Unemployment insurance, fintech lending, etc.

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Comparing jobs at the same companies across states, Gordon Dahl of the University of California, San Diego, and Matthew M. Knepper of the University of Georgia found that declining generosity of government unemployment insurance (UI) led to faster growth. jobs, but slower wage growth. The authors found that after a 50% drop in the generosity of the North Carolina user interface in 2013, multi-state firms had 2.4% faster job growth and paid 7.2% lower starting wages in their establishments in North Carolina than in its establishments in other states. Using data from online job postings, the authors also found that North Carolina establishments offered 5.5 percent lower pay for the same job than counterparts in other states. The authors found similar results on a smaller scale for establishments in six additional states that had modest reductions in government benefits for the user interface compared to North Carolina. The findings show that reducing user interface benefits reduces workers’ bargaining power by making it more expensive to lose their jobs. As such, employment and the fiscal benefits of less generous user interface programs need to be seen in conjunction with lower wage growth driven by “current jobseekers are satisfied with worse jobs or the same jobs with more low pay “, the authors conclude.

Small and medium-sized enterprises are more likely to use “large technology” lenders to meet short-term liquidity needs than to obtain long-term financing, said Lei Liu of the Chinese Academy of Social Sciences and co-authors. The authors compare the syndicated loans granted by MyBank, a subsidiary of Chinese Internet giant Alibaba, with conventional loans issued by a retail partner bank. With regard to the retail bank, the authors found that the large technology lender serves more first-time borrowers, younger borrowers and borrowers with limited access to credit. The authors also found that large technology loans have lower principal amounts, higher interest rates, faster repayment rates, higher arrears and lower levels of collateral than conventional loans. The authors argue that these differences between large technology and conventional loans are not due to differences in credit risk of borrowers, as they find similar trends in the group of borrowers with access to both services. They conclude that “big technology” loans – a growing market in the United States and worldwide – have the potential to lend to borrowers who are not serviced by traditional banks.

The Federal Special Supplementary Nutrition Program for Women, Infants, and Children (known as WIC) provides food to low-income pregnant women, postpartum and lactating women, and their children up to five years of age. Marianne Beatler of the University of California, Davis and co-authors used the National Health and Nutrition Study to assess what happens to family nutrition when a participating child turns five. The authors found that aging outside the program had no effect on children’s caloric or nutritional intake. However, women aged 20 to 50 who live with children (probably their mothers or caregivers) see a large increase in food insecurity and reduce their caloric intake by almost half. This suggests that mothers reduce their own consumption to protect their children from food insecurity, the authors conclude.

Mortgage interest rates are rising

“Consumer and business sentiment is quite negative. In the latest Michigan survey, consumer sentiment fell to its lowest level in history. In addition, the percentage of small business owners expecting better conditions over the next six months fell to the lowest level in the history of this survey in May. Both studies show that inflation leads to this pessimism. “Usually, such low sentiment is associated with declining consumer spending and business investment,” said Thomas Barkin, president of the Richmond Federal Reserve.

“At the same time, fiscal support from the pandemic is declining and inflation is forcing the Fed to raise interest rates. Higher interest rates tend to slow the economy by increasing borrowing costs and discouraging spending and investment. Historically, eight of the Fed’s last 11 tightening cycles have been followed by a recession. This policy change could make markets volatile. That’s understandable: The Fed hasn’t moved so fast in more than 20 years. Forecasts predict that our current cycle of interest rate hikes will pass higher than the relatively low peak of its predecessor of 2.4 percent in 2019. Now the stock market is not an economy. But if markets break, it could slow the economy, forcing people and companies to recoup their costs and investments.

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