Real Time Economics: Markets Rally, Housing Thaws, U.S. and China Set Date for Talks


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

The Federal Reserve is getting some of the credit for a booming stock market, builders are finally making cheaper homes, and China is finding ways to skirt a U.S. tech clampdown. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

IS THIS WHAT THE FED WANTED?

The S&P 500 and Nasdaq Composite had their highest closings on record Tuesday, regaining ground lost in last year’s rout. Stocks have flourished under a more accommodative Federal Reserve. The central bank said in January it would hold interest rates steady, setting in motion the stock market’s strongest first-quarter run in more than two decades, as investors dialed back up their appetite for riskier assets Continue reading “Real Time Economics: Markets Rally, Housing Thaws, U.S. and China Set Date for Talks”

Real Time Economics: Housing Sputters, Social Security to Tap Trust Fund, Oil Prices Surge


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

The housing market isn’t heating up for spring, Social Security costs are poised to exceed income, oil prices are rising and coffee prices falling. Good morning. Jeff Sparshott here to take you through key developments in the global economy.

WHAT’S WRONG WITH THE HOUSING MARKET?

Sales of previously owned U.S. homes sputtered in March despite lower mortgage rates and a strong job market. U.S. existing-home sales dropped 5.4% from a year ago, marking 13 straight months of annual declines, Laura Kusisto reports.

The housing market has been beset by a host of challenges: Home prices have risen faster than wages for years, mortgage rates had been climbing and inventory falling. All those trends moderated or reversed in recent months, raising hopes that buyers would return to Continue reading “Real Time Economics: Housing Sputters, Social Security to Tap Trust Fund, Oil Prices Surge”

Real Time Economics: The Resilient American Economy


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s Monday, April 22, newsletter on the economy. Due to technical issues, online publication was delayed. You can sign up for daily delivery here.

The U.S. economy is looking surprisingly solid, Fed officials are wondering when they might cut rates, and commercial tension is likely to outlast any U.S.-China trade deal. Happy Dyngus Day! Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

DON’T CALL IT A COMEBACK

The U.S. economy’s narrative has changed. First-quarter gross domestic product was looking downright putrid a couple months ago. The government shutdown, consumer caution, bad weather, the fading effects of fiscal stimulus, higher interest rates and slowing growth abroad seemed ready to push the first-quarter pace of growth down to the lowest level in years. The Atlanta Continue reading “Real Time Economics: The Resilient American Economy”

Fed Policymakers Take Notice of Climate Change’s Implications for Economic Outlook


This post is by Michael S. Derby from Real Time Economics


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The Federal Reserve is starting to take notice of climate change and its implications for the U.S. economic outlook.

“In coming decades, climate change—and efforts to limit that change and adapt to it—will have increasingly important effects on the U.S. economy,” wrote Glenn D. Rudebusch, an economist and executive vice president at the San Francisco Fed, in research released late last month. “These effects and their associated risks are relevant considerations for the Federal Reserve in fulfilling its mandate for macroeconomic and financial stability.”

Mr. Rudebusch defined climate change as rising average global temperatures and the accompanying environmental changes, such as rising sea levels and more severe storms, floods, droughts, and heat waves.

Much of the central bank’s work on the topic is happening at the Fed’s regional banks, where academics have begun to tally the projected economic effects.

“The evidence is overwhelming” that the climate is Continue reading “Fed Policymakers Take Notice of Climate Change’s Implications for Economic Outlook”

Real Time Economics: Trump vs. Fed, World vs. Germany


This post is by Greg Ip from Real Time Economics


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In today’s issue, the European Central Bank worries about the Fed’s independence, Goldman Sachs gives Trump the pole position in 2020 and trade uncertainty hits growth. Good morning, this is Greg Ip taking you through the day’s economic news. Send us your questions, comments and suggestions by replying to this email.

THE WORLD IS WATCHING TRUMP VS. FED

President Trump’s criticism of the Federal Reserve isn’t just a domestic matter: The whole world is watching. “I’m certainly worried about central bank independence in other countries, especially” in the U.S., said European Central Bank President Mario Draghi on Saturday. He said political attacks can lead the public to believe central banks are responding to political influence,  even when they are simply following their inflation mandate, Nick Timiraos reports. Paul Tucker, a former deputy governor at the Bank of England, said erosion of the Fed’s credibility could weaken the dollar’s

Continue reading “Real Time Economics: Trump vs. Fed, World vs. Germany”

Real Time Economics: High Times, Trade Truces and Fed Independence


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

American workers are smoking more marijuana, the European Union and Japan are trying to keep the peace with President Trump, and Fed officials at least sound like they’re trying to ignore political pressure. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

BECAUSE I GOT HIGH

The share of American workers and job applicants who tested positive for marijuana climbed 10% last year, according to an analysis by Quest Diagnostics, one of the nation’s largest drug-testing laboratories. Quest found 2.3% of the analyzed samples contained traces of marijuana and 4.4% contained traces of both legal and illegal controlled substances including pot, prescription painkillers and other drugs—the highest such rate since 2004. Since Continue reading “Real Time Economics: High Times, Trade Truces and Fed Independence”

Real Time Economics: The Middle Class Is Shrinking


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

A new study links economic stagnation and political instability, the U.S. Treasury secretary sees a breakthrough in trade talks and the Fed doesn’t expect to change its benchmark interest rate this year. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

FALLING BEHIND…

The middle class is shrinking and its economic power diminishing in the U.S. and other rich countries. A report by the Organization for Economic Cooperation and Development said the loss of middle-class economic power has been driven by “dismal” income growth and rapidly rising costs for many of the goods and services that are key to middle-class lifestyles, especially housing, Paul Hannon reports.

