Real Time Economics: U.S. and China Resume Trade Talks

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. Here we go again. The U.S. and China resumed trade talks last week, though divisions within the Trump administration make it hard to figure out whether we’re heading for a truce or more tariffs. Good morning. Jeff Sparshott here to take you through the day’s top economic news. We’ll also look at Amazon’s new headquarters, tech’s battle for talent, oil prices, and why foreigners are shunning U.S. colleges and British jobs.  LET’S TALK Treasury Secretary Steven Mnuchin spoke with his Chinese counterpart, Vice Premier Liu He, about a deal to ease trade tension. Friday’s phone call didn’t lead to a breakthrough but the renewed discussions indicate the two sides are trying to make progress ahead of a meeting between President Trump and Chinese President Xi Jinping at the end Continue reading "Real Time Economics: U.S. and China Resume Trade Talks"

Real Time Economics: Too Much Oil | U.S. Debt Piles Up | Christmas Shopping Season

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. Saudi Arabia and its OPEC allies are trying to get a handle on supply and demand dynamics in the oil market. That hasn’t been easy with U.S. shale producers pumping, global growth fading and Iran facing new American sanctions.  Good morning. Jeff Sparshott here to take you through the day’s key economic news. We’ll also look at how much the U.S. is spending to finance its growing debt, the mortgage market, holiday shopping, and runaway inflation in a dollar-denominated economy.  SAUDIS TO CUT OIL OUTPUT OPEC is nearing a deal to cut oil output. Saudi representatives said that the kingdom would slash its exports unilaterally next month as the wider alliance debated its next move. Russia, the world’s largest producer, sent mixed signals on whether it would Continue reading "Real Time Economics: Too Much Oil | U.S. Debt Piles Up | Christmas Shopping Season"

Real Time Economics: Fed Stays the Course | How to Pay for Roads and Bridges | Iran’s Appetite for American Soybeans

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. The Federal Reserve spoke volumes while saying hardly anything on Thursday. The takeaway: expect another rate increase next month.  Good morning. Jeff Sparshott here to take you through the day’s economic news. We’ll also look at the looming political struggle to pay for American infrastructure, how Iran is filling some of the void after China stopped buying U.S. soybeans, another low for jobless claims, and how Brexit is a bit like legalizing prostitution.  STEADY AS SHE GOES The Federal Reserve held interest rates steady and highlighted the economy’s strength after its two-day policy meeting. It offered nothing to dispel market expectations that it would deliver its fourth rate rise of the year in December, Nick Timiraos reports. Broad strength in the economy and labor market—powered in recent Continue reading "Real Time Economics: Fed Stays the Course | How to Pay for Roads and Bridges | Iran’s Appetite for American Soybeans"

Some Fed Bond Purchases Spurred Hiring, Central Bank Paper Says

WASHINGTON—At least some of the Federal Reserve’s bond buying in the wake of the 2008 financial crisis bolstered employment, according to a recent paper by staffers at the central bank’s board of governors.

The third round of such purchases, also known as quantitative easing, starting in late 2012, spurred banks with large holdings of mortgage-backed securities to lend more to companies, authors Stephan Luck and Tom Zimmermann found. Shortly thereafter, U.S. counties with such banks saw faster employment growth—up to 0.4 percentage point more per quarter—than counties where banks held fewer mortgage-backed securities.

Employment growth in the two sets of counties was similar for more than 18 quarters before the implementation of QE3, as the program was known.

The findings come as policy makers continue to debate the full impact of the unconventional stimulus measures taken by the Fed after interest rates, reduced to near zero by the end Continue reading "Some Fed Bond Purchases Spurred Hiring, Central Bank Paper Says"

Parsing the Fed: How the November Statement Changed From September

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the November statement compared with September. [wsj-responsive-sandbox id = "0" ] RELATED Fed Holds Rates Steady, Signals More Rate Increases Ahead Federal Reserve Likely to Keep Interest Rates Steady

Real Time Economics: Trump’s Trade Agenda | Who Cares About the Economy? | It’s Fed Day!

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. President Trump and Democrats have a shared skepticism of free trade. That doesn’t mean they’ll agree on a renegotiated Nafta—or the rest of the White House’s trade agenda. The new deal with Mexico and Canada could prove an early test when the administration seeks approval from a Democrat-controlled House next year.  Good morning. Jeff Sparshott here to take you through the latest developments affecting the global economy, including lessons and fallout from midterms, what to expect from the Fed, China’s surging exports, and big tech and dying startups. DON’T BET THE HOUSE ON IT President Trump said split control of Congress “could be a beautiful, bipartisan-type of situation.” He praised likely House Speaker Nancy Pelosi, saying he was prepared to negotiate over issues ranging from infrastructure to the environment. Continue reading "Real Time Economics: Trump’s Trade Agenda | Who Cares About the Economy? | It’s Fed Day!"

