GM's Chevrolet brand will have the weight balance and center of gravity of a race car, rivaling European competitors and leaving behind sports sedans and ever-more-powerful muscle cars that were getting close to outperforming the current 'Vette.
"We're asking people to spend a lot of money for this car, and people want it to be the best performer all around," Juechter said.
GM President Mark Reuss said the C8 will start below $60,000, 7% more than the current Corvette's base price of $55,900. Prices of other versions weren't announced but the current car can run well over $100,000 with options, still thousands cheaper most than European competitors.
Corvette sales aren't huge. Through June, the company sold just under 10,000 of them. But industry analysts say the car helps the company's image, showing that it can build a sports car that performs with top European models.
GM says the new version, with an optional ZR1 performance package, will go from zero to 60 mph (96.6 kilometers per hour) in under three seconds, the fastest Corvette ever and about a full second quicker than all but one high-performance version of the outgoing Vette.
The "cab forward" design with a short hood looks way different, but GM executives say they aren't worried that it will alienate Corvette purists who want the classic long hood and the big V8 in the front.
Harlan Charles, the car's marketing manager, said mid-engine Corvettes had for years been rumored to be the next generation so it wasn't unexpected. GM also is hoping the change will help draw in younger buyers who may not have considered a Corvette in the past.
George Borke, a member of Village Vettes Corvette Club in The Villages, Florida, a huge retirement community, said he hasn't heard anyone in the 425-member club complain about the new design. "I think after 60 years it's time for a change," said Borke, who owns a current generation "C7," bought when the car was last redesigned in the 2014 model year.
The new car has two trunks, one in the front that can hold an airline-spec carry-on bag and a laptop computer case. Under the rear hatch behind the engine is another space that can hold two sets of golf clubs.
Even though it's a performance car, Juechter said the Corvette can go from eight cylinders to four to save fuel. Some owners get close to 30 mpg on the freeway with the current model, and Juechter said he expects that to be true with the new one. Full mileage tests aren't finished, he said.
Engineers also took great pains to make the new car quiet on the highway, with heat shields and ample insulation to cut engine noise.
Even though the car has an aluminum center structure and a carbon fiber bumper beam, it still weighs a little more than the current model. It's also slightly less aerodynamic due to large air intake vents on the sides to help cool the engine. The new Corvette comes with a custom-designed fast-shifting eight-speed automatic transmission with two tall top gears. It also will be made with right-hand-drive for international markets.
Higher-performance versions are coming, although Juechter wouldn't say if the C8 is designed to hold a battery and electric motor.
Workers at a GM plant in Bowling Green, Kentucky, are just starting to build the new cars, which will arrive in showrooms late this year.
NASHVILLE, Tenn. (Reuters) - In the depths of the financial crisis, when the world was shunning debt and battening down for the worst, city officials here zagged in what seemed a preposterous direction and spent $600 million on a new convention center.
The downtown district is pictured in Nashville, Tennessee, U.S., January 7, 2019. Picture taken on January 7, 2019. REUTERS/Howard Schneider
A decade later thousands of new hotel rooms soar over the site, including a 33-story Marriott that is just a tiny part of the investment and jobs boom that has made Nashville an envy of other cities trying to find their footing, an image cemented when Amazon announced it would put a 5,000-job logistics center here.
“Look at the skyline, see the activity - whether it is a Monday night or a Saturday night - the city is thriving,” said Tom Turner, president of the Nashville Downtown Partnership.
It is in many ways a positive story of how new winners can emerge even after a devastating recession. But it also represents a major fault line in the recovery that followed: Winning places like Nashville have won big, often for reasons that can’t obviously or quickly be replicated, while much of the rest of the country has struggled to stay even or slipped behind.
It is a schism that helped elevate Donald Trump to the presidency with his massive support in less populated and slower-growing areas. The divide is also preoccupying U.S. central bankers and economists worried about what happens if large portions of the country never bounce back.
“The superstar cities have pulled so far away,” said MIT economist Simon Johnson. He recently called for a $100 billion annual federal investment in basic research centered in cities like Rochester, New York, that have the base of universities and college graduates to compete as innovation hubs.
