Finance

The share of days worked from home ballooned in the Covid-19 pandemic’s early days, and subsequently declined through 2022.
However, it has flatlined in 2023, suggesting more companies aren’t calling employees back to the office.
Long-term technological and demographic trends suggest the prevalence of remote work may grow in 2025 and beyond.

Morsa Images | Digitalvision | Getty Images

The share of workers being called back to the office has flatlined, suggesting the pandemic-era phenomenon of widespread remote work has become a permanent fixture of the U.S. labor market, economists said.
“Return to the office is dead,” Nick Bloom, an economics professor at Stanford University and expert on the work-from-home revolution, wrote this week.

In May 2020 — the early days of the Covid-19 pandemic — 61.5% of paid, full workdays were from home, according to the Survey of Working Arrangements and Attitudes. That share fell by about half through 2022 as companies called employees back to in-person work.
However, the story has changed in 2023.
The share of paid work-from-home days has been “totally flat” this year, hovering around 28%, said Bloom in an interview with CNBC. That’s still four times greater than the 7% pre-pandemic level. The U.S. Census Bureau’s Household Pulse Survey shows a similar trend, he said.

Meanwhile, Kastle data that measures the frequency of employee office swipe-ins shows that office occupancy in the 10 largest U.S. metro areas has flatlined at around 50% in 2023, Bloom said.
“We are three and a half years in, and we’re totally stuck,” Bloom said of remote work. “It would take something as extreme as the pandemic to unstick it.”

Why remote work has had staying power

The initial surge of remote work was spurred by Covid-19 lockdowns and stay-at-home orders.
But many workers came to like the arrangement. Among the primary benefits: no commute, flexible work schedules and less time getting ready for work, according to WFH Research.
The trend has been reinforced by a hot job market in the U.S. since early 2021, giving workers unprecedented leverage. If a worker didn’t like their company benefits, odds were good they could quit and get a job with better work arrangements and pay elsewhere.
Research has shown that the typical worker equates the value of working from home to an 8% pay raise.
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However, the work-from-home trend isn’t just a perk for workers. It has been a profitable arrangement for many companies, economists said.
Among the potential benefits: reduced costs for real estate, wages and recruitment, better worker retention and an expanded pool from which to recruit talent. Meanwhile, worker productivity hasn’t suffered, Bloom said.
“What makes companies money tends to stick,” he said.

Remote policies show ‘incredible diversity’

These days, most remote work is done as part of a “hybrid” arrangement, with some days at home and the rest in the office. About 47% of employees who can work from home were hybrid as of October 2023, while 19% are full-time remote and 34% are fully on site, according to WFH Research.
About 11% of online job postings today advertise positions as fully remote or hybrid, versus 3% before the pandemic, said Julia Pollak, chief economist at ZipRecruiter.
While remote work is the labor market’s new normal, there’s significant variety from company to company, Pollak said.

For example, 7% of workers are required to be in the office one day a week, while 9% are required in two days, 13% three days and 8% four days, according to a recent ZipRecruiter employer survey. Nearly 1 in 5, 18%, have discretion over their in-person workdays.
“The new normal is this incredible diversity,” Pollak said.
“There’s still a lot of experimentation going on,” she said. “But the aggregate effect is that remote work is steady.”

Why remote work will likely increase beyond 2025

While it’s unlikely that the prevalence of remote work will ever decline to its pre-pandemic level, it’s possible that a U.S. recession — and a weaker job market — may cause it to slide a bit, economists said.
“Employers say the biggest benefit of remote work is retention,” Pollak said. In a labor market with more slack, “retention gets much easier.”
However, since work-from-home arrangements also save companies money, it’s likely a severe recession would be necessary to see a meaningful decline, Bloom said.

Long-term trends suggest the share of employees who work from home is only likely to grow from here, possibly starting in 2025, Bloom said.
For example, improving technology will make remote work easier to facilitate, Bloom said. Younger firms and CEOs also tend to be more enthusiastic about hybrid work arrangements, meaning they’ll get more popular over time as existing business heads retire, he added.Don’t miss these stories from CNBC PRO: More

Cathie Wood just notched her best month.
Wood’s flagship Ark Innovation ETF (ARKK) rallied 31% this month, scoring its strongest month ever since its inception in 2014.
Driving the innovation fund higher this month were biotech names CRISPR Therapeutics and Twist Bioscience, along with Roku, Coinbase, Block and Shopify.

