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Good morning. Today we look at how the labor market is creating opportunity for more workers, a respite from emerging-market concerns, record orders for big rigs, Australia’s warning for the U.S., and the housing market’s soft summer.
THE KIDS ARE ALRIGHT
The unemployment rate among young Americans fell to its lowest level in more than 50 years this summer. That’s the latest sign a tight labor market is generating more opportunities for groups often overlooked by employers. The unemployment rate for adults without a high-school diploma fell to a record low in July. Among racial groups, the unemployment rates for Latinos and Blacks have touched record lows this year, Andrew Duehren reports.
The latest hiring trend may also help explain so-so wage growth. Rather than bidding more for experienced workers, employers are casting a wider net—opting for on-the-job training in return for lower labor costs.
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WHAT TO WATCH TODAY
Canada’s consumer-price index for July is out at 8:30 a.m. ET.
The University of Michigan consumer sentiment index for August, out at 10 a.m. ET, is expected to inch up to 98.0 from 97.9 at the end of July, reflecting a broadly upbeat assessment of the economy.
The Conference Board’s leading economic index for July, out at 10 a.m. ET, is expected to rise 0.5% from the prior month.
Investors stopped worrying about Turkey. The Dow Jones Industrial Average posted its biggest one-day gain in four months on Thursday as upbeat earnings reports and stabilizing commodities prices helped calm investors’ fears, Akane Otani and Ben St. Clair report.
STUCK IN THE MIDDLE
Some analysts are beginning to call a bottom to the current emerging-market selloff. Be careful. Developing economies may still get stuck between a stronger dollar and higher U.S. interest rates on one side, and slower Chinese credit growth and a sinking yuan on the other. If these trends continue alongside a Fed in rate-hiking mode, it adds up to a highly troublesome picture for emerging markets, whose companies increasingly will be squeezed by a combination of higher dollar funding costs and a Chinese slowdown, Nathaniel Taplin writes.
Truck manufacturers expect to break records for orders. They won’t be able to fill them all until next year. An unprecedented run of orders for big rigs has pushed the backlog at truck factories to nine months, Erica E. Phillips reports. Five is more typical. Freight-hauling fleets are trying to keep up with swelling demand in a robust U.S. economy even as they say they face difficulty finding drivers. New trucks are one recruiting tool, and the new vehicles also get better fuel mileage—an attractive feature for fleets as other costs are rising.
WHO CAN IT BE NOW?
Up close, the U.S. economy looks pretty darn good. From a distance, there are some concerns. Reserve Bank of Australia Governor Philip Lowe said he’s becoming increasingly uneasy about the potential for inflation to jump in the U.S., James Glynn reports. The reason: fiscal expansion via tax cuts and spending increases. “It is highly unusual to have such stimulatory fiscal policy when the economy is already operating at a very high level of capacity,” Mr. Lowe said. “One can’t rule out the possibility that the Federal Reserve will have to withdraw monetary accommodation more quickly than currently projected, with possible disruptive consequences in financial markets.”
Looking for a soft spot in the U.S. economy? Try housing. Supplies are tight, prices are rising and there’s little relief in sight: builders aren’t building fast enough. Single-family housing starts hit a post recession high in November but have since slipped and moved sideways.
That may well kill one emerging trend. Since bottoming out about halfway through 2016, the U.S. homeownership rate has been tentatively crawling back.
Millennials are driving the rebound.
It’s not all bad for first-time buyers: new homes are getting smaller. Smaller is cheaper.
QUOTE OF THE DAY
Customers tell us that they feel better about the current health of the U.S. economy as well as their personal finances. They’re more confident about their employment opportunities. – Walmart CEO Doug McMillon, after the company released second-quarter earnings
TWEET OF THE DAY
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WHAT ELSE WE’RE READING
Parents can be good for your career, especially if your career is derailed by a layoff. “There is something about living close to one’s parents that enables one to find another job that pays as well as the one lost,” Patrick Coate, Pawel Krolikowski and Mike Zabek write in a Cleveland Fed economic commentary. Why? Possibly free childcare and access to job networks.
Don’t day trade and drive. “Using the universe of fatal road car accidents in the United States from 1990 to 2015, we find that a one standard deviation reduction in daily stock market returns is associated with a 0.5% increase in the number of fatal accidents,” Corrado Giulietti, Mirco Tonin and Michael Vlassopoulos write in a CESifo working paper. The effect is worst among inexperienced investors.
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