The Wall Street Journal - 23.08.2019

A2| Friday, August 23, 2019 ** THE WALL STREET JOURNAL.

U.S. WATCH

Louisiana during the massive

blows of hurricanes Katrina and

Rita in 2005. Ms. Blanco died

Sunday after a yearslong strug-

gle with cancer. She was 76.

The visitation followed an in-

terfaith memorial service in a

downtown Baton Rouge cathe-

dral on the first of three days of

events for the former governor.

—Associated Press

IMMIGRATION

Border Agents Search

For Missing Toddler

A 3-year-old boy is missing

after he and his mother tried to

cross the Rio Grande near Eagle

Pass, Texas, the U.S. Border Pa-

trol said Thursday.

A body believed to be that of

the boy’s mother, a 28-year-old

woman from Honduras, was

found Wednesday, more than a

day after the pair went missing.

They were part of a group of

about a dozen people who

crossed the river from Mexico

near a legal border crossing in

the area early Tuesday morning.

Surviving members of the group

reported the pair missing.

“This is heartbreaking tragedy

that occurs too often,” said Del

Rio Sector Chief Patrol Agent

Raul L. Ortiz.

Multiple children have drowned

trying to cross the river with their

parents in recent months.

—Alicia A. Caldwell

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The U.S. AgricultureDe-

partment this week pulled

seven employees from its sta-

tistical division off this year’s

crop tour after one received a

violent threat. In some edi-

tions Thursday, a U.S. News

article about the tour incor-

rectly said the USDA pulled 15

employees off the tour after

one received a death threat.

The original Sony Walk-

man cost $199 in 1979, or

roughly $700 in today’s dol-

lars. An Off Duty article Satur-

day about the Walkman’s 40th

anniversary incorrectly said

the price in today’s dollars is

$1,347.

Readers can alert The Wall Street Journal to any errors in news articles by

[email protected] by calling 888-410-2667.

CORRECTIONSAMPLIFICATIONS

LosingSteam

Surveyssuggestmajoreconomiesareslowing,

sparkingrecessionfears.

PurchasingManagers'compositeoutputindexes

Source: IHS Markit

Eurozone

Japan

Australia

sExpansion U.S.

tContraction

60

48

50

52

54

56

58

2018 ’

clearly associated” with the

trade dispute between the U.S.

and China. “Further escalation

of the trade war risks spillover

in the service and household

sectors, which could signal a

much larger risk of recession

in 2020,” he added.

While government figures

suggest the U.S. and global

economies continue to expand,

Thursday’s data added to evi-

dence of a deepening slow-

down.

The International Monetary

Fund last month said a sharp

deceleration of global trade

driven by trade tensions slowed

the global economy more than

expected in the spring. It fore-

cast global growth, adjusted for

inflation, would fall to 3.2% this

year from 3.6% last year and

3.8% in 2017.

The decline in U.S. factory

activity appears to be tied to

three factors, Mr. Brusuelas

said: softening demand for mo-

tor vehicles; weaker sales at

aircraft makerBoeingCo.; and

the U.S.-China trade dispute.

The factory malaise ap-

peared to weaken the broader

U.S. economy. IHS released a

“composite output index”—re-

flecting production by manu-

facturing and service compa-

nies alike—that showed the

record-long expansion losing

momentum.

Manufacturing activity is

falling in most of the world’s

advanced economies, another

sign that a deepening global

slowdown is weighing on the

U.S. expansion.

An index of factory activity

in August declined in the U.S.,

Japan, Germany and the euro-

zone, IHS Markit said on

Thursday. The U.S. decline

marked the first manufactur-

ing contraction there since

September 2009, according to

the firm’s surveys of purchas-

ing managers. The gauges fell

in Italy and the U.K. in July,

the firm said recently.

The IHS manufacturing in-

dexes are imprecise because

they are based on surveys and

combine figures including

product sales, inventory levels

and commodity prices to come

up with an index of factory

“activity,” designed to broadly

assess the sector’s health.

But the reports comport

with other warning signs that

have flashed recently about

the U.S. and global economies.

“It’s a reflection of growing

global pessimism among pur-

chasing managers,” said Joe

Brusuelas, chief economist for

RSM US, a consulting firm. He

said their darkening mood “is

BYJOSHMITCHELL

ANDJASONDOUGLAS

U.S. NEWS

Stumbling Global

Economies Heighten

Fears of Recession

the cost of insurance, accord-

ing to insurers and analysts.

