United States
image

 

Please note: Links that are followed with an asterisk (*) are gated publications and a subscription is needed to read the full article.

Highlights:

US

 Lennar to Buy CalAtlantic, Forming Largest U.S. Homebuilder

•The Staten Island warehouses* fulfilling e-commerce companies' need for speed; also, new warehouse at DFW breaks ground

Rent Is Eating Up a Record Share of Americans' Disposable Income*

•More job cuts from ESPN and Johnson Controls.

Retail

•Brexit Retail Mess: You Can’t Move Supermarkets to Frankfurt

•Why Is the Government Giving Money to Dying Malls*?

•Citi Downgrades Macy’s to “Sell.”

•Fashion brand TopShop recently agreed to pay HK$1.5m monthly rent for 12,000-sq-ft flagship shop of Asia Standard Tower in the city’s Central business district for another three years, just half of what it agreed to pay in existing lease signed in 2012 when global brands were vying for prime space during Hong Kong retail boom.

 Canada

•Pessimism About the Economy and Housing Dent Canadian Confidence

 UK/Europe

•Goldman Sachs Boss Lloyd Blankfein Has Another Dig at Brexit on Twitter

Asia

•Billionaires Keep Bubbling Up as China Property Market Soars

•Mizuho Financial Group Set to Cut as Many 19,000 Jobs From a Total of 60,000 over the next 10 years?

1) Google, Amazon Can Find Fresh Talent in Canada’s Youth Boom(Bloomberg)

In short: Head north, employers. Young people are. If you haven't been to Vancouver or Toronto, visit and you'll see what the buzz is about.

Canada experienced a record inflow of young people into the country last year, possibly due to the immigration stance of U.S. president Donald Trump. Whatever the reason, it bodes well for the economy and companies hunting for talent amid stretched labor markets. The country took in about 106,000 non-permanent residents aged 15 to 24, many heading directly for university, according to Statistics Canada data crunched by National Bank of Canada.

Almost a quarter of the nation’s population was born outside of the country in 2016, the highest level since 1921, and the bank said that’s likely to rise even further this year. “This enrollment surge of foreign talent can probably be attributed to U.S. immigration policy," Matthieu Arseneau, senior economist at National Bank Financial, said in a note. “Canada has become a magnet for young talent." With Canada’s unemployment rate at a nine-year low of 6.2 percent those future workers are set to be snapped up. The tech scene especially is booming, with a unit of Alphabet Inc. announcing last week plans to develop a wired city along the waterfront in Toronto that will be home to Google. Amazon.com Inc. is also bolstering its ranks north of the border, announcing in June an additional 200 people to work on sales and technology.

 

2) Solid U.S. Spending Gain Masks Weak Spot of Stagnant Incomes(Bloomberg)

In short: The lowest savings rate in a decade suggests that any household spending is coming from savings, rather than wages, which may not be sustainable over the long term. Moreover, much of the gain in spending in September came from auto purchases—likely a reaction to cars damaged in the hurricanes (i.e., one-time purchases.)

Americans’ spending, the biggest part of the economy, jumped in September by the most since 2009. A look at how it came about tells a less rosy story. After-tax incomes adjusted for inflation were stagnant after falling 0.1 percent the prior month, Commerce Department figures showed Monday. Over the last four months, real disposable income was little changed. Sure, wages advanced moderately, but a sustained pickup remains elusive in the current expansion that began in mid-2009 despite robust hiring and an unemployment rate at a 16-year-low.

What’s more, the saving rate slumped to the lowest since December 2007, the month the last recession began, as households tapped their bank accounts to spend. That, along with a pickup in borrowing, makes it less likely that the economy will benefit from a sustained acceleration in consumer spending. “The continued drawdown in the saving rate will likely limit how much further consumption can accelerate,” Blerina Uruci, an economist at Barclays Plc, wrote in a note after the report. Barclays still expects spending to be “solid” in the fourth quarter, consistent with strong employment, personal income and consumer confidence data.

The 1 percent jump last month in nominal purchases probably overstated the true strength of household spending. The last time outlays rose as much was in mid-2009 when auto purchases were fueled by a federal government incentive program called “cash-for-clunkers,” only to slump the following month. The latest report showed inflation-adjusted purchases of motor vehicle purchases climbed 9.9 percent in September from the previous month, fueling a 3.5 percent gain in durable-goods purchases as people replaced vehicles damaged by the hurricanes.

In any case, economists expect household consumption to settle into a more sustainable, though decent pace. That’s OK, as growth in the overall economy is now also getting help from capital investment and export gains. Finally, improvement in the finances of Americans across the board would be another way to lift the outlook for spending. While higher property values and record stock prices are helping generate income, most of the increase has benefited the wealthiest. Such a concentration of wealth is why faster wage growth is vital to propel consumer spending and the economy.

3) Wall Street Bonuses Likely to Rise This Year(Bloomberg)

In short: State Comptroller said that bonuses could increase again in 2017, as firms set aside more money for compensation expense in H1. Here is the full statement.

Wall Street bonuses could increase for the second year in a row as profits at securities firms surged in the first half, New York State Comptroller Thomas DiNapoli said. The industry set aside about 4 percent more for compensation in the first six months of 2017 compared with a year earlier, DiNapoli said Monday in a statement. Profit among securities firms rose by one-third in the period, he said.

“After a very successful first six months, Wall Street profits are on track to exceed last year’s level, barring a major fourth quarter setback,” DiNapoli said in the statement. DiNapoli issues reports throughout the year on the health of the financial industry in New York. The securities industry represented about one-fifth of the state’s private wages in 2016, according to the statement. Net income at the five largest Wall Street firms jumped 19 percent to $39 billion in the first half of 2017. The strong earnings, along with expectations of relaxed regulations and tax reform from President Donald Trump’s administration, have helped fuel gains in financial stocks. Securities-related jobs in New York City are on pace for a small gain this year, DiNapoli said. There were 178,000 jobs as of September, the most since the financial crisis, he said.

 

 

 

About the Blog

Our goal: To provide business leaders with actionable insights from experts across the corporate occupier spectrum that help deliver bottom-line results

If you have any comments or questions regarding the Savills blog just drop us a line.

Email the Editor