Real Time Economics: The U.S. Moves Closer to a Trade War With Allies

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the Trump administration’s words and deeds on trade, good news for economic growth and productivity, firming eurozone inflation, the economics of sports in Switzerland, and why people go bankrupt when a neighbor wins the lottery. TRADE WAR: GAME ON The Trump administration is planning to make good on its threat to impose tariffs on European steel and aluminum. An announcement is expected as early as Thursday after U.S. negotiators were unable to win concessions from European Union counterparts, William Mauldin, Bojan Pancevski and Vivian Salama report. The move is almost certain to draw a response from the EU, which has threatened to retaliate with its own tariffs on American products such as motorcycles, jeans and bourbon. The numbers: 25% tariffs on imported steel, and 10% on Continue reading "Real Time Economics: The U.S. Moves Closer to a Trade War With Allies"

Real Time Economics: U.S. Threatens Tariffs, Italy Rattles Markets

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the Trump administration’s latest threat and China’s unhappy reaction, worries over the euro’s future, the seemingly inexorable march of home prices, and how many hours a Swiss woman has to work to pay for a haircut. U.S.-CHINA: TARIFFS ON! The Trump administration sent a sudden, harsh message to Beijing: The U.S. is moving forward with tariffs on Chinese imports and restrictions on China’s access to sensitive U.S. technology. The White House plans to announce a final list of $50 billion in targeted Chinese imports by June 15. Planned investment restrictions are due by June 30. The move startled officials in Beijing, as the White House had for days suggested it would put such measures on hold during negotiations to narrow the $375 billion annual trade gap between the Continue reading "Real Time Economics: U.S. Threatens Tariffs, Italy Rattles Markets"

Real Time Economics: U.S. Threatens Tariffs, Italy Rattles Markets

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the Trump administration’s latest threat and China’s unhappy reaction, worries over the euro’s future, the seemingly inexorable march of home prices, and how many hours a Swiss woman has to work to pay for a haircut. U.S.-CHINA: TARIFFS ON! The Trump administration sent a sudden, harsh message to Beijing: The U.S. is moving forward with tariffs on Chinese imports and restrictions on China’s access to sensitive U.S. technology. The White House plans to announce a final list of $50 billion in targeted Chinese imports by June 15. Planned investment restrictions are due by June 30. The move startled officials in Beijing, as the White House had for days suggested it would put such measures on hold during negotiations to narrow the $375 billion annual trade gap between the Continue reading "Real Time Economics: U.S. Threatens Tariffs, Italy Rattles Markets"

Real Time Economics: Is a Tight Labor Market Really, Finally Generating Higher Wages?

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at wage gains in the U.S., political trouble for the euro, Trump administration trade tactics, the country with the power to move oil prices, and the vast but shallow gig economy. WHERE’S MY RAISE? The unemployment rate fell below 4% for the first time in almost two decades last month. So where’s the wage growth? WSJ labor markets reporter Eric Morath tells us to look under the surface, where there’s evidence pressure is building. While overall pay gains decelerated in recent months, hourly earnings for nonmanagers have quietly improved. In April they matched their best increase since 2010. They also equaled overall wage gains, a potentially significant change. Wage growth for managers had outstripped rank-and-file workers since late 2014. That suggests that instead of broad labor-market Continue reading "Real Time Economics: Is a Tight Labor Market Really, Finally Generating Higher Wages?"

Real Time Economics: What Do Tariffs, Oil Prices, a Tight Labor Market and Rising Borrowing Costs Mean for the Economy?

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at pushback on proposed auto tariffs, rising prices on U.S. steel, climbing borrowing costs, a shortage of summer workers, Europe’s soft patch, and who’s paying for $80 a barrel oil. PUSHBACK ON AUTO TARIFFS Lawmakers, the auto industry and foreign trade partners are among those lambasting the White House’s latest directive on tariffs. President Donald Trump ordered a review of imported vehicles and auto parts under a 1962 law allowing tariffs based on national security concerns, William Mauldin and Siobhan Hughes report. It’s the same justification used on steel and aluminum, though it’s garnering stronger reactions from political allies and trade partners. Republican lawmakers are growing worried that employing tariffs based on national security grounds could alienate military allies, kick off trade wars, disrupt supply chains and boost consumer Continue reading "Real Time Economics: What Do Tariffs, Oil Prices, a Tight Labor Market and Rising Borrowing Costs Mean for the Economy?"