Cathie Wood, CEO of Ark Invest, speaks during an interview on CNBC on the floor of the New York Stock Exchange on Feb. 27, 2023.
Brendan McDermid | Reuters

Cathie Wood notched her best month ever as her holdings of innovative technology stocks roared back from steep losses amid declining Treasury yields in November.
Wood’s flagship Ark Innovation ETF (ARKK) rallied 31.1% this month, scoring its strongest month ever since its inception in 2014. The fund rebounded dramatically from three straight months of losses, pushing 2023 gains to 47%.

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Ark Innovation ETF

Driving the innovation fund higher this month were biotech names CRISPR Therapeutics and Twist Bioscience, along with Roku, Coinbase, Block and Shopify, which were all up at least 50%.
Despite the stellar performance this year, ARKK has suffered about $664 million in outflows in 2023, according to FactSet. Due to ARKK’s big losses over the past two years — down 67% in 2022 and off by 23% in 2021 — many of the fund’s more recent investors are likely to remain hugely underwater. It closed 2020 at $124.48, compared to today’s trading level around $46.
Wood has been a firm believer that many of her big holdings stand to be leading beneficiaries from the artificial intelligence boom, including Tesla, Twilio and UiPath.
The 68-year-old CEO of Ark Invest previously said she expects the economy to slow down more than the consensus, creating an ideal environment for artificial intelligence-driven companies to expand as firms seek to salvage profit margins by using their products.Don’t miss these stories from CNBC PRO: More

DBRS Morningstar Senior Vice President Vitaline Yeterian and Managing Director Elisabeth Rudman said on Wednesday that such a large concentration to a troubled real estate borrower raises concerns about risk management and highlights the broader risks for the banking sector.
Julius Baer has a strong capital position with a CET1 capital ratio of 16.1% as of the end of October, the bank said Monday, significantly above its own floor of 11%.
“However, we see the recent significant fall in Julius Baer’s share price as a reminder of the rising impact of technology and social media on stakeholder behavior,” DBRS Morningstar said.

A pedestrian sheltering under an umbrella passes a Julius Baer Group Ltd. branch in Zurich, Switzerland, on Tuesday, July 13, 2021.
Stefan Wermuth | Bloomberg | Getty Images

The share price of Julius Baer plummeted after the Swiss private bank disclosed 606 million Swiss francs ($692.7 million) of loan exposure to a single conglomerate client.
Julius Baer CEO Philipp Rickenbacher at an event on Wednesday declined to comment on rumors that the bank’s large exposure was to Signa, according to Reuters. CNBC has also reached out for comment.

The disclosure and swirling concerns about concentration of risk in the lender’s private debt business, came against a backdrop of emerging news that troubled Austrian real estate group Signa was teetering. It filed for insolvency on Wednesday.
The 606 million Swiss franc exposure to one client — via three loans to different entities within a European conglomerate — is collateralized by commercial real estate and luxury retail, the company revealed. It represents around 18% of Julius Baer’s CET1 capital as of the end of June 2023, according to analysts at DBRS Morningstar.
The bank last week booked provisions of 70 million Swiss francs to cover the risk of a single borrower in its private loan book.
DBRS Morningstar Senior Vice President Vitaline Yeterian and Managing Director Elisabeth Rudman on Wednesday said that such a large concentration of funds to a troubled real estate borrower raises concerns about risk management and highlights the broader risks for the banking sector, as highly leveraged companies grapple with higher debt financing costs in a perilous economic environment.
The European Central Bank recently examined the commercial real estate sector and the provisioning methods and capital buffers of European banks.

DBRS Morningstar says the capital levels of Julius Baer are adequate to absorb further losses, with a hypothetical 606 million Swiss franc loss accounting for around 280 basis points of the Swiss bank’s 15.5% CET1 ratio, based on risk-weighted assets of 21.43 billion Swiss francs as of the end of June.
“However, we see the recent significant fall in Julius Baer’s share price as a reminder of the rising impact of technology and social media on stakeholder behavior,” they said in Wednesday’s note.

