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"
- What’s Good for Pharma Isn’t Good for America - Paul Krugman
- Cryptocurrencies’ challenge to central banks - VoxEU
- We can't ignore climate change - Pyndyck and Stock
- Finance and the Blockchain: A Primer - Cecchetti & Schoenholtz
- The “accounting view” of money: money as equity - All About Finance
- How the broadcast media created mediamacro - mainly macro
- The Future of Reliable News - Economic Principals
- Interviews: Dow, Harcourt, Goodhart, Lawson, Nelson, Chang - Tim Taylor
- The paradox of markups, part 2 - Growth Economics
- Ireland Exports its Leprechaun - Brad Setser
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 President Trump’s lifeline to ZTE, corporate America’s conflicting views on tariffs, U.S. plans to sanction European companies, pressure on U.S. automakers to create more jobs, and Italy’s new anti-establishment coalition. PHONE A FRIEND U.S.-China trade tensions eased. President Donald Trump said he was working with President Xi Jinping to keep ZTE Corp. in business. It’s an extraordinary lifeline to the Chinese telecommunication giant. ZTE had shut down major operations after the Commerce Department blocked U.S. companies from selling components to the firm. Mr. Trump said in a tweet that he is working with Mr. Xi to get ZTE “a way to get back into business, fast. Too many jobs in China lost,” Dan Strumpf and John D. McKinnon report. The president said the Continue reading "Real Time Economics: Trump’s Lifeline to China | U.S. Readies Sanctions on Europeans | Gasoline Heads Toward $3"
- The Death of Acceleration (Wonkish) - Paul Krugman
- Fiscal policy remains in the stone age - mainly macro
- It's a (low inflation) trap! - Antonio Fatas
- Initial Coin Scams - Nouriel Roubini
- Let Them Eat Trump Steaks - Paul Krugman
- Inflation, globalisation, and competition - VoxEU
- The Double Standard of America’s China Trade Policy - Dani Rodrik
- Job Guarantee: Marxist or Keynesian? - Stumbling and Mumbling
- Estimating Aggregate Fiscal Multipliers from Local Data - FRB Richmond
- Some Economic Effects of US Import Restraints - Tim Taylor
- Disaggregating the Fall in China's Current Account Surplus - Brad Setser
- More From Your Horseshoe Crab Blood Economics Leader - Tim Taylor
- Beauty contests and the term structure - VoxEU
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 Nafta’s looming deadlines, economic forecasts for the next recession, more tit-for-tat in the U.S.-China trade fight, U.S. efforts to cut Iran off from the global economy, the crab economy, and the insidious effect of inflation on American wages. NAFTA DEADLINE LOOMS The U.S., Canada and Mexico are focusing on rewriting the auto rules at the center of the North American Free Trade Agreement as negotiators face hard deadlines to wrap up a new deal. That could mean less drastic changes to other controversial parts of Nafta, Siobhan Hughes and William Mauldin report. House Speaker Paul Ryan said he needs paperwork related to a Nafta deal by Thursday (May 17) to have time to consider it in the House this year. One Continue reading "Real Time Economics: Nafta’s Deadline | The Next Recession | American Goods Held Up at Chinese Ports"
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 a possible way out of the U.S.-China trade fight, how businesses are getting squeezed by rising wholesale prices, California’s decision to make housing more expensive, and the ascendance of euroskeptics in Italy. BUY AMERICAN China likely will offer to import more U.S. goods as the two sides look to avert an all-out trade war. China is dispatching its chief economic envoy, Liu He, to Washington in the days ahead, Lingling Wei and Bob Davis report. Mr. Liu is expected to come with a shopping list of sorts, specific ideas for purchases designed to narrow the two country’s vast trade imbalance. Such a move is viewed as one of the best ways to ease tensions that already have affected trade flows and business deals. CALL Continue reading "Real Time Economics: China’s Shopping List | Rising Costs Squeeze Businesses | California Insists On Solar"
- Gnawing Away at Health Care - Paul Krugman
- May 1968 and inequality - Thomas Piketty
- The paradox of markups - Growth Economics
- Tax evasion and inequality - VoxEU