Real Time Economics: Why Markets Love the Fed Minutes and Hate Auto Tariffs

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today, our Fed watcher, Nick Timiraos, digs into the newly dovish Fed take on inflation, we look at potential new U.S. tariffs on auto imports, and find employers using putting greens and craft beer to lure workers into the plumbing industry. JUST WAIT A MINUTE Stocks and bonds rallied strongly on the release of minutes from the Fed’s May meeting thanks to new hints that officials are relaxed about inflation​, WSJ Fed watcher Nick Timiraos tells us​. First, the minutes detail a discussion in which officials saw “a temporary period of inflation modestly above 2%” as “helpful in anchoring longer-run inflation expectations.” That reinforces prior signals that inflation over 2% won’t bother them: they’ve emphasized their inflation target is symmetric, meaning they won’t dial up rate increases if inflation rises above Continue reading "Real Time Economics: Why Markets Love the Fed Minutes and Hate Auto Tariffs"

Real Time Economics: Why Markets Love the Fed Minutes and Hate Auto Tariffs

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today, our Fed watcher, Nick Timiraos, digs into the newly dovish Fed take on inflation, we look at potential new U.S. tariffs on auto imports, and find employers using putting greens and craft beer to lure workers into the plumbing industry. JUST WAIT A MINUTE Stocks and bonds rallied strongly on the release of minutes from the Fed’s May meeting thanks to new hints that officials are relaxed about inflation​, WSJ Fed watcher Nick Timiraos tells us​. First, the minutes detail a discussion in which officials saw “a temporary period of inflation modestly above 2%” as “helpful in anchoring longer-run inflation expectations.” That reinforces prior signals that inflation over 2% won’t bother them: they’ve emphasized their inflation target is symmetric, meaning they won’t dial up rate increases if inflation rises above Continue reading "Real Time Economics: Why Markets Love the Fed Minutes and Hate Auto Tariffs"

Real Time Economics: Congress Pushes Back On Trump’s China Deal

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the latest wrinkles and roadblocks in trade talks with China, the EU, Canada and Mexico, financial well-being in the U.S., student loan delinquencies, and the incomplete comeback for the U.S. housing market.  TRADE WARS: THE SENATE STRIKES BACK U.S. lawmakers are moving to thwart Trump administration efforts to ease restrictions on Chinese telecommunications giant ZTE Corp. and other sensitive technology. The Senate Banking Committee unanimously approved legislation that would tighten national-security reviews of Chinese technology deals, strengthen export controls and prohibit the Trump administration from lifting stiff penalties imposed on ZTE, Kate O’Keeffe and Bob Davis report. It’s the latest twist in trade negotiations between the world’s largest economies. ‘WE’LL SEE WHAT HAPPENS’ What does this mean for U.S. trade Continue reading "Real Time Economics: Congress Pushes Back On Trump’s China Deal"

Why Student-Loan Delinquency Is Falling

The share of new delinquencies on student loans has fallen to the lowest level in more than decade—and it’s not just due to the healthy labor market. In the first quarter, slightly over 9% of student debt outstanding was newly delinquent, based on Federal Reserve Bank of New York figures smoothed for seasonal volatility. The student-loan delinquency rate is still far higher than rates for any other type of consumer debt and would be much higher if it excluded certain borrowers, such as students still in school, who do not have to make any payments. Still, the rate for new delinquencies on student loans has fallen steadily in recent years. Several factors are likely behind the decline. Unemployment, at 3.9% in April, is at its lowest point since late 2000, and economic growth picked up over the past year, while wages are rising. More borrowers are likely in a Continue reading "Why Student-Loan Delinquency Is Falling"

What Happened in Steel Cities After Trump’s Tariff Plans? Weak Hiring

Employment in each of America’s top 10 steel cities has grown slower than the rate of growth for the U.S. as a whole since President Donald Trump announced plans to impose tariffs on steel and aluminum imports earlier this year. Metro areas in the nation’s Rust Belt, like Youngstown, Ohio, and Huntington, W. Va., saw their employment decline in February and March from the previous year, while others, including Mobile, Ala., notched growth below the overall U.S.’s rate. Four of the nation’s 10 metro areas with the largest share of jobs in steel manufacturing saw job declines of up to 1.35%, while the other six saw sluggish growth of about 0.7%, well below the nation’s 1.6% growth. The Trump administration in March announced plans to institute broad tariffs of 25% on steel and 10% on aluminum products. The Labor Department jobs figures provide Continue reading "What Happened in Steel Cities After Trump’s Tariff Plans? Weak Hiring"