“Meanwhile, the limited level of disclosure makes it hard to assess the full picture for the bank at this stage. Any kind of deposit outflow experienced by Julius Baer would be negative for the bank’s credit profile.”
Rickenbacher issued a statement on Monday confirming that the bank would maintain its dividend policy, along with other updates, while reassuring investors that any excess capital left at the end of the year will be distributed via a share buyback.
Julius Baer has a strong capital position with a CET1 capital ratio of 16.1% as of the end of October, the bank said Monday, significantly above its own floor of 11%.
Even under a hypothetical total loss scenario, the Group’s pro-forma CET1 capital ratio at Oct. 31 would have exceeded 14%, the bank said, meaning it would have remained “significantly profitable.”
“Julius Baer is very well capitalised and has been consistently profitable under all circumstances. We regret that a single exposure has led to the recent uncertainty for our stakeholders,” Rickenbacher said.
“Together with investing and multi-generational wealth planning, financing is an inherent part of the wealth management proposition to our clients.”

He added that the board is now reviewing its private debt business and the framework within which it is conducted.
Nonetheless, Julius Baer’s shares continued to fall and were down 18% on the year as of Thursday morning.
“We continue to closely monitor sectors that have come under stress as a result of more uncertain economic times, higher for longer interest rates, tightening in lending conditions, weaker demand, higher operating costs, and in particular the commercial real estate sector,” DBRS Morningstar’s Yeterian said.
Several economists in recent weeks have suggested that there are lingering vulnerabilities in the market that may be exposed in 2024, as the sharp rises in interest rates enacted by major central banks in the last two years feed through.
Exposure to commercial real estate emerged as a concern for several major lenders this year, while the risks associated with panic-driven bank runs on smaller lenders became starkly apparent in March, with the collapse of Silicon Valley Bank.
The ensuing ripple effects shook global investor and depositor confidence and eventually contributed to the downfall of Swiss giant Credit Suisse.
A common theme during the mass withdrawals of investment and customer deposits was a panic exacerbated by rumors about the lender’s financial health on social media, a trend bemoaned by its bosses at the time. More