- The yield curve and the stock market - VoxEU
- Explaining Germany’s exceptional recovery: A new eBook - VoxEU
- Forecasts of the Lost Recovery - Liberty Street Economics
- TReagan's Policies: Supply-Side Miracle or Keynesian Stimulus? - Econbrowser
- Globalisation, government popularity, and the Great Skill Divide - VoxEU
- Economic policies for tectonic change - FT
Labor unions could lose hundreds of thousands of members if the Supreme Court determines this spring that public employees cannot be required to pay union dues, a new study finds. The court is expected to issue a ruling on the case involving Illinois state worker Mark Janus and the American Federation of State, County and Municipal Employees union in the coming weeks. If the court rules against the union—the expected outcome now that Justice Neil Gorsuch has joined the court—government workers would have less incentive to join or fund unions that negotiate on their behalf. Such an outcome would result in an eventual loss of 726,000 union members, according to a study released Wednesday by the Illinois Economic Policy Institute and Robert Bruno, a labor and employment relations professor at the University of Illinois. The loss represents an 15.3% decline in union membership among state and local government Continue reading "How a Supreme Court Decision This Spring Could Cut Union Rolls by 726,000"
This is the web version of the WSJ’s daily economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at a rather misshapen Phillips curve, a record number of U.S. job openings, the Trump administration’s decision to leave the Iran nuclear accord, a big mess in Argentina that the Fed (unintentionally) helped create, and the 3.3 million workers who said “I quit” in March. INFLATION PRESSURES BUILDING? The question isn’t whether inflation is rising, but why isn’t it rising more? Producer prices, which rose 3% in the year through March, are expected to rise by less in April; the index is out at 8:30 a.m. ET Wednesday. Thursday’s consumer price index is expected to rise 2.5% from a year earlier, 2.2% excluding food and energy, both the highest in more than a year. Yet overall, cost pressures are remarkably subdued. Unemployment Continue reading "Real Time Economics: Any Sign of Inflation? | Oil Prices Rise as U.S. Drops Iran Deal | Americans to Employers: I Quit"
There was essentially one job opening for every unemployed person in America in March–making this spring an excellent time to look for a job, especially in the service sector. The number of unfilled jobs U.S. employers had at the end of March rose to a record high of 6.55 million, the Labor Department said Tuesday. There were just 6.59 million unemployed Americans that month, creating the narrowest gap between available jobs and those actively seeking work in nearly two decades of record keeping. “If you’re employed and looking for a new opportunity, it’s a great time to look,” said Paul McDonald, senior executive director at staffing agency Robert Half. “If you’re unemployed, and you have skills that are current, this data bodes very well for your job search.” The number of job openings increased by nearly 1 million from a year earlier in March. Meanwhile, the Continue reading "Why It’s a Good Time to Look for a Job"
This is the web version of the WSJ’s daily economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at Fed Chairman Jerome Powell’s defense of stimulus policies, oil and aluminum’s wild ride, U.S.-China trade friction, signs Germany’s economy is back on track, and why older Americans are defying trends and working longer. FED TO EMERGING MARKETS: DON’T BLAME US Emerging economies from Argentina to Indonesia are struggling as rising U.S. interest rates and a strengthening dollar prompt investors to pull money out the world’s riskier markets. Federal Reserve Chairman Jerome Powell’s response: Don’t blame me. Mr. Powell pushed back on complaints that the Fed’s efforts to spur U.S. economic growth over the past decade were responsible for a surge of capital into emerging markets, and that Fed moves to remove stimulus would spark upheaval, Nick Timiraos reports. “While global factors play Continue reading "Real Time Economics: The Fed’s Emerging-Market Fallout | Oil and Politics Don’t Mix | Why Are Americans Working Longer?"
