Tag: WSJ

Covid-19 Pandemic Led to Smaller-Than-Expected Baby Bust, New Data Suggest

Mary Pat Campbell

Link:https://www.wsj.com/articles/covid-19-pandemic-led-to-smaller-than-expected-baby-bust-new-data-suggest-11644328800

Graphic:

Excerpt:

New data on U.S. births suggest that the Covid-19 pandemic has led to a smaller-than-expected baby bust.

The U.S. saw about 7,000 fewer births through the first nine months of 2021 compared with the same period the year prior, according to provisional data from the Centers for Disease Control and Prevention’s National Center for Health Statistics. The numbers reflect conceptions that occurred roughly from April through December 2020, a period that includes the first part of last winter’s Covid-19 case surge, which started in October 2020 and waned by February 2021.

Author(s): Janet Adamy and Anthony DeBarros

Publication Date: 8 Feb 2022

Publication Site: WSJ

Climate Scientists Encounter Limits of Computer Models, Bedeviling Policy

Mary Pat Campbell

Link:https://www.wsj.com/articles/climate-change-global-warming-computer-model-11642191155?mod=hp_lead_pos10

Excerpt:

At least 20 older climate models disagreed with the new one at NCAR, an open-source model called the Community Earth System Model 2, or CESM2, funded mainly by the U.S. National Science Foundation and arguably the world’s most influential. Then, one by one, a dozen climate-modeling groups around the world produced similar forecasts.

The scientists soon concluded their new calculations had been thrown off kilter by the physics of clouds in a warming world, which may amplify or damp climate change. “The old way is just wrong, we know that,” said Andrew Gettelman, a physicist at NCAR who specializes in clouds and helped develop the CESM2 model. “I think our higher sensitivity is wrong too. It’s probably a consequence of other things we did by making clouds better and more realistic. You solve one problem and create another.”

Since then the CESM2 scientists have been reworking their algorithms using a deluge of new information about the effects of rising temperatures to better understand the physics at work. They have abandoned their most extreme calculations of climate sensitivity, but their more recent projections of future global warming are still dire — and still in flux.

…..

Skeptics have scoffed at climate models for decades, saying they overstate hazards. But a growing body of research shows many climate models have been uncannily accurate. For one recent study, scientists at NASA, the Breakthrough Institute in Berkeley, Calif., and the Massachusetts Institute of Technology evaluated 17 models used between 1970 and 2007 and found most predicted climate shifts were “indistinguishable from what actually occurred.”

Still, models remain prone to technical glitches and are hampered by an incomplete understanding of the variables that control how our planet responds to heat-trapping gases.

Author(s): Robert Lee Hotz

Publication Date: 6 Feb 2022

Publication Site: WSJ

A Politicized Fed Endangers the Economy

Mary Pat Campbell

Link:https://www.wsj.com/articles/a-politicized-fed-endangers-economy-monetary-federal-reserve-powell-balance-sheet-climate-stress-test-social-justice-11642448983

Excerpt:

It is time to depoliticize monetary policy. First, instead of making the Fed’s mandate broader, Congress should consider narrowing it to one of price stability. The Fed’s contribution to achieving full employment should be through focusing on long-term price stability. Next, as we learn to live with Covid and as the economy continues to recover, the Fed must go beyond merely tapering its bond purchases. It must set out a credible process and timetable to unwind its balance sheet.

Should the Fed be called on again to exercise emergency powers, Congress must ensure those powers are of limited duration and that any credit facilities created are quickly transferred to the Treasury Department. Finally, the more improvisational and discretionary the Fed’s conduct of monetary policy, the more difficult it is to withstand political pressures. The Fed should move to a monetary-policy framework that is more systematic, predictable and transparent.

If politicized monetary policy doesn’t prove transitory, it is doubtful the Fed will be able to deliver either stable prices or maximum employment.