Real Time Economics: China Wins the First Round In Trade Fight

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at apparent U.S.-China trade detente, a fresh high for oil prices, slow employment gains in steel cities, the Great Recession’s lost generation, and the job market for bright-eyed college grads. WELL, THAT DE-ESCALATED QUICKLY The U.S. and China agreed on the broad outline of a deal that would save imperiled Chinese telecom giant ZTE Corp. If completed, the Trump administration would remove the ban on U.S. companies selling components and software to ZTE, a penalty that has threatened to put the company out of business. Instead, ZTE would be forced to make big changes in management, board seats and possibly pay significant fines, Lingling Wei and Bob Davis report. Beijing has also offered to remove tariffs on billions of dollars of U.S. farm Continue reading "Real Time Economics: China Wins the First Round In Trade Fight"

Financial Crisis May Have Hit ’80s Generation the Hardest

The children born into Ronald Reagan’s “Morning in America” era could be on track to become the last recession’s “lost generation,” new research from the Federal Reserve Bank of St. Louis says. Americans who entered the world in the 1980s “are at substantial risk of accumulating less wealth over their life spans than the members of previous generations,” the report’s authors say. “Not only is their wealth shortfall in 2016 very large in percentage terms, but the typical 1980s family actually lost ground in relative terms between 2010 and 2016, a period of rapidly rising asset values that buoyed the wealth of all older cohorts.” The St. Louis Fed research finds that as of 2016, those born in the 1980s had wealth levels 34% below where they would be absent the financial crisis and its aftermath. In comparison, people born in the 1970s had wealth levels that were 18% Continue reading "Financial Crisis May Have Hit ’80s Generation the Hardest"

Real Time Economics: U.S. Tariffs on Hold? | Where to Find Inflation | Chavismo Wins, Venezuela Suffers

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the Trump administration’s mixed message on China tariffs, the United States’s two economies, software that shaves worker pay, the rise of U.S. bond yields, 13,000% inflation in Venezuela, and the dollar’s rally. TARIFFS ON HOLD? The Treasury secretary and the Trump administration’s top trade official took markedly different positions over U.S. tariffs on Chinese imports, punctuating several days of negotiations between the world’s two biggest economies with a question mark. Treasury Secretary Steven Mnuchin said the U.S. was “putting the trade war on hold” and wouldn’t assess tariffs on Beijing while the two sides talked. U.S. Trade Representative Robert Lighthizer put out a statement saying that tariffs remained an important tool to “protect our technology.” That’s a significant difference in Continue reading "Real Time Economics: U.S. Tariffs on Hold? | Where to Find Inflation | Chavismo Wins, Venezuela Suffers"

Which Jobs Are Workers Most Willing to Move For? These Ones

Workers are most willing to move for technology jobs in big, expensive coastal cities, a new study found. The only problem? Those aren’t the bulk of open jobs in the U.S. Firms in cities such as San Francisco, New York and San Jose are attracting the most out-of-area job candidates, according to a new study from recruiting site Glassdoor. And those applicants are most interested in engineering and other high-tech positions. That relatively narrow focus among potentially mobile workers is a problem when the national job market is as tight as it’s been in two decades, shown by the 3.9% unemployment rate last month. Separate Labor Department data shows the highest rate of job openings is in the Midwest—not the East or West Coast. And the health-care, hospitality and retail industries have among the most severe worker shortages, according to the government. “Job seekers seem to be Continue reading "Which Jobs Are Workers Most Willing to Move For? These Ones"

Real Time Economics: U.S.-China Tensions Easing? | ‘Nowhere Near’ a Nafta Deal | Mortgage Rates Hit 7-Year High

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at progress and possibilities for U.S.-China trade relations, “gaping differences” in Nafta talks, President Trump’s pressure on Germany, oil’s latest jump, and the not coincidental rise of U.S. Treasury yields and U.S. mortgage rates.  U.S.-CHINA BREAKTHROUGH? China is easing up on U.S. farmers. Will the U.S. dial back sanctions on China’s telecommunications champion? China ended an anti-dumping and antisubsidy investigation into imported U.S. sorghum, as the two countries work toward a deal to ease trade tensions. After weeks of tit-for-tat threats of levies on growing lists of products, Washington and Beijing are now zeroing in on a deal to resolve the trade conflict, Lingling Wei reports. It would give China’s ZTE Corp. a reprieve from U.S. sanctions in exchange Continue reading "Real Time Economics: U.S.-China Tensions Easing? | ‘Nowhere Near’ a Nafta Deal | Mortgage Rates Hit 7-Year High"

Argentina’s Economy Is Near Crisis. Will a Bailout Be Big Enough, Fast Enough?