“There is no entity other than the federal government that has the capacity to move the needle on this.”
WHERE THE GROWTH IS ... AND ISN’T
The U.S. economy entered a second decade of growth this month, marking the longest expansion on record.
In many ways the country has seemingly recovered from a 2007-2009 recession that was the worst downturn since the 1930s. Unemployment is near a 50-year low, household income has been rising, and the country is at a point in the business cycle when workers typically see their most robust gains.
But a Reuters analysis of federal data shows just how unevenly the spoils of growth have been divided.
In a ranking of 378 metropolitan areas by how their share of national employment changed from 2010 to 2017, 40% of the new jobs generated during that time went to the top 20 places, along with a similar share of the additional wages.
Those cities represent only about a quarter of the country’s population and are concentrated in the fast-growing southern and coastal states. None were in the northeast, and only two were in the “rust belt” interior - Grand Rapids, Michigan, and a rebounding Detroit.
Nashville ranked 11th on the list, keeping company with other southern towns like Charlotte and Atlanta, and the usual fast-growth suspects like Seattle and San Francisco.
The drop from there is steep. The next set of 20 cities captured about 10% of the jobs created from 2010 through 2017, close to their roughly 7.5% share of the population.
At the bottom, 251 cities, many spread across the heartland and in the industrial northeast, lost job share.
It is a map that hews close to Trump’s election results: Of 221 counties that voted for President Barack Obama in 2012 and Trump in 2016, only three are in the metropolitan areas that won the most job share. Sixty-two are part of metro areas where the share of national employment declined.
MUSIC CITY MIRACLE? OR HAPPY ACCIDENT?
Among the decade’s winners, many have an obvious story to tell - Houston as a long-time oil town amid a boom in U.S. energy production or San Francisco as the epicenter of all things tech.
But interviews with entrepreneurs and officials in Nashville point to a mix of factors behind its success, including some that were out of the city’s control, such as the state’s lack of an income tax, and others associated with its unique local assets.
The once-in-a-generation decision to gamble on the convention center shows the importance of political leadership, something Federal Reserve officials and economists have begun to see as central to a local jurisdiction’s success. But it also depended on the city’s celebrated country music roots and seven-night-a-week year-round party scene as the draw for major conferences and trade shows, something that can’t simply be reproduced by other municipalities.
With rock-bottom interest rates and companies competing aggressively for building work, “you could never build at that price again,” said Turner of the convention center. “It gave the city a different way of looking at things. Coming out of the recession you had new momentum.”
For some cities, the presence of legacy companies positioned in growth industries like healthcare can give a boost. But for others, whose anchor firms may have been in industries that have fled overseas, such as textiles, the hill is harder to climb.
Private sector jobs in Nashville surged 31% since national employment bottomed in 2010, from 622,000 to around 820,000 through 2017, double the national job growth rate of around 15%, according to federal data.
The 40 top job-generating metro areas saw employment expand 23% during those years. Jobs in other metro areas grew around 11%, and in counties outside of metro areas the job growth rate was around 4.5%.
WHAT’S LUCK GOT TO DO WITH IT?
And there are quirks of history. Nashville’s downtown zoning rules had been notoriously strict. When they were eased in the 1990s, the result was fast growth from a low base, as builders turned empty land into new neighborhoods.
It came off as a boom, but in fact it was more “playing catch up” after years of underbuilding, said Jay Turner, whose MarketStreet Enterprises developed the now trendy Gulch neighborhood around an abandoned rail yard.
Jay Turner, who is not related to Tom Turner, said Nashville “was underdeveloped because of the zoning” that had put a premium on offices and parking garages.
That type of surge can only happen once, and not at all in cities that are already filled in.
Turner said it created a dynamic where “people say we need exposure in Nashville.”
Fed officials are taking the gap in economic outcomes among cities and regions seriously. Providing time for “catch up” among lagging demographic groups and areas of the country is one of the reasons behind policymakers’ decision to leave interest rates low and to consider cutting them in coming weeks.
Atlanta Federal Reserve bank president Raphael Bostic has made the issue a priority in his travels and research, puzzling over why places in his district like Atlanta have surged ahead while others have not.