The threat: Middle-income Continue reading “Real Time Economics: The Middle Class Is Shrinking”

Real Time Economics: Is the Economy in a ‘Delicate Moment’ or a ‘Good Place?’


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

The IMF’s outlook dimmed, Boeing’s 737 sales dried up, and Brexit faces another pivotal day. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

‘DELICATE MOMENT’

The International Monetary Fund cut its forecasts for global economic growth. Nearly the entire world economy is stumbling amid trade tensions and tariff hikes between the U.S. and China, a decline in business confidence, tighter financial conditions, and higher policy uncertainty. “This is a delicate moment for the global economy,” said IMF Chief Economist Gita Gopinath.

The IMF’s latest economic forecasts cut the outlook for growth in 2019 to 3.3% from estimates of 3.5% in January and 3.7% in October. Economic growth appears Continue reading “Real Time Economics: Is the Economy in a ‘Delicate Moment’ or a ‘Good Place?’”

Real Time Economics: Will the Economy Get Another Fiscal Boost?


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Government spending is a big unknown for U.S. economic growth, the White House is sticking by its picks for the Fed, and more Brexit drama is on the way. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

THE GREAT UNKNOWN

One of the big unknowns for U.S. economic growth: federal spending. Lawmakers agreed to cap spending in 2011 as part of a bruising fight over raising the debt limit. Since, they’ve struck three separate deals—the latest boosted funding nearly $300 billion above the caps. But if Congress doesn’t reach another deal by October, the spending limits known as the sequester would kick back in, reducing discretionary spending by $125 billion, Continue reading “Real Time Economics: Will the Economy Get Another Fiscal Boost?”

Real Time Economics: U.S. Hiring Rebounds


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

U.S. employers added 196,000 jobs and the unemployment rate held steady at 3.8% in March, a spring bump that’s welcome news for workers, investors and the Fed. Jeff Sparshott and Greg Ip here to take you through some of the numbers and what they say about the broader economy.

SLOWDOWN? WHAT SLOWDOWN?

Three months ago, markets were concerned the Federal Reserve may have tipped the U.S. into recession. This morning’s jobs report suggests the panic was for naught. March payroll growth bounced back to a healthy 196,000 from a shutdown- and weather-distorted 33,000 in February. For the first quarter, jobs grew at 1.7% annual rate, the same as in the fourth. Unemployment ended the quarter at 3.8%, down slightly from December. Private hours worked is a Continue reading “Real Time Economics: U.S. Hiring Rebounds”

Real Time Economics: Packing the Fed, Pushing for a Trade Deal and Preparing for Jobs Day


This post is by Jeffrey Sparshott from Real Time Economics


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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 March employment report is out at 8:30 a.m. ET; Greg Ip and I will follow up with a special edition of our newsletter in time for your lunch-time reading. Good morning. Jeff Sparshott here to take you through the day’s top economic news. Send us your questions, comments and suggestions by replying to this email.

YES WE CAIN

President Trump plans to nominate former GOP presidential candidate Herman Cain to the Federal Reserve’s board of governors. The selection, following the president’s decision to nominate his former campaign adviser Stephen Moore, marks an effort to install two Fed critics and loyal Trump supporters on the central bank’s powerful seven-seat board. The picks underscore Mr. Trump’s growing unhappiness with Fed policy under Chairman Jerome Powell, Nick Timiraos and Continue reading “Real Time Economics: Packing the Fed, Pushing for a Trade Deal and Preparing for Jobs Day”

The Media Endlessly Talks About Interest Rates—Are They Even an Effective Economic Tool at This Point?


This post is by Yves Smith from naked capitalism


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Interest rates are a poor substitute for fiscal spending and as we’ve seen, over-reliance on monetary policy produces speculative booms and busts. More and more people recognize this formula isn’t working, but what will it take to change course?

Real Time Economics: Trump Blasts the Fed (Again, and Again); U.S. and China Talk Trade


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Tensions are running high between the White House and the Fed, U.S.-China trade talks pick up today, and the number of $100 bills in circulation is skyrocketing. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

NOT-SO-NEUTRAL INTEREST

President Trump is blaming the Federal Reserve for holding back the economy and stock market despite the central bank’s decision to do two things he wanted: halt rate increases and stop shrinking its asset portfolio. In the past week alone, the president blasted the Fed and Chairman Jerome Powell at three meetings with Republican senators, supporters and staffers, Nick Timiraos and Alex Leary report.

