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Financial Positions of U.S. Public Corporations: Part 1, Before the Pandemic
This blog is the first in a series that will discuss how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. This first blog discusses the financial positions before the pandemic started. We document three facts: (1) the share of nonfinancial public companies with large amounts of leverage was elevated, suggesting financial fragility; however, (2) interest expenses were small for most firms due to the low level of interest rates; and (3) most firms had ...
Is the Unemployment Rate a Good Measure of People Currently Out of Work?
Update, May 15, 2020: Following the release of the latest Current Population Survey estimates and related micro data, we are able to calculate the actual value of our U-Cov rate for April, which was 30.7% (not seasonally adjusted). This was over a 17 percentage point increase from March, significantly higher than the 10 percentage point increase in the official “U3” unemployment rate (to 14.4% in April). A 4.8 million increase in the number of people working part-time for economic reasons, a 4.3 million increase in those on unpaid leave, and a 4.5 million increase in those out of the ...
A Closer Look at the Correlation Between Google Trends and Initial Unemployment Insurance Claims
Since the onset of the pandemic, there has been growing interest in tracking labor market activity with “big data” sources like Google Trends.1 Just as an example, one can track how the number of Google searches with the term unemployment office has changed over the past week for the Chicago metro area or explore how unemployment became one of the top searched issues across the U.S. during the early months of the pandemic here.
Charging Ahead: Trends in Leasing for Battery Electric Vehicles
How do consumers acquire vehicles that feature new propulsion technology? This question is of specific interest in the context of the growing sales of battery electric vehicles (BEVs), vehicles that run exclusively on electricity. In this post, we look at trends in leasing for BEVs during the past decade or so, a period in which the electric vehicle market has seen remarkable growth.
Financial Positions of U.S. Public Corporations: Part 2, The Covid-19 Earnings Shock
This blog is the second in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. The first blog discussed the financial positions before the pandemic started. It documented that many nonfinancial publicly traded companies entered 2020 with historically elevated levels of leverage. This second blog explains how we use stock returns to project the potential earnings losses due to Covid-19; this will be used in our next blog to project the ...
Potential Jobs Impacted by Covid-19: An Update
This blog post updates our earlier analysis of the potential jobs impacted by Covid-19. The update reflects three adjustments to the original analysis. First, we updated our guesses on the shares of each industry employed and working at still-operating businesses based on the Labor Department’s March Employment Situation report. Second, we use an updated model to estimate the possible June unemployment rates from initial unemployment insurance claims data (the model details are found here. Finally, we use unemployment rate predictions that incorporate the data from the April 2 report on ...
Recent UAW Contracts with Ford, GM, and Stellantis
The U.S. auto industry is highly cyclical and even when the overall industry is up or down, the fortunes of individual UAW-represented automakers have waxed and waned. What follows is a summary of previous rounds of bargaining between 2003 and 2019. Contracts during this period were for four years, though the parties could—and can in the future—agree to any term. This blog post first discusses recent trends in U.S. wages and market share for the UAW-represented firms to provide the long-term wage context of bargaining and then provides high-level summaries of recent bargaining rounds.
Predicting the Unemployment Rate in a Time of Coronavirus
Economists forecast the unemployment rate all the time. Usually, though, they use data over the previous months and quarters to forecast the unemployment rate out several years. Since the relationships between the unemployment rate and things like GDP growth and employment are mostly stable over time, and since month-to-month movements in the unemployment rate are usually small, these forecasts usually work well.
Financial Positions of U.S. Public Corporations: Part 3, Projecting Liquidity and Solvency Risks
This blog post is the third in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response.In this post, we attempt to quantify the risk to the solvency and to the liquidity of U.S. public corporations, and how this risk can be reduced or eliminated by firms’ decisions. These calculations should be taken as illustrative only, given the high uncertainty about the evolution of the economy; they do not constitute a forecast, and reflect only the ...
Financial Positions of U.S. Public Corporations: Part 4, Tax Relief
This blog post is the fourth in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. In this post, we discuss the adjustments to federal tax policy that have been initiated to support U.S. businesses and their possible effects. These measures represent a significant fiscal cost ($280 billion over ten years) and an even larger positive cash flow effect for businesses in 2020 (over $700 billion), because some measures are effectively ...