U.S. Unemployment Claims Drop 23,000 to 238,000 as Omicron Wave Relents​​​

New requests for U.S. unemployment benefits fell for the second week in a row to 238,000, as the record omicron wave receded and more people were able to go back to work, MarketWatch.com reported. Initial jobless claims declined by 23,000 from a revised 261,000 in the prior week, the Labor Department said today. New jobless claims soared to as high as 290,000 early last month owing to the omicron outbreak. They had fallen to as low as 188,000 in December and hit a 52-week low. Now they are declining again. New claims fell the most last week in Ohio, Kentucky and Illinois. The only state to post a sizable increase was Pennsylvania. The number of people already collecting unemployment benefits, meanwhile, slipped by 44,000 to 1.63 million. These so-called continuing claims have returned to pre-crisis levels and are extremely low.

U.S. Job Market Faces Reshuffling as Workers Quit at Near Record Rates​​​​​​

Nearly 4 million Americans on average quit their jobs each month last year, an unprecedented wave of workplace turnover as the economy emerged from a pandemic-induced recession that, while brief, appears to be leaving a lasting imprint on the U.S. job market, Reuters reported. Job openings are near historically high levels as companies seek to rebuild staff or pivot in response to changes in consumer demand, and there aren't enough workers to fill all the positions. As of December, there were nearly two openings for every unemployed person, according to the Labor Department. That mismatch means that many workers are finding themselves with more options — and taking them. With hiring still outpacing the level of quits, some economists say the trend dubbed the "Great Resignation" is really more of a great reshuffling as people take advantage of the tight labor market to move into jobs with better pay or more flexibility, or to try something new. "The job has become a commodity," said Nela Richardson, chief economist for payroll processing company ADP. "If you don’t like this one, you can get another one." Not all people who quit are moving to better jobs. Some people are struggling to work because of ongoing disruptions with child care, and others have had to quit because they don't have paid sick time or are worried about facing increased health risks on the job, said Elise Gould, a senior economist for the Economic Policy Institute. "It could be a short-term spell of having to step away," said Gould. Nearly 9 million people said they did not work in the first few weeks of January because they were sick with coronavirus or caring for someone who was, according to a Census bureau survey. Economists are dimming their outlooks for job growth in January, with more forecasting that the U.S. economy lost jobs as the Omicron wave hampered demand and led to event cancellations.

Banks Make Billions in Overdraft and Other ‘Junk Fees.’ Biden Officials Want That to End​​​​​​

The Consumer Financial Protection Bureau is now targeting the type of “junk fees” that often drive low-income and minority customers from banks to predatory payday loan companies — and that have become a significant source of banking revenue, the Washington Post reported. “In many cases, junk fees often act as penalties, like with non-sufficient funds and credit card late fees, rather than compensation for a legitimate service,” CFPB Director Rohit Chopra said. “While it may make sense for banks to pass on the cost for extra services provided, many complain that these fees are far higher than the service is really worth.” In 2019, revenue from overdraft and insufficient-funds fees (typically $25 to $30) surpassed $15 billion, the CFPB said. A 2019 study by the Federal Deposit Insurance Corp. found that half of unbanked Americans had had a bank account at some point in the past. Among the top reasons cited by many who checked out of the banking system were high or unpredictable account fees. The CFPB is soliciting public comment on how it can address the explosion of fees. Comments can be emailed to federalregistercomments@cfpb.gov. The CFPB says it’s particularly interested in hearing from older and lower-income consumers, students, service members and people of color. The Consumer Bankers Association, which represents the leading retail banks in the United States, pushed back on the CFPB’s characterization of the fees. “Overdraft fees as a percent of total revenue across the industry made up less than 2 percent in 2019,” CBA president and chief executive Richard Hunt said.