The critical drumbeat is complicating Mr. Powell’s job by Continue reading “Real Time Economics: Trump Blasts the Fed (Again, and Again); U.S. and China Talk Trade”

Real Time Economics: China’s Manufacturers Rebound, Europe’s Factories Sink


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

U.S. manufacturing data follows China and Europe this morning. We’ll also look at the jobs market, interest rates, budget deficits and the spring home-buying season. Good morning. Jeff Sparshott here to take you through the day’s economic news. Send us your questions, comments and suggestions by replying to this email.

GOING UP…

An official gauge of China’s manufacturing activity rose to a six-month high in March. Factories showed a pickup almost across the board, from new orders to production, according to the official purchasing managers index. And a separate, private gauge of factory activity out Monday rebounded to expansionary territory in March for the first time in four months, underscoring the turnaround.

The WSJ’s Nathaniel Taplin cautions: China’s economy may have improved modestly last month, but the jump in Continue reading “Real Time Economics: China’s Manufacturers Rebound, Europe’s Factories Sink”

Real Time Economics: Mortgage Rates Drop, Prospects for U.S.-China Deal Rise


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

THE 4% MORTGAGE IS BACK

Mortgage rates are dropping. Economists and lenders believe they’re getting low enough to help jump-start the housing market. The average rate on a 30-year fixed mortgage this week fell to its lowest since January 2018. Some lenders are advertising sub-4%. Just a few months ago, average rates were on the verge of hitting 5%, drying up refinancings and putting a damper on home price growth, Ben Eisen reports.

Thanks, Fed: Rates have been declining along with the yield on the benchmark 10-year Treasury note. The bond-market moves have been spurred by the Federal Reserve’s decision to pause its Continue reading “Real Time Economics: Mortgage Rates Drop, Prospects for U.S.-China Deal Rise”

Real Time Economics: The Economy May Look Worse Before It Looks Better


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

SLOW RIDE

The Commerce Department today releases revised fourth-quarter gross domestic product figures. Economists polled by the WSJ are expecting a significant downgrade—a 2.2% pace of growth instead of the initially reported 2.6%. Yes, that’s all so 2018. But it points to a slowing trend that appears set to continue into the first quarter of 2019. The trend, however, has been looking better lately as more hard data comes in. The Atlanta Fed’s GDPNow model initially was tracking a scant 0.3% pace of growth for the first quarter. That’s now up to 1.5%. Some economists expect a rebound in the Continue reading “Real Time Economics: The Economy May Look Worse Before It Looks Better”

Real Time Economics: Markets Are Betting Fed Will Cut Rates


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Good morning. Jeff Sparshott here to take you through the latest on interest rates, the housing market and corporate taxes. Send us your questions, comments and suggestions by replying to this email.

TOO SOON

Markets are starting to think the Federal Reserve will cut rates this year. Some Fed officials are saying it’s too soon to consider such a move. The latest development to spook investors: Yields on 10-year Treasury notes fell below yields on three-month Treasury bills last week for the first time since August 2007. A so-called inverted yield curve has preceded past recessions.

“I’d need to see an inversion of some magnitude and/or some duration, and right now we don’t have either,” Dallas Fed President Robert Kaplan tells the WSJ’s Nick Timiraos. An inversion that lasts “for three Continue reading “Real Time Economics: Markets Are Betting Fed Will Cut Rates”

Real Time Economics: The Accurate Economist, Diving Bond Yields and a More Politicized Fed


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

MEET THE WSJ SURVEY’S MOST ACCURATE ECONOMIC FORECASTER

Bernard Baumohl, chief global economist at The Economic Outlook Group, was the most accurate forecaster for 2018 in The Wall Street Journal’s monthly survey. How did he get top billing? Conventional models, such as those deployed by the Federal Reserve, don’t properly capture the way technological change has affected how Americans live and spend, he says. The Princeton, N.J.-based firm he founded in 2008 strives to insert “more of a human analysis.”

Forecast: Mr. Baumohl expects growth to slow in 2019, although he says there should be enough momentum in the economy Continue reading “Real Time Economics: The Accurate Economist, Diving Bond Yields and a More Politicized Fed”

Real Time Economics: Yes, the Economy Is Slowing


This post is by Jeffrey Sparshott from Real Time Economics


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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Brexit, GDP, yield curves, Fed speeches, trade talks… Buckle up, this week could get interesting. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.

DANGER ZONE

Let’s hope this week is better than last. Friday closed out with reports showing factory output in the eurozone fell in March at the fastest pace in six years and U.S. manufacturing activity slid to its lowest level in almost two years. The drumbeat of unsettling news drove the yield on 10-year Treasury notes below that of three-month bills for the first time since 2007. That situation, known as an “inverted” yield curve, has preceded every U.S. recession since 1975 and is viewed by many investors as Continue reading “Real Time Economics: Yes, the Economy Is Slowing”