Weekly Market Update


Thursday, June 8, 2017

May's unemployment rate of 4.3% is the lowest it has been in 16 years. While this indicator appears positive, the US Department of Labor reported that the participation rate dropped to 62.7%, near a 40-year low. By comparison, in May 2007, the unemployment rate was at 4.4% and the participation rate was 65.8%. If the May 2017 unemployment number is adjusted to reflect a participation rate of 65.8%, unemployment would stand at a whopping 8.5%, nearly double that of the rate reported last Friday.

In Other News

  • Despite the fact that state tax revenue has surpassed pre-financial crisis levels and state budgets have expanded in nearly every category, higher education has taken a hit in funding. Unlike public pensions, which are protected by law, as well as Medicaid and other programs, many states have come to believe that higher education is nonessential, and it has become the only major category to take a budget cut.
  • After news broke last week that the United States would no longer participate in the Paris Climate Agreement, 180 presidents of both public and private colleges and universities, signed a pledge named We are Still In, in which they committed to continue the work of the agreement even if the U.S. was not formally engaged. Former New York City Mayor Michael Bloomberg spearheaded the efforts and in addition to university presidents, the pledge was also signed by corporations and mayors of major cities.
  • The IRS Data Retrieval Tool (DRT) was shut down in March due to security concerns. Last Friday, access to the tool was restored. The DRT allows student loan borrowers to automatically populate applications for income-based repayment programs with information from their tax returns.
  • Hopes of free higher education ran high during the 2016 presidential campaign, but such plans had very high price tags. A new report released by the State Higher Education Executive Officers Association offers a less expensive plan which provides more affordable higher education for all students, including part-time and adult students.
  • Santa Clara University will receive a $30 million donation from the Thomas and Dorothy Leavey Foundation to build out its STEM campus. This is the second largest gift in the school's history, after a $100 million gift earlier this year to start the STEM campus.
  • The New York Times recently published an article describing the confluence of events causing operating pressure at colleges and universities throughout the country. Several institutions are evaluating strategies including tuition discounting and mergers and consolidation to effect change. Others have formed an industry group called the Frontier Set to exchange ideas that have worked to lower costs and improve education outcomes.

Rating Agency Update

  • Moody's and S&P assigned A1 and AA-, respectively, to New Mexico State University's Series 2017A-C bonds. Moody's downgraded the University's outstanding bonds to A1. Both outlooks are stable.
  • Moody's affirmed B3 on Birmingham Southern College's bonds. The outlook is negative.
  • Moody's assigned Aa3 to University of Vermont and State Agricultural College's Series 2017 Bonds. The outlook is stable.
  • S&P downgraded the University of Illinois to A-. The University has also been placed on negative CreditWatch.
  • S&P affirmed A+ on the Texas Women's University's bonds. The outlook is stable.
  • S&P affirmed A+ on Idaho State University's bonds. The outlook is stable.
  • S&P affirmed A- on Nova Southeastern University's bonds. The outlook is stable.
  • S&P affirmed BBB on Sarah Lawrence College's bonds. The outlook is stable.