Links (11/7/18)

How an Analysis of Basque Terrorism Helps Economists Understand Brexit

A method developed more than a decade ago to assess the cost of political violence in the Basque country has become a key tool for economists trying to figure out the cost of Brexit. The U.K. voted to leave the European Union in 2016 and is due to formally withdraw from the bloc in March next year. Attempting to estimate the effect of the referendum result runs into a problem familiar to anyone curious about the economic consequences of a particular event: No one can be sure how the economy would have performed had the vote gone the other way. One approach might be to extrapolate the pre-referendum trend to paint a picture of how the economy might have behaved had voters chosen to keep the U.K. in the EU. Another might be to take the average growth rate of the world’s other advanced economies and compare it Continue reading "How an Analysis of Basque Terrorism Helps Economists Understand Brexit"

Real Time Economics: The Midterm Results Are In | Gridlock Likely To Limit Policy Shifts | Remember the Debt Ceiling?

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. Democrats retook the House, Republicans added a seat in the Senate—and the short-term economic outlook is pretty much the same as before the midterms. Political gridlock is likely to temper major shifts in American economic and tax policy for the next couple years but could also leave Washington looking over the next fiscal cliff. Good morning. Jeff Sparshott here to take you through the latest developments affecting the global economy. HELP WANTED. SERIOUSLY. Before we dive into the election, here’s some bright news for workers: Unfilled jobs in the U.S. exceeded the number of unemployed Americans by more than one million as the summer came to a close. Before March, job openings had never exceeded unemployed workers in more than 17 years of monthly records, Eric Morath reports. It’s a Continue reading "Real Time Economics: The Midterm Results Are In | Gridlock Likely To Limit Policy Shifts | Remember the Debt Ceiling?"

Who Gets Credit for Economy, Obama or Trump? The Answer Is Both

President Trump and former President Obama sparred on the campaign trail about who deserves credit for the strong economy, but the record is more complex than either describes. While economic growth has been faster during Mr. Trump’s first 21 months in office than it was during Mr. Obama’s eight years, federal debt is growing faster now than it was during Mr. Obama’s second term. Mr. Obama, meantime, presided over faster overall growth in payroll jobs during his second term, but growth in manufacturing payrolls under Mr. Trump is faster than during Mr. Obama’s two terms. And while the stock market has rallied under Mr. Trump, it hasn’t measured up to the rebound during Mr. Obama’s first term from lows in the financial crisis. No comparison is perfect. Mr. Obama came to office during a deep recession and financial crisis. Mr. Trump came into office during a long run of steady Continue reading "Who Gets Credit for Economy, Obama or Trump? The Answer Is Both"

Real Time Economics: Amazon Does the Splits | U.S. Midterms Are Here | Why Iran Sanctions Aren’t Raising Oil Prices

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. It’s Election Day! Today we look at Amazon’s decision to split its second headquarters between two cities, U.S. midterms, the “real” unemployment rate, and Iran sanctions. AMAZON SPLITS HQ2 Amazon.com plans to split its second headquarters evenly between two locations rather than picking one city. The WSJ’s Laura Stevens and Shayndi Raice report that the surprise decision is to allow the company to recruit more of the best tech talent, and ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems. Under the new plan, Amazon would divide the workforce with about 25,000 employees in each place. Amazon is in advanced talks with multiple cities but hasn’t made a final decision on which two locations it will pick. An announcement Continue reading "Real Time Economics: Amazon Does the Splits | U.S. Midterms Are Here | Why Iran Sanctions Aren’t Raising Oil Prices"

Links (11/5/18)

Real Time Economics: U.S. Companies Feel Tariff Pinch | Strongest Wage Growth In a Decade | Election Day Nears

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. Good morning. Today we look at fallout from U.S. trade policy, another milestone for workers, how opioid addiction is affecting the labor market, and where midterm elections could affect economic policy. THE LONG ARM OF HIGHER TARIFFS U.S. companies said they are tempering the effects of escalating tariffs with China through price increases or changes to their supply chains, but they warn investors that the picture could worsen next year. Tariffs have slowed U.S. timber and grain exports, raised the cost of imported clothes hangers and heavy-equipment materials, and compressed profit margins for computer chip and tool makers, among other effects, according to an analysis of results and comments from third-quarter earnings. While the negative impact is widespread, it’s so far mostly modest, Theo Francis reports. The tariff Continue reading "Real Time Economics: U.S. Companies Feel Tariff Pinch | Strongest Wage Growth In a Decade | Election Day Nears"

