Financial services media highlights Financial services media highlights

While the US economy is strong on paper, the average American is feeling financial pressure. 

There have been many positive things to note about the US economy over the last several years, including a very strong dollar in comparison to other global currencies. However, these broad economic metrics don’t always trickle down to the average American. Right now, many US residents are struggling with a challenging job market and high levels of inflation. 

In mid-June, continuing unemployment claims in the US hit a new peak, reaching their highest level since the end of 2021. For the week of June 15th, claims reached 1.84 million. This is a reflection of a challenging labor market, as hiring has slowed down in many industries. The tech industry, in particular, continues to struggle with mass layoffs. 

There are also challenges for those who are still employed. Many organizations are struggling to provide adequate work-life balance for their teams in the current landscape of tech-driven remote work. Some government leaders are pushing for legislation that would limit after-hours communication with employees, although this movement has faced extensive scrutiny and criticism thus far. 

Inflation and high costs of living have also been a key concern for many Americans over the last several years. While inflation has slowed from its peak in 2022, many people are still feeling the effects. Many Americans opted to save money during the COVID-19 pandemic in 2020 and 2021, and the US population accumulated a total of $2 trillion in savings during that time. However, these savings have since been depleted, with debt levels hitting record highs. 

These financial struggles could affect overall spending levels moving forward. Although American individuals may be dealing with these challenges, the country’s financial institutions still look strong. Recent analysis has found that US banks could withstand up to $685 billion in total losses in the event of a severe economic downturn. 

As the summer travel season ramps up, airlines are facing a number of challenges that could potentially disrupt summer travels. At the end of June, Canadian airline WestJet started cancelling flights in preparation for a mechanic strike. However, the airline was able to reach an eleventh-hour deal with help of Canadian prime minister Justin Trudeau, which averted the strike for now. 

However, this is indicative of broader unrest in the airline industry. Earlier in 2024, flight attendants held protests in major airports throughout the United States in demand of fair wage increases. The flight attendant unions have continued to negotiate over the past several months. Although some airlines have made significant progress, flight attendants at American Airlines have prepared to strike if necessary. 

In addition to labor disputes, the airline industry has also faced challenges with manufacturing and safety. Boeing came under fire in early 2024 after an incident with an Alaska Airlines plane, which lost a door panel mid-flight. The National Transit Safety Board has sanctioned Boeing for sharing information directly related to the investigation, which violated established protocols. Additionally, the FAA has announced a new airworthiness directive for some of Boeing’s 757 planes, requiring airlines to address possible structural fatigue in the lavatory area. 

China is currently the world’s second-largest economy and has experienced rapid growth since the early 2000s. However, the country’s economy is shifting amid and could be headed for stagnation in the future. This is happening amid tensions with the United States, among several other nations. 

In fact, relations with China have become an important talking point in the upcoming US election, although both candidates share similar views on the issue. Both Joe Biden and Donald Trump plan to put trade restrictions in place that could continue to restrict trade between the US and China. However, Trump is likely to use a more aggressive approach with China if re-elected, which could have a ripple effect in the global markets. 

Signs of stagnation in China’s economy have already caused challenges for international investors. Chinese stocks have underperformed as of late, although investments in state-owned companies have fared better than average, even paying dividends. 

Chinese investors have shifted their focus to bonds, despite repeated risk warnings from the People’s Bank of China. Chinese bond mutual funds reached 6.5 trillion yuan in May 2024, a 40% increase from May 2023. 

The residential real estate market has seen tumultuous ups and downs over the past few years, making it difficult for new home buyers to find affordable properties. In the US, home prices hit record highs in April 2024, rising 6.3% from the year prior. Overall affordability levels are low, and more than half of US renters spend more than 30% of their income on rent. This means that they are considered “cost-burdened” when it comes to housing expenses, and makes it very challenging to work toward home ownership. 

Interestingly, trends indicate that new homes tend to be cheaper than existing ones right now. This is likely due in part to the consistent increase in home prices over the past several years, which has discouraged many existing homeowners from moving. On top of that, the average size of a newly built house is getting smaller, with a median of 2,140 square feet of space. This means that new homeowners could be getting less bang for their buck.  

However, it’s not all bad news for aspiring homeowners. Mortgage rates have been slowly but steadily been trending downwards over the last few months after peaking in late 2023.