The attrition has occurred

largely in plans sold outside

the ACA’s marketplaces.

These plans draw people

who don’t qualify for federal

subsidies that help defray the

costs of coverage. Those con-

sumers have borne the full

brunt of rate increases, which

hit heavily in years before

2019.

“Affordability is what’s

driving that,” said Paul

Rooney, a vice president at

eHealth Inc.

Teri Goodrich, a 61-year-old

engineer in Raleigh, N.C., said

she was forced to drop her

ACA coverage in 2017, when

the premiums became unaf-

fordable and she made too

much to get a federal subsidy.

Ms. Goodrich, whose income

fluctuates as she takes on con-

sulting work, got a subsidy the

following year that made ACA

insurance affordable, and has

stayed covered even without a

subsidy this year.

But, she said, her current

ser analysis, down from 14.

million a year earlier and 18.

million in 2015’s first quarter.

“It’s a good news/bad news

situation,” with the ACA mar-

ketplaces steadying and draw-

ing increased competition

among insurers, said Geoff

Bartsh, a vice president at

nonprofit insurer Medica,

which sells ACA plans in sev-

eral states. “The broader indi-

vidual market continues to

have a lot of problems, and

that’s shown by the number of

people who are leaving.”

This year, the ACA’s finan-

cial penalty for people without

health coverage went away,

which was likely a factor in

the individual-plan enrollment

decrease from 2018, said Cyn-

thia Cox, a vice president at

the Kaiser foundation. She

said the decline also may re-

flect people who gained em-

ployer coverage.

But the sharper fall in indi-

vidual-market enrollment

since 2015 is largely tied to

ContinuedfromPageOne

COLORADO

Hickenlooper Will

Run for Senate

John Hickenlooper, who

ended his 2020 presidential

campaign earlier this month, has

entered a crowded race for the

U.S. Senate in his home state of

Colorado.

The former Colorado governor

made his announcement in a

video Thursday morning, making

him an immediate leading con-

tender for the Democratic nomi-

nation to challenge Republican

Sen. Cory Gardner, a top target

for Senate Democrats.

Mr. Hickenlooper, a former

brewpub entrepreneur, served as

Colorado’s governor from 2011 to

2019 and was previously Den-

ver’s mayor.

A centrist Democrat, Mr.

Hickenlooper failed to gain trac-

tion in the presidential race as

he warned of liberal policies that

he said would turn off moderate

and independent voters more

commonplace in his home state.

—Ken Thomas

TEXAS

School Co-Founder

Sues Over His Firing

Mike Feinberg, co-founder of

KIPP charter schools, filed a law-

suit late Wednesday against the

school network for defamation

following his firing after an in-

vestigation into allegations that

he sexually abused a student in

the late 1990s.

KIPP officials said last year

upon his termination that there

was “credible evidence” to merit

the action. The lawsuit denies

the allegation and contends KIPP

officials made false statements,

causing Mr. Feinberg severe

emotional distress and ruined

his reputation.

The suit, filed in a Texas dis-

trict court, says that Mr. Fein-

berg has been unable to obtain

similar employment in his field

and seeks at least $1 million in

monetary relief. KIPP officials

called the lawsuit “baseless and

frivolous,” saying Mr. Feinberg

was terminated after thorough

investigations.

—Tawnell D. Hobbs

LOUISIANA

State Mourns

Former Gov. Blanco

A bagpiper played “Amazing

Grace” as Louisiana’s first and

only female governor, Kathleen

Babineaux Blanco, was carried to

the state Capitol by an honor

guard for public viewing.

Her former staff lined the

building steps, and hundreds of

mourners packed the ornate hall

between the House and Senate

chambers to pay their last re-

spects to the Democrat who led

consulting contract will end

later this fall, and she may

drop her ACA coverage again

then. Without the federal tax

credit, “the insurance premi-

ums are superhigh,” she said.

The lack of overall growth

in the ACA market is likely

one reason large national in-

surers that pulled out in past

years are remaining on the

sidelines for 2020, said Deep

Banerjee, an analyst with S&P

Global Ratings. Also, they are

likely able to get stronger re-

sults from other lines of busi-

ness, he said.

UnitedHealth Group Inc. said

it expects to be in the same

three ACA markets next year as

this year. CVS Health Corp.’s

Aetna andHumanaInc. both

said they have no plans to offer

ACA products in 2020.