How Can the Field of Economics Diversify? Here Are Janet Yellen’s Thoughts

To help economics become a field of more diverse thought, perhaps the profession should take a look at what sorts of research is rewarded, former Federal Reserve Chairwoman Janet Yellen contends. On a panel at a Pathways to Gender Equality conference in Washington, D.C., Friday, Ms. Yellen, the first female chief of the central bank in its more than 100-year history, emphasized the importance of diversifying economic research methods and topics. The economics profession, Ms. Yellen said, tends to value mathematical modeling and is increasingly becoming a harder science, which could be biasing economists against new ideas. “What’s happened in economics is that anything that could be called anecdotal or case study types of methods are simply ruled out,” Ms. Yellen said. “To my mind this is a serious methodological bias that is blinding the profession to very important phenomena.” Ms. Yellen highlighted economists’ failure to predict Continue reading "How Can the Field of Economics Diversify? Here Are Janet Yellen’s Thoughts"

Just How Good Is the October Job Market? Here’s How It Compares

U.S. employers added 250,000 jobs, the unemployment rate held steady at 3.7% and hourly wages posted their strongest growth since 2009 in October. Wage growth climbed 3.1% from a year ago, on an hourly basis, topping 3% for the first time since the recession. On a weekly basis, wages jumped an even stronger 3.4%. The number of jobs grew by 1.7% over the past year. That pace of gains is a slight acceleration from a year ago but below the postrecession highs seen in 2015. Broader measures of unemployment, such as those that include discouraged workers, and part-time workers who can’t find full-time work, have also continued to trend downward. The share of Americans participating in the labor force has been little changed for the past five years, as job gains have been partially offset by the ongoing retirement of the baby boomer generation. Among Continue reading "Just How Good Is the October Job Market? Here’s How It Compares"

Real Time Economics: U.S. Jobs Numbers On Tap, Trump Signals Progress With China

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. It’s jobs day! The U.S. employment report for October is out at 8:30 a.m. ET. Today we also look at progress and prospects for resolving the U.S.-China trade fight, slower growth at U.S. factories, so-so worker productivity, labor disruptions, and the company that’s following you by tracking your smartphone. GOOD COP President Trump said he had a “very good conversation” with President Xi Jinping of China, signaling progress in the nations’ trade dispute. The president’s upbeat assessment came as an impasse over trade has threatened to undermine a planned meeting between the two leaders at the Group of 20 leaders summit in Buenos Aires later this month, Vivian Salama, Aruna Viswanatha and Kate O’Keeffe report. Mr. Trump said the two discussed many issues by telephone on Thursday, Continue reading "Real Time Economics: U.S. Jobs Numbers On Tap, Trump Signals Progress With China"

5 Things to Watch in the October Jobs Report

The U.S. government releases its broad measure of the October labor market on Friday. Economists surveyed by The Wall Street Journal expect the Labor Department to report employers added 188,000 jobs during the month and unemployment held at 3.7%. Here are five things to watch in the report. 1. Wage Breakthrough Workers’ wages are poised to break through a 3% annual growth ceiling that’s held firm for nearly a decade. Economists surveyed by The Wall Street Journal project that average hourly earnings advanced 0.2%, or about 5 cents an hour, in October from September. Such an increase would result in wages advancing 3.1% from a year earlier. Wages haven’t exceed 3% year-over-year growth since April 2009. The strong annual gain in October in part reflects that wages declined, on a monthly basis, in October 2017. Still, the broader trend is one of improving pay for workers. Continue reading "5 Things to Watch in the October Jobs Report"

Real Time Economics: Americans Are Finally Getting Fatter Paychecks

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. Good morning. Today we look at rising wages, signs the labor market has further to run, a hiring frenzy for $300,000-a-year jobs, where foreign students work, and how the U.S. Treasury is adding to its growing pile of debt.  PAY DAY! Americans paychecks rose at the fastest rate in more than a decade over the past year, showing a tight labor market is paying dividends for more workers, Eric Morath reports. The latest wage data comes from the slightly obscure employment-cost index, which accounts for both wages and benefits paid to civilian workers. A more closely watched pay gauge—average hourly earnings for private-sector employees—is out with the October jobs report on Friday. It’s expected to rise just more than 3% from a year earlier, which would be the strongest Continue reading "Real Time Economics: Americans Are Finally Getting Fatter Paychecks"

Links (10/31/18)