According to a familiar saying, academic disputes are so vicious precisely because the stakes are so low. But in a scholarly battle over inequality, the stakes are rather higher. Research by a trio of French economists—Thomas Piketty, Emmanuel Saez and Gabriel Zucman—has popularised the notion that American income inequality is soaring. Other economists have built heaps of research upon these findings, while politicians have pledged to undo the trends through higher taxes and spending. To most people the phrase “inequality is rising” seems self-evidently true.Others have cast doubt on the trio’s findings, however—notably Gerald Auten of the Treasury Department and David Splinter of the Joint Committee on Taxation, a nonpartisan group in Congress. We first analysed their work in 2019, as part of a cover story. It modifies the French trio’s methodology and comes to a very different conclusion: American post-tax income inequality has hardly risen at all since the 1960s. In the past few days the Journal of Political Economy (JPE), one of the discipline’s most prestigious outlets, has accepted their paper for publication.This has not settled the debate. In fact, the opposing sides are digging in. “I don’t think that inequality denial (after climate denial) is a very promising road to follow,” Mr Piketty tells your columnist. “We’ve been showered with prizes from the establishment for our academic contributions on this very topic,” adds Mr Saez. Others say the JPE paper has won the day. “It seems clearly correct to me,” says Tyler Cowen of George Mason University. “The Piketty and Saez work is careless and politically motivated,” says James Heckman, a Nobel prizewinner at the University of Chicago.You might think that analysing trends in income inequality would be straightforward. Don’t people’s tax returns tell researchers all they need to know? But although tax returns are useful, they can mislead. Americans who are partners in a company, or hold investments, often have enough trouble estimating their own income. Now imagine trying to estimate the incomes of millions of people over several decades, accounting for overhauls to the tax code. Researchers then need to account for the 30-40% of national income that is not even reported on tax returns—including some employer-provided benefits and government welfare. Researchers’ methodological choices have huge effects on the results.Messrs Auten and Splinter focus much of their attention on the distorting impact of an important tax reform in 1986. Before it was introduced many rich people used tax shelters that allowed them to report less income on their tax return and therefore pay less to the irs. In “Mad Men”, a television series about advertising executives in the 1960s, Don Draper and his pals fund their lavish lifestyles by putting lots of spending on expenses. Reforms made such wheezes harder, and increased incentives to report income, in part by lowering rates. Looking only at his tax return, Draper might appear to have got richer after 1986, even as his true income stayed the same. Once this is corrected for, the rise in top incomes is less dramatic than it might at first appear. In some papers one-third of the long-term rise in inequality occurs around 1986.Messrs Auten and Splinter make other adjustments. Messrs Piketty and Saez have focused on “tax units”, typically households who file taxes in a single return. This introduces bias. In recent decades marriage has declined among poorer Americans. As a consequence, the share of income enjoyed by those at the top appears to have risen, as the incomes of poorer people are spread across more households, even as those of richer households remain pooled. Messrs Auten and Splinter therefore rank individuals.They also account for benefits provided by employers, including health insurance, which reduces the share of the top 1% in 2019 by about a percentage point. They make different assumptions about the allocation of government spending, and about misreported income. All in all, they find that after tax, the top 1% command about 9% of national income, compared with the 15% or so reported by Messrs Piketty, Saez and Zucman. Whereas the trio conclude that the share of the top 1% has sharply increased since the 1960s, Messrs Auten and Splinter find practically no change.Their paper is a valuable contribution. Greg Kaplan of the University of Chicago, who edited it, notes that it was reviewed by four expert referees and went through two rounds of revisions that he oversaw. The paper is scholarly in the extreme (including delights such as “the deduction for loss carryovers is limited to 80% of taxable income computed without regard to the loss carryover”). The authors are clearly obsessive about the history of the tax code.Yet their methodology has its own difficulties. “The remarkable thing is that almost all of their modifications push in the same direction—that’s something you wouldn’t expect a priori,” says Wojciech Kopczuk of Columbia University. Mr Splinter, speaking at a seminar in 2021, seemed not to have thought deeply about the potentially distorting effects of the decline of America’s informal economy. The gradual shift from cash-in-hand payments to direct deposits could have forced poorer folk such as cleaners and taxi-drivers to report more income on tax returns, making them appear richer when in fact they were not.I feel bad for you / I don’t think about you at allThe trio has concerns as well. Mr Piketty argues that “in order to get their results, Auten-Splinter implicitly assume that non-taxed labour income, pension income and capital income has been much more equally distributed than taxed income since 1980”, which he believes is unrealistic. Mr Saez seems a little fed up with the scholarly battle. “Our experience is that they haven’t changed anything of substance following these long exchanges.” But the JPE paper makes Mr Kopczuk “think that together with earlier papers we are now getting (wide) bounds for where the truth might be”. As a consequence, the idea that inequality is rising is very far from a self-evident truth. ■Read more from Free exchange, our column on economics:How to save China’s economy (Nov 23rd)The false promise of green jobs (Oct 14th)In praise of America’s car addiction (Nov 9th)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