But companies that are cur-

rently in the ACA market-

places said they want to ex-

pand, despite lingering risks

like a court challenge to the

law filed by a group of Repub-

lican-led states. Many ACA

plans keep costs down with

smaller selections of health-

care providers, with some in-

surers, including Bright and

Oscar, often building plans

around a single major hospital

system. Both Bright and Oscar

said they are seeing increased

interest from health-care pro-

viders in offering such plans.

Insurers

Add ACA

Options

CoverageChanges

Fewerpeoplearegettingindividualhealthcoverage,but

insurers’financialresultshaveimproved.

First-quarterindividual

marketenrollment

Averageindividual-market

grossmarginspermemberper

month*

*For first quarter of each year. Gross margins indicate

the difference between premiums and claims costs.

Source: Kaiser Family Foundation

Subsidized Unsubsidized

Off-Exchange

2012 ’14 ’16 ’

0

5

10

15

20 million

2012 ’14 ’16 ’

0

25

50

75

100

125

150

$

inflation running below their

2% target at a time when they

expected it to climb. Others

were more concerned about

the risk of the world-wide

manufacturing downturn and

a chill in business investment

hitting the U.S.

Still others believed slow-

ing global growth and trade

tensions meant the Fed’s

benchmark rate was restrict-

ing economic activity more

than they wanted, making it

attractive to cut rates as “in-

surance” against a slowdown.

At the same time, several

Fed officials didn’t see a

strong case to cut rates at all,

given healthy consumer

spending and labor market

conditions. Two Fed bank

presidents dissented from the

decision, which lowered the

central bank’s policy rate to a

range between 2% and 2.25%.

Some analysts say the lack

of an overarching rate-cutting

framework is making it harder

for investors to gauge what

will drive the Fed’s next

moves. Officials gave markets

“no benchmark to indicate

why they would cut again,”

said Steven Blitz, chief U.S.

economist at TS Lombard, a

research firm.

Absent a crisis, Fed officials

tend to make big policy moves

with caution. It takes time to

build consensus for action when

numerous officials—currently

five governors and 12 regional

Fed bank presidents—partici-

pate in the decision. It also

takes time to assess whether

their assumptions about the

economy are proving true.

“For the chair, what you

care about is agreement on

the decision. You don’t care

about agreement on the rea-

soning,” said Adam Posen,

president of the Peterson In-

stitute for International Eco-

nomics in Washington.

“He’s speaking for a commit-

tee that has multiple reasons

for voting as it did,” Mr. Posen

said. “It’s not good for Powell to

pretend there’s more coherence

or clarity than actually exists.”

Some investors saw last

month’s rate cut as a missed

opportunity to signal a stronger

commitment to boosting infla-

tion, which they believe would

have steadied long-term Trea-

sury yields while weakening the

U.S. dollar. Instead, long-term

yields have tumbled and the

dollar has strengthened.

“The Fed had one good rea-

son that could have justified

cutting rates—several times—

despite solid economic

growth, and instead it kicked

[the inflation argument] to the

curb and highlighted two

other confusing reasons,” said

Robert Brusca, who runs an

economic consulting firm.

Another challenge is that

businesses and economists in-

creasingly view President

Trump’s trade policies as a

major source of uncertainty,

which restrains investment.

This uncertainty limits how

much guidance Fed officials

can offer about their plans.

JACKSON HOLE, Wyo.—The

Federal Reserve struggled to

provide a single explanation

for why it cut interest rates

last month because its officials

supported the move for differ-

ent reasons.

Fed Chairman Jerome Pow-

ell’s challenge in the weeks

ahead, including with his

speech Friday at the Kansas

City Fed’s annual conference

here, is to articulate clearly

why the central bank is likely

to continue reducing rates ab-

sent obvious signs of eco-

nomic deterioration in the U.S.

With this speech, Mr. Powell

can start building a consensus

among his colleagues for the

next move, which could come

at the Fed’s Sept. 17-18 meeting.

Fed officials generally sup-

ported the July rate cut to

cushion the U.S. against a

slowing global economy. But

minutes of the policy meeting

released Wednesday showed

they saw the risks differently.

Some worried most about

BYNICKTIMIRAOS

Powell Faces Challenge Explaining

Why Fed Should Cut Rates More

Fed Chairman Jerome Powell and New York Federal Reserve President John Williams taking a stroll in Jackson Hole, Wyo., Thursday.

ANN SAPHIR/REUTERS

 ECB’s minutes signal big

stimulus next month..........A

 Treasurys fall, yield curve

inverts briefly...........................B