A fresh test of the IMF’s rescue chops is in the works as the Argentine peso and Argentina stock markets fall. But a number of big questions are yet to be resolved, and they could rattle financial markets depending on how they’re answered. How we got to this point: Argentina was on course to run a large fiscal deficit this year, and Argentina owes a large amount of its debt in U.S. dollars, which are becoming very expensive. Negotiations for an Argentine rescue from the International Monetary Fund are picking up, with the IMF’s board expected on Friday to formally deputize the IMF’s staff to negotiate the details of the rescue. A rescue is looking very likely. The IMF has said it’s discussing a “Stand-By Arrangement” in which Argentina would receive a large infusion of cash to help get through the immediate crisis, and then face a relatively quick timeline Continue reading "Argentina’s Economy Is Near Crisis. Will a Bailout Be Big Enough, Fast Enough?"

Prescription Rates Drive Opioid Crisis More Than Economic Woes, Study Finds

The supply of opioid prescriptions is a strong predictor of declines in work-force participation, according to a new study, which also found that weak employment conditions themselves didn’t lead to more opioid abuse. The study by two Federal Reserve Bank of Cleveland economists found that people in areas with higher opioid prescription rates are less likely to participate in the labor force, and have lower employment rates. Yet the share of people abusing opioids didn’t increase because of the last recession. For men of prime working age—between 25 and 54 years old—the labor force participation rate was 4.9 percentage points lower in a high prescription area than in a low prescription area, the paper by Cleveland Fed economists Dionissi Aliprantis and Mark Schweitzer said. Women also worked less in areas where opioid prescriptions were more common, but not to the same degree, with a 1.4 percentage point lower Continue reading "Prescription Rates Drive Opioid Crisis More Than Economic Woes, Study Finds"

Real Time Economics: The Great American Baby Bust | Standing Firm on China? | Manufacturing’s Productivity Problem

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at developing demographic distress, President Trump’s latest comments on China and Mexico, how pain-killer prescriptions knock people out of the workforce, investor indigestion in Italy, and why U.S. manufacturing productivity is mired in an epic soft patch. BABY BUST American women are having children at the lowest rate on record. The general fertility rate for women age 15 to 44 was 60.2 births per 1,000 women—the lowest since the government began tracking it more than a century ago, Janet Adamy reports. The figures suggest that a number of women who put off having babies after the 2007-09 recession are forgoing them altogether. This dearth of births could exacerbate two problems: As older Americans retire, a smaller share of young workers will pay into the social safety net that supports the Continue reading "Real Time Economics: The Great American Baby Bust | Standing Firm on China? | Manufacturing’s Productivity Problem"

Real Time Economics: Treasury Yields Hit Fresh Highs | Nafta Deadline Looms | The Economics of Taylor Swift and Ticket Scalpers

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at rising Treasury yields and good economic news in the U.S., Thursday’s soft deadline for Nafta talks, Japan’s economic slowdown, and empty seats at Taylor Swift concerts. RISING YIELDS, HIGHER RATES The yield on the 10-year Treasury note, used as a reference rate for everything from mortgages to auto loans to corporate debt, touched its highest level in nearly seven years on Tuesday. Why? Good economic news. Fresh data showed U.S. consumers ramped up spending on everything from food to clothing to gasoline in April, and a New York Fed manufacturing survey came in better than expected. Fixed returns on Treasurys typically look more attractive when investors are uncertain about economic prospects. The latest reports helped ease concerns that momentum is fading for the second-longest economic expansion in Continue reading "Real Time Economics: Treasury Yields Hit Fresh Highs | Nafta Deadline Looms | The Economics of Taylor Swift and Ticket Scalpers"

Real Time Economics: Business Investment Soars | Trump Nears a Deal With China | Job Switchers Get the Biggest Raises

This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at booming capex, the latest developments in the U.S.-China trade saga, Germany’s cooling economy, Poles and Hungarians exiting the U.K. workforce, and who’s getting the biggest raises. CAPITAL SPENDING BOOMS U.S. companies are ramping up spending on their businesses at the fastest pace since 2011. Spending on factories, equipment and other capital expenditures by companies in the S&P 500 is expected to have risen 24% in the first quarter, Akane Otani, Ben Eisen and Chelsey Dulaney report. Capex is good for the broader economy, helping boost short-term GDP numbers and laying the foundation for future growth. Yet history suggests it could also pressure share prices—leaving investors questioning whether it is worthwhile to bet on companies with costly projects that may not pan out.
Comments or suggestions for Real Time Economics? Continue reading "Real Time Economics: Business Investment Soars | Trump Nears a Deal With China | Job Switchers Get the Biggest Raises"