If you want to be liked, don’t be a short-seller. Some other investors might defend you, at least in the abstract, as an important part of a healthy and efficient market. But to most you are—at best—a ghoul who profits from the misfortune of others. At worst, you are a corporate raider who bets that honest firms will go bust and then spreads lies about them until they do. Even your defenders will melt away if you pick the wrong target (shares they own) or the wrong moment (a crash in which many are losing money but you are making it).Since the authorities are often among these fair-weather friends, the list of historical short-selling bans is long. It features 17th-century Dutch regulators, 18th-century British ones and Napoleon Bonaparte. The latest addition, issued on November 6th, came from South Korea’s Financial Services Commission. It has caught the zeitgeist well, and not just among the army of local retail investors who blame shorts for a soggy domestic stockmarket. Wall Street’s “meme stock” craze also cast amateur traders as the heroic underdogs, pitted against villainous short-selling professionals.Meanwhile, one of America’s best-known shorts, Jim Chanos, wrote to his investors on November 17th to announce the closure of his main hedge funds. “Our assets under management just fell to the point where it was no longer economic to run them,” he explains, defining that point as “a few hundred million”. At its peak in 2008, a few years after predicting the downfall of Enron, an energy company, his firm was managing “between $6bn and $7bn”. Since being set up in 1985 its short bets have returned profits of nearly $5bn to its investors.The shorts who remain in the game, then, face two threats. The first is an old one: that regulators, egged on by those who view short-selling as immoral, will clamp down on their business model. The second, more insidious, threat is that investors have lost patience with that business model and no longer want to put their money into it. Should short-sellers fall prey to either danger, financial markets will be worse at allocating capital, and those who invest in them will be worse off.Start with the charge that betting on asset prices falling is immoral. This view holds that short-sellers drive down prices, hurting other investors’ returns and making it harder for companies (or even governments) to raise capital. Most obviously, it ignores the fact that the shorts’ biggest targets tend to be those, like Enron, that have themselves defrauded investors. Short-sellers are the only people with a strong financial incentive to uncover such frauds and bring them to light, saving investors from even greater losses in the long run. The same is true of firms that are simply overvalued. Had shorts managed to puncture the dotcom bubble earlier, or the more recent ones in SPACs and meme stocks, fewer investors would have bought in at the top and lost their shirts.Meanwhile, there is scant evidence that short-selling depresses prices. A study of six European countries that temporarily banned short-selling during the crash of March 2020, by Wolfgang Bessler and Marco Vendrasco of the University of Hamburg, found that these bans failed to stabilise stockmarkets. Instead, they reduced liquidity, increasing the gap between “buy” and “sell” prices and thereby making transactions more costly. Moreover, the shares of smaller firms—often painted as victims of bigshot shorts—suffered more from a deterioration in market quality.What short-sellers can do, if they head off the second threat and convince their investors to stick with them, is alert the rest of the market to assets they believe to be overvalued. They are often successful in this endeavour: take Adani Enterprises, a vast Indian conglomerate that was loudly shorted by Hindenburg Research in January, and whose share price is down 39% since the start of the year. Such arguments might be self-interested, but so are those of any fund manager talking up their book.The difference is that the longs are backed by investment banks, public-relations advisers and the companies themselves, all with a clear interest in selling optimism and hype. Markets work better, and capital is allocated more efficiently, when there are also killjoys willing to take the opposing side. And with stockmarkets, especially America’s, close to their all-time highs, the insurance against a crash that short-selling funds provide may be particularly valuable to investors. After all, notes Mr Chanos, the fact that it is so out of fashion means it is cheaper than ever.■Read more from Buttonwood, our columnist on financial markets: Investors are going loco for CoCos (Nov 23rd)Ray Dalio is a monster, suggests a new book. Is it fair? (Nov 16th)Forget the S&P 500. Pay attention to the S&P 493 (Nov 8th)Also: How the Buttonwood column got its name More