Author(s): Jeb Hensarling

Publication Date: 17 Jan 2021

Publication Site: WSJ

Covid-19, Endemic or Not, Will Still Make Us Poorer

Mary Pat Campbell

Link: https://www.wsj.com/articles/covid-19-endemic-or-not-will-still-make-us-poorer-11642608213

Excerpt:

Endemic Covid-19 could thus become a lasting “supply shock” that degrades how much economies can produce, similar to the surge in oil prices in the 1970s. In October, the International Monetary Fund estimated global output this year would still be 3% lower than it had projected in 2019, with Western Europe and Latin America showing much bigger hits than China and Japan, where Covid-19’s toll has been much lower.

The U.S. is an exception: Output in the last quarter of 2021 was roughly back to its pre-pandemic trend. But the economy, distorted and disrupted by Covid-19, is struggling to sustain this level of output, as the surge in inflation to 7% demonstrates.

Covid-19 might have boosted efficiency in some industries by speeding up digitization and adoption of remote work. Goldman Sachs economists estimate this delivered a 3% to 4% boost to U.S. productivity.

But some of the shift to remote operations is involuntary, and some of the rise in productivity might reflect an overworked workforce. Indeed, the pandemic has left the labor force smaller, sicker and less happy. Absences due to illness among employed workers have averaged 50% higher in the last two years. In early January, nearly 12 million people weren’t working because they were sick with Covid-19, caring for someone with coronavirus, or concerned about getting or spreading the disease, according to a regular Census Bureau survey. The figure hasn’t been below 4 million since June 2020.

In the past year, workers have reported declining satisfaction with their wages and a rising “reservation wage,” that is, how much they would have to be paid to accept a new job, according to the Federal Reserve Bank of New York. This might reflect inflation, changed expectations, or stress due to Covid-19 testing, masks and vaccine mandates, or their absence.

For employers, this makes it much harder to attract the necessary staff. Nursing homes have boosted hourly wages 14% since the start of the pandemic, yet staffing has plummeted 12%, impairing their ability to accept new patients. Such shortages impose a cost that doesn’t show up in gross domestic product.

Author(s): Greg Ip

Publication Date: 19 Jan 2022

Publication Site: WSJ

Iowa’s Bold Tax Reform

Mary Pat Campbell

Link:https://www.wsj.com/amp/articles/iowas-bold-tax-reform-kim-reynolds-11642614230

Excerpt:

Gov. Reynolds is proposing a bold tax reform that would increase the incentives to work and invest in the Hawkeye State. Her proposal unveiled last week would reshape the state income tax, gradually consolidating brackets en route to a flat 4% rate by 2026. “When the bill’s fully implemented,” she said, “an average Iowa family will pay more than $1,300 less in taxes.”

The flat 4% levy would drop the state’s top rate by more than a third. Under current law Iowans are set to pay 6.5% on earnings above about $80,000, a threshold that catches much of the middle class. That and three other income-tax brackets would be swept away by Gov. Reynolds’s reform.

The plan would also slash the state’s corporate tax, which is even more punishing. Iowa-based companies pay 9.8% of their earnings above $250,000 in state tax. Ms. Reynolds’s reform would gradually reduce the top rate to 5.5%, capping corporate-tax revenue at $700 million a year and using excess revenue to offset annual rate cuts. An immediate rate cut would be better economically, providing more clarity for corporate investment decisions. But the revenue target should be met if the economy continues to grow.

Author(s): WSJ Editorial Board

Publication Date: 19 Jan 2022

Publication Site: WSJ

Puerto Rico Released From Bankruptcy as Economic Problems Persist

Mary Pat Campbell

Link:https://www.wsj.com/articles/puerto-rico-released-from-bankruptcy-as-economic-problems-persist-11642537090

Excerpt:

Puerto Rico received court approval to leave bankruptcy through the largest restructuring of U.S. municipal debt ever, ending years of conflict with creditors as the U.S. territory confronts other stubborn economic problems.

Tuesday’s court ruling approved a write-down of $30.5 billion in public debts built up during an economic decline marked by high joblessness, outward migration and unsustainable borrowing that tipped Puerto Rico into bankruptcy in 2017. The restructuring plan calms tension between Puerto Rico and its Wall Street creditors dating to its debt default, the largest ever on bonds backed by the full faith and credit of a U.S. municipality.