Banks See Business Lending Driving 2022 Growth​​​​​​

Demand for business loans is picking up in the U.S. as an economic recovery drives consumer spending and encourages companies to bulk up inventories, fueling optimism it will boost banks' 2022 growth, Reuters reported. However, the outlook for consumer spending is more mixed with demand for home loans, mortgage refinancing and auto loans declining while credit card spending rises. As investment banking and trading bonanzas fizzle out, banks are relying on a revival of moribund loan demand to drive profits during 2022. An increase in commercial and industrial (C&I) loans through the back end of 2021 and start of 2022 has generated optimism. "People are rebuilding their inventories," Terrance Dolan, chief financial officer for U.S. Bancorp, said last month. "They're starting to make business investment ahead of the consumer spend and the economic growth that they see in 2022." That growth could come in fits and starts this year, analysts and bank executives have said.

Consumers Are Pivoting Spending to Services Like Dining and Travel​​​​​​

Americans responded to the pandemic with a dramatic shift in spending to goods from services. That now appears to be reversing and should gather steam as the omicron wave of COVID-19 ebbs, economists say, the Wall Street Journal reported. Consumers shopped more online in the pandemic, and changed what they bought. Unable to eat out or travel, and with both school and work going remote, they splurged more on things for the home such as furniture and computers. Several rounds of federal stimulus amplified that spending spree. Goods — including nondurable goods such as food and clothing, and durable goods such as cars and appliances — averaged 31% of total personal consumption in the two years before the pandemic. That soared to 36% in March and April 2021, shortly before the COVID-19 vaccines became widely available. The share has been dropping since, to 34% in December. Consumer spending on goods fell that month for the second month in a row, according to the Commerce Department, while spending on services increased slightly. (Subscription required.)

Latest ABI Podcast: Former ABI Executive Director Sam Gerdano Discusses His Transition from the Hill, the Growth of ABI and the Enactment of the Small Business Reorganization Act ​​​​​​

A special two-part podcast features ABI Editor-at-Large Bill Rochelle talking with former ABI Executive Director Sam Gerdano, an alumnus of Syracuse University, about his move from Capitol Hill to ABI, the growth of ABI as an organization, the enactment of the “Small Business Reorganization Act” and what may be on the horizon in Congress.



Miss the first part of the interview? Click here for the previous podcast. 

Gerdano's reflections on his career were featured in the Bankruptcy Symposium edition of the Syracuse Law Review (scroll to "Book 2: Bankruptcy Symposium 2020-2021"). In addition to Gerdano's oral history, the edition features articles by many ABI members on key bankruptcy issues. Sen. Grassley also provided a foreword for the edition.

ABI Will Make Next Week Virtually Amazing for You with Insightful Webinars and Networking​​​​​​

Make sure to take advantage of two great abiLIVE webinars and an ABI virtual happy hour next week:

- Tuesday, Feb. 8, at 12:30 p.m. ET: PwC will be sponsoring a special abiLIVE webinar to look at restructuring activity in 2021 and discuss trends we may see in 2022. Additionally, we will explore industries to watch and host a live Q&A with the audience. Speakers include Rachel Albanese of DLA Piper, Lorie Beers of Cowen and Company, Steven Fleming of PwC US and David Tyburski of PwC US. ABI Editor-at-Large Bill Rochelle will moderate the session. (Click here for complimentary registration.)

- Wednesday, Feb. 9, at 8 p.m. ET: ABI's Commercial Fraud Committee will be hosting a virtual happy hour to celebrate the upcoming Super Bowl. There will be games and prizes, with breakouts into smaller groups for discussions and to share tailgating stories. (Register here.)

- Thursday, Feb. 10, at 1 p.m. ET: Join us for part two of the ABI and Reid Collins & Tsai LLP three-part webinar series focusing on recurring issues that arise in post-bankruptcy litigation involving trustees, and how to set trustees up for success in pursuing litigation claims. Session 2, taking place on February 10, 2022, at 1 PM ET, will be presented in collaboration with ABI's Commercial Fraud Committee. Panelists include Michael Eidelman of Vedder Price P.C., David Posner of Kilpatrick Townsend & Stockton LLP, Jeremy Ryan of Potter Anderson & Corroon LLP and Yonah Jaffe of Reid Collins & Tsai LLP. (Click here for complimentary registration.)

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