From western Uganda, the East African Crude Oil Pipleine will run for 1,443km through farms, forests and rivers, until it reaches the Tanzanian coast. If, that is, anyone pays for it. Already, 27 banks have ruled themselves out as lenders. Shareholders, led by TotalEnergies, a French oil giant, are now courting Chinese firms as they try to raise $2.4bn in debt. In response, environmental and human-rights activists in six African and European countries protested outside Chinese banks, embassies and insurers on November 20th.The battle is a sign of things to come as Western lenders reconsider fossil fuels. Several banks, including Société Générale, say that they will no longer directly finance new oil and gas projects. G7 governments have also promised to wind down support for overseas extraction, albeit with some caveats and loopholes. “We need to recognise that you [can’t] just walk to Mayfair or the City and get a deal done,” says Rahul Dhir, the chief executive of Tullow Oil, which gets most of its barrels from Ghana. “You’re going to have to go to Cairo, you’re going to Lagos, you’re going to Beijing.”In Africa, the drilling continues, at least for now. Politicians argue that revenues can finance development, even though Africans are on the front line of climate change (and oil and gas often lead to corruption, not prosperity). Wood Mackenzie, a consultancy, foresees nearly $300bn of capital spending on extracting African oil and gas this decade. Apart from dipping into their own pockets, firms have three options: go local, woo traders or look east.African lenders, like the continent’s politicians, remain enthusiastic about fossil fuels. In South Africa, Standard Bank is expanding its oil-and-gas portfolio and acting as a financial adviser on the East African pipeline. The African Export-Import Bank, based in Cairo, is teaming up with oil-producing countries to launch an “African Energy Bank”, which will plug the gap left by traditional financiers. Such African multilaterals have helped keep the Nigerian oil sector afloat by assuming financial risks that deter local lenders, says Ayodeji Dawodu of BancTrust, an investment bank.Funding for existing projects also comes from trading firms such as Glencore and Vitol, which will arrange a multi-year loan in return for future barrels. “We have no ambition to replace banks, what we want is more barrels to trade,” says one financier. Prepayments of this sort are popular with midsize producers and national oil companies, in part because they can be organised quickly. Yet they can pose difficulties, too. Opaque deals with oil traders lay at the heart of recent debt troubles in the Republic of Congo and Chad, as state firms struggled to fulfil their commitments.The third option is to look east. Saudi Aramco is investing in Nigerian oil refineries; the Islamic Development Bank has pledged $100m to the East African pipeline. Most important is China, which has a long history of resource-backed lending, mostly through its state-owned financial firms. Despite a slowing economy, which has dragged on overseas lending, Chinese firms are making more direct investments in African oil and gas than ever.Nor is Western capital retreating altogether. Its oil giants will still provide funding for headline projects such as Namibia’s oilfields, which are probably the largest ever discovery south of the Sahara. There will still be money for gas, which has a cleaner reputation than oil. And although banks are nervous about supporting specific projects, they seem to be less worried about general-purpose finance, such as corporate loans or the underwriting of bond issuances. Western lenders contributed two-thirds of corporate financing for fossil fuels in Africa between 2016 and 2021, according to BankTrack and Milieudefensie, two Dutch ngos, and Oil Change International, an American one.Even so, the cost of capital is rising. Combined with weak demand, that could jeopardise assets in places like Angola and Nigeria. Extraction in Africa is pricey and carbon-intensive. McKinsey, a consultancy, reckons that 60% of the continent’s production could be uncompetitive by 2040 if rich countries stick to green commitments. Oil provides around 60% of fiscal revenues in the countries that export it; gas provides a rising share of the continent’s electricity. African governments complain they are being rushed into an energy transition on somebody else’s timetable. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Chinese buses are idling. Statements released by a handful of transport companies complain of deteriorating economic conditions and a lack of financial support. In October two in the city of Nanchong, in south-west China, said that they would halt services owing to a lack of finance from municipal authorities. These announcements may seem prosaic, but the intention is to do more than just inform riders about cancelled bus routes. They are aimed upwards at central authorities, says a former state official, and local authorities encourage the statements because they send a signal that all is not well in the provinces. Some have been even more direct, warning that they can no longer pay their debts. Across the country cadres are begging for bail-outs, in ways both subtle and direct. And there are signs that their efforts are beginning to persuade the higher-ups.Local cadres must overcome severe resistance. Officials in Beijing want to avoid picking winners and the moral hazard inherent in bailing-out poorly run localities. Property is at the heart of the problem. Over the past year local governments have used shrinking budgets to stop construction sites from shutting down. Some have drummed up demand by lowering downpayments or making mortgages more accessible. But these efforts seem to be failing. In the first half of November home sales by floor space fell by nearly 20% year on year. Local government land sales have plummeted, squeezing a vital source of income. And thousands of firms run by provincial officials, called local-government financing vehicles (lgfvs), face problems. Goldman Sachs, a bank, estimates that such firms sit on 61trn yuan ($8.6trn) in debt, equivalent to about half China’s gdp, and are struggling to make payments.Individual property developers are also hoping for rescues, and small banks require capital injections. On November 22nd Zhongzhi, one