….

The territory entered bankruptcy with $74 billion in bond debt and a $55 billion gap between the pension benefits promised to employees and retirees and the funding set aside to pay for them. Public agencies were beset by cronyism and failed for years to draw up accurate budgets or account for expenses, according to a 2018 investigation commissioned by the board.

Sprawling bureaucracy and a high cost of doing business discouraged investment, especially after the expiration of some corporate tax breaks in 2006 pushed some pharmaceutical and other manufacturers to depart. To make up for a shrinking tax base, officials borrowed to paper over deficits and skimped on pension contributions.

Many residents of Puerto Rico, political leaders, and some investors have called for an independent audit of how the huge debt was built up, according to Judge Swain’s decision.

Author(s): Andrew Scurria and Soma Biswas

Publication Date: 18 Jan 2022

Publication Site: WSJ

Want to Be an Actuary? Odds Are, You’ll Fail the Test

Mary Pat Campbell

Link:https://www.wsj.com/articles/actuary-credential-test-exam-bad-odds-11640706082?st=52aicn5y38okulw&reflink=article_email_share

Graphic:

(the answer: B — I’ll leave it to you to verify the calculations)

Excerpt:

Actuaries quantify risk. One of their riskiest endeavors is trying to become one.

Among people taking at least one exam from the Society of Actuaries—the field’s biggest U.S. credentialing body—15% eventually pass the multiple tests required to become an Associate, one of two designations allowing them to practice. Just 10% pass those and additional tests to become a Fellow, the group’s higher designation, which affords bigger responsibilities and salaries.

It’s such an arduous process that the number of test-takers has been declining in recent years, and the society is making changes to keep candidates from dropping out of the gantlet. It is also adding new “predictive analytics” tests to adjust to the massive amounts of data insurers now have.

There is no limit to how many times a candidate can take the tests. It took one man 50 years to become a Fellow, says Stuart Klugman, an official at the society. The society says a candidate typically takes seven to 10 years to become a Fellow. They must pass 10 exams plus other coursework and requirements.

Author(s): Neal Templin

Publication Date: 28 Dec 2021

Publication Site: WSJ

Covid Spurs Biggest Rise in Life-Insurance Payouts in a Century

Mary Pat Campbell

Link:https://www.wsj.com/articles/covid-spurs-biggest-rise-in-life-insurance-payouts-in-a-century-11639045802

Excerpt:

The Covid-19 pandemic last year drove the biggest increase in death benefits paid by U.S. life insurers since the 1918 influenza epidemic, an industry trade group said.

Death-benefit payments rose 15.4% in 2020 to $90.43 billion, mostly due to the pandemic, according to the American Council of Life Insurers. In 1918, payments surged 41%.

The hit to the insurance industry was less than expected early in the pandemic because many of the victims were older people who typically have smaller policies. The industry paid out $78.36 billion in 2019, and payouts have typically increased modestly each year.

….

In the 1918 flu pandemic, the number of U.S. deaths reached about 675,000, with mortality high in people younger than 5 years old, 20 to 40 years old, and 65 years and older, according to the CDC’s website.

The ACLI’s data show two other years, both in the 1920s, when year-over-year increases topped 15%, when there also were influenza epidemics, said Andrew Melnyk, the ACLI’s vice president of research and chief economist.

Author(s): Leslie Scism

Publication Date: 9 Dec 2021

Publication Site: Wall Street Journal

Two Top Pennsylvania Pension Fund Officials to Retire Amid Federal Probe

Mary Pat Campbell

Link:https://www.wsj.com/articles/pennsylvania-pension-cio-jim-grossman-to-resign-amid-federal-probe-11637243641

Excerpt:

Two top officials at Pennsylvania’s largest pension fund are retiring amid a federal investigation and calls by some board members for their ouster.

The board of Pennsylvania’s $64 billion Public School Employees’ Retirement System voted Thursday to approve resolutions accepting the retirement of Glen Grell, the executive director, and Jim Grossman, the chief investment officer. Board members approved plans for both men to stay on in temporary advisory positions and authorized the board chair to begin a search for their replacements.