Slideshow (3 Images)
It’s not clear, he said, that there’s a uniform policy mix that could easily spread the wealth.
“Every city has its unique narrative as to why it got to where it got,” Bostic said. “I don’t think there is a general formula that if you hit each point at a certain level you guarantee an outcome.”
Reporting by Howard Schneider; Editing by Dan Burns and Andrea Ricci
New research on how consumers react when they don’t know what to watch on their video-streaming service could help explain why Netflix is losing subscribers.
Netflix’s
NFLX, -10.27%
second-quarter earnings report Wednesday revealed fewer new subscribers than expected. But Nielsen’s analysis on viewing habits might help explain what consumers have been doing if they haven’t been buying Netflix subscriptions of late.
That sent Netflix’s stock tumbling. Netflix shares dropped more than 10% Thursday. (Netflix did not respond to a request for comment on this story.)
“We think Q2’s content slate drove less growth in paid net adds than we anticipated,” Netflix executives said in a letter to shareholders this week. Netflix CEO Reed Hastings said that would be a focus in the third quarter, and said the third series of “Stranger Things” had already broken records.
Some 40.7 million household accounts have been watching the show since its July 4 global launch, the company said on Twitter
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— “more than any other film or series in its first four days. And 18.2 million have already finished the entire season.”
But Nielsen has another, perhaps more troubling, theory that goes beyond other streaming competition from shows on Hulu, Disney
DIS, -0.66%
CBS
CBS, -2.08%
and Amazon: When there’s just too much video streaming content to choose from, viewers turn to a trusty old friend: broadcast television.
If video streaming subscribers don’t know what they want to watch, they’re almost twice as likely to tune into their favorite broadcast television channel (58%) rather than browse through the menus of their streaming services (33%), according to the research from Nielsen.
Streaming service recommendations do not appear to carry much weight either — 44% of polled viewers said they would scan through television channels to decide what to watch, while 26% said they watch shows recommended by their subscription service.
When viewers are indecisive, the preference for television is stronger within the 35 to 49-year-old demographic, compared to viewers between the ages of 18 and 34.
Subscriptions like Netflix and Amazon Prime offer plenty of critically-acclaimed, award-winning content. But the thing is, viewers have to pick which movies and series they’ll watch, and observers say many are getting burned out from all that decision-making.
In addition to its rotating library of existing feature movies and TV shows like “Friends,” Netflix has ramped up creation of its own content, releasing some 1,500 hours of original series and movies in 2018, by one estimate. Viewers between age 18 and 34 spent 9.4 minutes browsing through content. Viewers age 35 to 49 spent 8.4 minutes.
Television viewers also need to choose what channel to watch. Yet part of the allure might be how television just beams whatever’s on the channel instead presenting viewers with even more options on what to watch.
2018 marked the first time ever that there were online video subscriptions than cable subscriptions across the country, according to the Motion Picture Association of America. There were 613.3 million streaming subscriptions globally, and 556 million cable television subscriptions, the organization said.
Video streaming is an increasingly crowded business. Apart from Hulu, CBS’s streaming service and Amazon Prime, there’s also HBO Now and Sling TV to name a few. Disney’s service, Disney Plus, will launch in November, and Apple’s
AAPL, +1.14%
own service is scheduled to go live later this year, though there’s no exact date yet. AT&T
T, -0.51%
which owns HBO, is also planning to launch HBO Max this spring.
Netflix shares are up more than 20% year to date, compared to a 16% gain for the Dow Jones Industrial Average
DJIA, +0.01%
and a 19% increase for the S&P 500
SPX, +0.36%
New research on how consumers react when they don’t know what to watch on their video-streaming service could help explain why Netflix is losing subscribers.
Netflix’s
NFLX, -10.27%
second-quarter earnings report Wednesday revealed fewer new subscribers than expected. But Nielsen’s analysis on viewing habits might help explain what consumers have been doing if they haven’t been buying Netflix subscriptions of late.
That sent Netflix’s stock tumbling. Netflix shares dropped more than 10% Thursday. (Netflix did not respond to a request for comment on this story.)