of China’s largest wealth-management companies, said that it was “severely insolvent” and unable to pay $36bn in debts, prompting a police investigation. Zhongzhi’s liabilities are heavily intertwined with developers, local governments and wealthy urban investors, meaning they pose risks of financial contagion. The firm will probably require some form of state-brokered bail-out.Will officials give in to the demands? They seem to have realised the scale of damage that could be caused by forced deleveraging in the property sector, says Zhang Zhiwei of Pinpoint Asset Management. According to Bloomberg, a news service, banks are being asked to supply unsecured short-term loans to a handful of developers. Prices of developer bonds traded in Hong Kong have risen recently on reports that authorities are drawing up a list of 50 firms eligible for new financing through banks, bonds and equities.This news came after unconfirmed reports in mid-November that the government would provide 1trn yuan in low-cost financing for affordable housing and urban renovation. Another 1trn yuan in government bonds was issued in October. Some of the cash will probably find its way to local officials hoping to pay down debts. The plans imply that the central government is willing to print money in order to avert a collapse of local governments and the property market. They will be music to the ears of desperate local apparatchiks.Analysts are yet to call the moves a bail-out. lgfvs have been swapping high-cost loans for special refinancing bonds that carry lower interest rates. This is easing the crushing repayment pressure many poor cities are under but, crucially, the towering debts are not being wiped clean. The 1trn yuan for urban renovation, if it materialises, will probably encourage more people to buy homes, but millions of others are still waiting for the delivery of properties for which they paid upfront. Many will not be built on time, if at all. Zhongzhi’s liabilities are to wealthy investors; the state will be reluctant to rescue all of them.A true bail-out would give developers access to copious credit, as would be needed to restore confidence in the property market. Demand for land would rise, giving local governments more income. Shadow banks such as Zhongzhi might even be able to recoup debts from developers. There have been signs of such a move. The city of Shenzhen said it would provide enough cash to a large local developer for it to avoid default. Reuters, a news agency, reported that Ping An, an insurance firm, was tapped to bail-out Country Garden, one of China’s largest developers. Ping An denied the story, but the rumour has raised expectations that something is coming.The plan to provide just 50 developers with liquidity indicates that officials still do not want to bail out everyone. They think that they can protect healthy but illiquid firms, and let insolvent ones fail. The desire to weed out duds has already prevented the creation of a lender of last resort for the companies, says Larry Hu of Macquarie, an investment bank. Therefore officials must also get banks to lend, says Mr Hu. This has not worked in the past. As always, the more cash Beijing hands out, the more others come begging for help. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Not much unites the world these days. Yet there is one sentiment shared by many people, regardless of nationality: pessimism about the economy. Just one in ten Americans thinks they are better off than a year ago, according to a recent poll conducted for The Economist by YouGov. Similar negativity shows up in surveys elsewhere.Such glumness persists in America despite the remarkable feat performed by its economy: workers’ real wages are significantly higher than before the covid-19 pandemic—even after controlling for inflation. Those on low incomes have done particularly well, benefiting from tight labour markets since 2021.Average weekly earnings for the country’s workers reached nearly $1,170 in October, up by around 3% in real terms since the end of 2019. The lowest quartile of earners has seen average annual nominal pay rises of 5.6% per year since the beginning of 2020, compared with 3.8% for the highest quartile, according to figures compiled by the Federal Reserve Bank of Atlanta.image: The EconomistAs ever with economic data, it is possible to tell different stories. Much depends on the choice of baseline. Incomes surged early in the pandemic on the back of the government’s giant handouts. Relative to that heady period, real incomes are lower today. The choice of deflator also matters. The oft-cited consumer-price index exaggerates how much inflation erodes wages because it fails to capture how people adjust spending patterns amid rapid price increases.Like America’s economy, Britain’s has produced growth in real wages despite the pandemic: inflation-adjusted pay 1.5% higher than it was at the end of 2019. As in other countries, there is also a bright spot at the bottom end of the jobs market. A 9.7% increase in the minimum wage this year and a further 9.8% increase scheduled for next year help explain that. But official figures may overstate the increase, since other sources, such as tax receipts, point to slightly weaker growth. Moreover, on a longer time horizon, real wages remain 4.7% below their peak, which was reached in February 2008. The government’s forecasting office estimates that wages will not regain that level until 2028.The effects of a tight labour market take longer to appear in Europe, since most of the continent’s workers have pay set by collective-bargaining agreements. These tend to run for a year or more, and do not respond quickly to inflation. Real wages under collective-bargaining agreements in the euro zone thus dropped by 5.2% last year as inflation hit.But since then wage agreements have ticked up. In the Netherlands, which has some of Europe’s most up-to-date figures, annual growth in negotiated wages has reached 6% this year, even as inflation has dropped to zero. As inflation falls elsewhere, too, and new agreements come into force, real wages are likely to rise further. In Germany, for instance, federal-government employees will receive nominal wage rises of as much as 16.9% next year, with the heftiest rises accorded to those on the lowest wages.■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More