The fund has been racked by turmoil since board members learned in March that a report of investment returns was too high. The accurate figure was low enough to trigger an increase in payments from employees that the plan serves. Investigations conducted by the fund haven’t found wrongdoing on the part of investment staff.

The board said in April that it had hired law firms to investigate the miscalculation and to respond to a federal grand jury subpoena requesting documents. The pension declined to comment on what information the grand jury is seeking.

Author(s): Heather Gillers

Publication Date: 18 Nov 2021

Publication Site: Wall Street Journal

Biden to Nominate Jerome Powell for Second Term as Federal Reserve Chairman

Mary Pat Campbell

Link:https://www.wsj.com/articles/biden-will-tap-jerome-powell-for-new-term-as-fed-chairman-11637589600?mod=hp_lead_pos1

Excerpt:

President Biden said he would nominate Federal Reserve Chairman Jerome Powell to a second term leading the central bank, opting for continuity in U.S. economic policy despite pushback from some Democrats who wanted someone tougher on bank regulations and climate change.

Mr. Biden said he would also nominate Fed governor Lael Brainard as vice chairwoman of the central bank’s board of governors. Prominent liberals like Sen. Elizabeth Warren (D., Mass.) had warned the president against picking Mr. Powell, and progressive groups mounted a last-ditch campaign to pressure the president to tap Ms. Brainard for the top job.

Author(s): Nick Timiraos and Andrew Restuccia

Publication Date: 22 Nov 2021

Publication Site: Wall Street Journal

Newly Flush With Cash, Retirement Funds Struggle to Find Appealing Investments

Mary Pat Campbell

Link:https://www.wsj.com/articles/newly-flush-with-cash-retirement-funds-struggle-to-find-appealing-investments-11636293602?mod=e2tw

Excerpt:

California transferred an extra $2.31 billion to its teachers’ and public workers’ pension funds after stock gains and the economic recovery bolstered income tax collections, according to budget documents. Connecticut Treasurer Shawn Wooden is transferring an additional $1.62 billion to that state’s teachers’ and workers’ pension funds in accordance with a mandate that excess revenue be used to pay down debt.

This year New Jersey is making the full pension payment recommended by its actuaries for the first time since 1996, plus an extra half-billion dollars, funneling a total of $6.9 billion to the state’s deeply underfunded retirement plan, the New Jersey treasurer’s office said.

Asked how the money would be used, a spokeswoman for the state’s division of investment said it “will continue to move forward toward the previously established allocation targets.” The $101 billion fund’s private equity, private credit, real estate and real assets portfolios each contained between $1 billion and $3 billion less than the goal amount as of Aug. 31, records show.

Author(s): Heather Gillers

Publication Date: 7 Nov 2021

Publication Site: Wall Street Journal

Who’s Quitting Their Jobs? New Data Show Some Workers Are More Likely Than Others

Mary Pat Campbell

Link:https://www.wsj.com/articles/as-american-workers-leave-jobs-in-record-numbers-a-closer-look-at-who-is-quitting-11636894801

Excerpt:

Workers resigned from a record 4.4 million jobs in September, according to Labor Department data, and new surveys show that low-wage workers, employees of color and women outside the management ranks are those most likely to change roles. The findings signal that turnover isn’t evenly spread across the U.S. workforce even as employers across industries struggle to fill a variety of roles.

The overall percentage of people considering leaving their jobs — about three in 10, according to research by consulting firm Mercer LLC — is fairly consistent with historical trends. But sentiment varies across demographics and occupations. While front-line and low-wage positions typically see high rates of turnover, for example, employees in those roles are especially likely to leave now, Mercer found in a survey of 2,000 U.S. workers conducted in August.

….

Nearly half of low-wage and front-line workers surveyed said their pay and benefits were insufficient while 41% said they felt burned out from demanding workloads. Some 35% of Black employees and 40% of Asian employees said they were considering leaving, compared with 26% of white employees.

Author(s): Kathryn Dill

Publication Date: 14 Nov 2021

Publication Site: WSJ