“We think Q2’s content slate drove less growth in paid net adds than we anticipated,” Netflix executives said in a letter to shareholders this week. Netflix CEO Reed Hastings said that would be a focus in the third quarter, and said the third series of “Stranger Things” had already broken records.
Some 40.7 million household accounts have been watching the show since its July 4 global launch, the company said on Twitter
TWTR, -0.11%
— “more than any other film or series in its first four days. And 18.2 million have already finished the entire season.”
But Nielsen has another, perhaps more troubling, theory that goes beyond other streaming competition from shows on Hulu, Disney
DIS, -0.66%
CBS
CBS, -2.08%
and Amazon: When there’s just too much video streaming content to choose from, viewers turn to a trusty old friend: broadcast television.
If video streaming subscribers don’t know what they want to watch, they’re almost twice as likely to tune into their favorite broadcast television channel (58%) rather than browse through the menus of their streaming services (33%), according to the research from Nielsen.
Streaming service recommendations do not appear to carry much weight either — 44% of polled viewers said they would scan through television channels to decide what to watch, while 26% said they watch shows recommended by their subscription service.
When viewers are indecisive, the preference for television is stronger within the 35 to 49-year-old demographic, compared to viewers between the ages of 18 and 34.
Subscriptions like Netflix and Amazon Prime offer plenty of critically-acclaimed, award-winning content. But the thing is, viewers have to pick which movies and series they’ll watch, and observers say many are getting burned out from all that decision-making.
In addition to its rotating library of existing feature movies and TV shows like “Friends,” Netflix has ramped up creation of its own content, releasing some 1,500 hours of original series and movies in 2018, by one estimate. Viewers between age 18 and 34 spent 9.4 minutes browsing through content. Viewers age 35 to 49 spent 8.4 minutes.
Television viewers also need to choose what channel to watch. Yet part of the allure might be how television just beams whatever’s on the channel instead presenting viewers with even more options on what to watch.
2018 marked the first time ever that there were online video subscriptions than cable subscriptions across the country, according to the Motion Picture Association of America. There were 613.3 million streaming subscriptions globally, and 556 million cable television subscriptions, the organization said.
Video streaming is an increasingly crowded business. Apart from Hulu, CBS’s streaming service and Amazon Prime, there’s also HBO Now and Sling TV to name a few. Disney’s service, Disney Plus, will launch in November, and Apple’s
AAPL, +1.14%
own service is scheduled to go live later this year, though there’s no exact date yet. AT&T
T, -0.51%
which owns HBO, is also planning to launch HBO Max this spring.
Netflix shares are up more than 20% year to date, compared to a 16% gain for the Dow Jones Industrial Average
DJIA, +0.01%
and a 19% increase for the S&P 500
SPX, +0.36%
U.S. stock index futures continued to climb Friday morning after two influential Federal Reserve officials hinted at more aggressive policy easing from the central bank.
Around 5:15 a.m. ET, Dow futures implied a positive open of around 90 points, while S&P 500 and Nasdaq futures were also seen higher.
Stocks had been heading south on Thursday until New York Fed President John Williams said the central bank needed to "act quickly" when the economy was slowing and rates were low, adding in a speech that it is "better to take preventative measures than wait for disaster to unfold."
The S&P 500 reversed its trajectory to close 0.4% higher at 2,995.11, led by a 0.8% gain in consumer staples, while the Nasdaq and Dow Jones Industrial Average also finished the session marginally in positive territory..
However, a spokesperson for the New York Fed moved to cool the speculation arising from Williams' comments, telling CNBC that he was drawing from academic research, not hinting at potential policy actions at the upcoming Federal Open Market Committee (FOMC) meeting.
Investors on Thursday digested a mixed flurry of corporate earnings, as Netflix shares plummeted more than 10% after the streaming giant reported a surprise loss in U.S. subscribers, while Microsoft shares hit record highs after it beat analysts' estimates for fourth-quarter revenue and profit.
IBM reported its fourth consecutive revenue decline, while Morgan Stanley beat expectations.
Investors will also be monitoring another escalation of tensions in the Middle East, after President Trump said a U.S. Navy ship destroyed an Iranian drone in a "defensive action" in the Strait of Hormuz.
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