- Unnatural Economics (Wonkish) - Paul Krugman
- The Destruction of the Republican Party - J. Bradford DeLong
- A very simple model of too much city - Nick Rowe
- How Futures Trading Changed Bitcoin Prices - FRBSF
- Banking the Masses: 2018 Edition - Cecchetti & Schoenholtz
- Corporate Profit Margins at Risk From Rising Input Prices - Tim Duy
- It’s not just monopoly and monopsony - EPI
- Making (some) sense of cryptocurrencies - VoxEU
- State of the union - gender equality - Women in Economics at Berkeley
- The threat of secular stagnation has not gone away - Larry Summers
- CA’s Crude Oil Production and its Climate Change Policies - Robert Stavins
- How to spot fraudulent economic arguments - mainly macro
- How to represent the interests of future generations now - VoxEU
- Black Unemployment Is at an All-Time Low, But ... - Bloomberg
- What the boss wants to hear ... - Understanding Society
- After the Next Continue reading "Links"
Martin Baily, President Bill Clinton’s top economic adviser the last time the unemployment rate was below 4%, said he sees a lot of similarities between the economy then and now. But he’s more worried about the differences–specifically expanding federal budget deficits and an aging population. Mr. Baily was chairman of the Council of Economic Advisers from August 1999 until January 2001, just before the brief recession that began that March. He is currently a senior fellow in economic studies at the Brookings Institution. Here is a lightly edited conversation with Mr. Baily following the April jobs report. Q: How does today’s economy look similar to the economy in early 2000, when unemployment dipped below 4% for the first time since 1970? A: There are similarities between what we had then and what we have now: Low unemployment, a very strong labor market and relatively modest inflation. Those things were Continue reading "Q&A: Bill Clinton’s Economist Sees Similarities to 2000, But Worries About Differences"
Texas wrapped up 2017 with the fastest-growing economy in the U.S., propelled by a swift resurgence in oil extraction that lifted business across the state. The Lone Star economy grew at a 5.2% seasonally adjusted annual rate in the fourth quarter, with the mining industry the leading factor behind output gains, according to the Commerce Department. The sector helped buoy the state’s economic output over the year, after the state had weathered several quarters of weak growth and even contractions. The economic recovery in Texas sheds light on how strong oil production in the Permian Basin is closely linked with other sectors, namely manufacturing, and fuels overall growth in the state and across the nation. “It’s actually Texas that’s driving much of the national numbers on manufacturing,” said Rob Martin, U.S. economist at UBS. “In part, with the further rise in oil prices, we’re seeing other energy fields coming online. Continue reading "How Texas, Once an Economic Drag, Became the Nation’s Fastest-Growing Economy"
This is the web version of the WSJ’s daily economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at rising oil prices, low unemployment and inflation, a kind of Nafta minimum wage, robots milking cows, trouble in emerging markets, and the declining number of Americans who aren’t in the labor force but want a job. OIL CLIMBS Oil futures hit new 3 1/2-year highs Monday, with the U.S. benchmark hovering around $70 a barrel. Fundamentals (including strong global demand, OPEC supply reductions and Venezuela outages) have been pushing prices up but the latest bump is largely due to uncertainty: Will President Donald Trump renew waivers of U.S. sanctions on Iran? If they expire Saturday, markets worry Iran’s output would fall, Biman Mukherji reports. West Texas Intermediate, the U.S. benchmark, entered Monday’s trading having gained in 15 of the past 20 trading days. Brent Continue reading "Real Time Economics: Oil Hits New Highs | The Economy’s Goldilocks Moment | Is Anyone Still Looking for a Job?"
From the NBER Digest. "Two studies suggest that an increase in employers' monopsony power is associated with lower wages.":
Employer Concentration and Stagnant Wages: Stagnant wages and a declining share of labor income in GDP in recent decades have spawned a number of explanations. These include outsourcing, foreign competition, automation, and the decline of unions. Two new studies focus on another factor that may have affected the relative bargaining position of workers and firms: employer domination of local job markets. One shows that wage growth slowed as industrial consolidation increased over the past 40 years; the other shows that in many job markets across the country there is little competition for workers in specific job categories.
In Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages? (NBER Working Paper No. 24307), Efraim Benmelech, Nittai Bergman, and Hyunseob Kim analyzed county-level census data forContinue reading "Employer Concentration and Stagnant Wages"
- Free markets require robust social insurance. - The Washington Post
- "The Very Structure of Capitalism Is Inherently Monopolistic" - ProMarket
- Is the Great Recession Still Holding Down Wages? (Wonkish) - Paul Krugman
- Unemployment Falls to 3.9 percent, Wage Growth Remains Weak - Dean Baker
- Apple and the Fruits of Tax Cuts - Paul Krugman
- Progress in economics - Stumbling and Mumbling
- Hamilton on Econometrics, Energy, and Low Interest Rates - David Beckworth
- Rising Bilateral Deficit with China, Negotiations Over China 2025 - Brad Setser
- Spring 2018 Journal of Economic Perspectives is Online - Tim Taylor
- Donald Trump’s Normal Fed - Kenneth Rogoff
- The influence of Karl Marx—a counterfactual - globalinequality
- Don’t go spare over excess capacity in manufactures - VoxEU
- Financial globalisation, bank lending and the limits of monetary policy - VoxEU
- Politicians Don’t Need New Ideas - Paul Krugman
- Why was economics so insular? - mainly macro
- The Continue reading "Links"
The U.S. unemployment rate fell to 3.9% in April, hitting the lowest level since December 2000, as employers picked up the pace of hiring by adding 164,000 jobs. Wider measures of unemployment also declined last month, including the broadest rate of underemployment that includes those so discouraged that they have stopped looking for work and part-time workers who want full-time work. That broad rate reached the lowest level since 2001. Wage growth slowed from last month, both weekly and hourly. Because inflation has also been picking up, real wage growth is close to disappearing. The pace at which the economy has been adding jobs, though slower than in 2015, has accelerated somewhat this year. The share of Americans in the labor market declined slightly last month, as did the share of Americans with jobs. Even among workers ages 25 to 54, participation in the labor market fell slightly last Continue reading "The April Jobs Report in 12 Charts"
This is the web version of the WSJ’s daily economic newsletter. You can sign up for daily delivery here. In today’s issue, U.S. issues China sweeping China demands, Europe has a Trump problem, April jobs data is released, Mexico’s trade surplus, and tax cuts power profits. US DEMANDS CHINA CUT TRADE DEFICIT BY $200 BILLION U.S. officials handed their Chinese counterparts a list of sweeping demands in Beijing today, including cutting the bilateral trade deficit, which was $375 billion last year, by $200 billion by 2020, Lingling Wei reports. The U.S. also demanded China slash its tariffs to U.S. levels, stop subsidizing key industries in its Made In China 2025 plan, drop most barriers to foreign investment, and refrain from retaliating against U.S. protectionist actions. The list amounts to a request to substantially alter the way China manages its economy and Chinese officials considered it “unfair,” according to Continue reading "Real Time Economics: U.S.’ China Trade Demands | Europe’s Trump Problem | Jobs Day"
The Labor Department releases its monthly snapshot of the nation’s labor market Friday. Economists surveyed by The Wall Street Journal expect it to show employers created 195,000 jobs in April and that the unemployment rate fell to 4% for the first time since December 2000. Here are five things to look for in the report. 1. Low unemployment. The jobless rate has been stuck at 4.1% since October, a 17-year low. That’s below the range of 4.3% to 4.7% that the Federal Reserve thinks will be the economy’s long-run average. The Fed forecasts unemployment will fall a bit further—to 3.8% by year end—as employers continue to hire and the pool of available workers dwindles. 2. Job growth. Hiring slowed in March: The 103,000 jobs added were the fewest of any month since September and among the weakest in recent years. That may have been a temporary setback. Indeed, hiring Continue reading "5 Things to Watch in the April Jobs Report"