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 worker pay amid slowing inflation, the biggest risk to the economy, another sign of a Chinese slowdown, misleading jobless claims, the fast-growing U.S. budget deficit, and Ben Bernanke‘s reflection on the financial crisis. INFLATION TAKES A BREATHER Inflation has been eating away at worker paychecks, so August’s consumer-price index was a welcome reprieve. The CPI, which gauges what Americans pay for everything from rent to razorblades, was up 2.7% from a year earlier, a slowdown from the prior two months. Core inflation, which excludes food and energy, rose 2.2%, slightly slower than in July, Eric Morath reports. Worker pay gains, by contrast, are accelerating. Adjusted for inflation, hourly earnings rose 0.2% from a year earlier. While modest, that’s an improvement from Continue reading "Real Time Economics: Inflation Eases Up | China’s Economy Stumbles | Budget Deficit Balloons"
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 the latest trade rumblings, rising wages and signs of inflation, and the Federal Reserve’s efforts to get ahead of the next crisis. MADE IN THE U.S.A. OR ELSE. President Trump threatened tariffs on pretty much all Chinese exports to the U.S., China’s trade surplus with the U.S. hit another record, and the president told Apple to start making its products in the U.S. to avoid potential levies on Chinese-made goods. Phew. It’s going to be another eventful week. Quick recap: the U.S. has already imposed 25% tariffs on $50 billion in Chinese goods, another $200 billion is teed up, and Mr. Trump Friday said tariffs on yet another $267 billion in tariffs are ready to go and could Continue reading "Real Time Economics: Trade, Tariffs, Apple and Inflation. It’s Going To Be Another Busy Week"
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 what Turkey’s economic crisis means for other markets, a pivot on U.S. trade policy toward poorer nations, how homeowners are dodging one big source of inflation, and whether we’re running out of construction workers. RECORD LOWS FOR LIRA The Turkish lira hit fresh record lows on Monday, rattling emerging markets around the world. The South African rand fell to a nearly two-year low against the dollar while the Chinese yuan neared its weakest level in more than a year. That’s driving up the cost of servicing dollar-denominated debt in emerging markets at a time when investors were already skittish. Turkey’s central bank pledged to provide “all the liquidity the banks need.” Markets shrugged. And Federal Reserve policy also matters: Rising U.S. interest Continue reading "Real Time Economics: Turkish Lira’s Collapse Ripples Through Financial Markets"
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 a wild ride for currency markets, the economic outlook for the U.S., U.K. and Japan, and one high-class problem for a resurgent manufacturing sector—American factories are running short of parts. CURRENCY CRASH The dollar rose to its strongest point in more than a year while Turkey’s lira, Russia’s ruble and other currencies tumbled. Turkey: The lira has lost more than 20% over the week as international markets soured on the country’s capacity to repay its foreign-currency debts. Concerns about the health of Turkey’s financial system are rippling through global markets, Mike Bird writes. Russia: U.S. sanctions roiled Russia’s currency and blue-chip stocks. Since 2014, Western sanctions have taken a severe toll on Russia’s economy, wiping out half of the ruble’s value, Continue reading "Real Time Economics: Dollar Strengthens as Turkey’s Troubles Rattle Currency Markets"
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 what’s moving inflation, Alcoa bid to let more aluminum into the U.S., supply and demand in food and energy markets, the latest on the dollar’s ascent, and how owning a TV may not be the best thing for your sex life. INFLATION WATCH Inflation is back in the spotlight this week with release of July producer and consumer prices. Everyone wants to know how tariffs are affecting costs for business and consumers. But you know what may be an even bigger deal (for now)? The Supreme Court decision authorizing states to make online retailers collect sales tax. The government estimates the decision will generate $8 billion to $13 billion in additional taxes. Morgan Stanley economists figure that will feed into the Federal Reserve’s preferred Continue reading "Real Time Economics: How the Supreme Court Affects Inflation; the Latest On Tariffs and the Dollar"
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 strong profits and rising prices, a Canadian boycott and other fallout from trade tensions, and the booming U.S. labor market. PROFITS, PRICES AND INFLATION America’s biggest companies are reporting some of the strongest earnings growth since the recession, boosted by lowered tax rates and a robust U.S. economy that is fueling demand. Profits at S&P 500 companies jumped an estimated 23.5% in the three months through June, Thomas Gryta reports. What could go wrong? Investor are wary of rising interest rates, trade tension and increasing costs for labor and supplies. Companies ranging from Kraft Heinz to Winnebago Industries are trying to push through price increases, which will help determine how the rest of the year shakes out. Inflation watch: Continue reading "Real Time Economics: U.S. Companies Look for Higher Prices to Offset Rising Costs"
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 190,000 jobs in July and that the unemployment rate fell to 3.9% from 4.0% a month earlier. Here are five things to look for in the report. 1. Lower jobless rate Watch for the unemployment rate to tick down after a jump to 4.0% in June. Jobless claims, a proxy for layoffs, have remained at historically low levels, supportive of strong labor market conditions. Further, concerns that tariffs will cause companies to hold back hiring have yet to materialize in a widespread way. The question is, how low can unemployment fall without sparking overheating? 2. Hiring hits sweet spot Through the first half of the year, employers added an average of 215,000 a jobs a month, an unexpected acceleration from last year’s first-half Continue reading "5 Things to Watch in the July Jobs Report"
Inflation Is Coming Thanks to Trump’s Tariffs Levies on steel and aluminum have yet to filter through to prices. But they will. Bloomberg, July 26, 2018 Did the global economy dodge an economic bullet yesterday? The U.S. and the European Union agreed to step back from the brink of imposing mutually… Read More The post Get Ready for Tariff-Based Inflation appeared first on The Big Picture.
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 Trump administration deliberations on tariffs, how the U.S. economy is growing while others are slowing, signs of stronger wages and rising inflation, and what to expect when the Federal Reserve’s policy meeting concludes today. LET’S TALK Some White House advisers are pushing President Donald Trump to apply tariffs as high as 25% on $200 billion of Chinese goods, up from an original proposal for 10%. The hope is that the harsher measures would bring Chinese negotiators to the table. The White House won’t make a final decision until at least late August, Bob Davis and Lingling Wei report. Meanwhile, the administration is split internally on the best way forward. Hawks and doves: U.S. Trade Representative Robert Lighthizer pushing for more tariffs. Treasury Secretary Steven Mnuchin Continue reading "Real Time Economics: Trump Advisers Push for Higher Tariffs on China"
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 how companies are trying to expand the pool of potential workers, more fallout from tariffs, China’s shrinking trade deficit, and the economy’s strength and sustainability. NO EXPERIENCE? NO DEGREE? NO PROBLEM! Employers are slowly abandoning preferences for college degrees and specific skill sets to speed up hiring and broaden the pool of job candidates. Only 23% of entry-level jobs now ask applicants for three or more years of experience, compared with 29% back in 2012, putting an additional 1.2 million jobs in closer reach of more applicants, Kelsey Gee reports. What’s happening? Many companies added requirements to job postings after the recession, when millions were out of work and human-resources departments were stacked with résumés. Now, the tightest job market in decades has Continue reading "Real Time Economics: The Labor Market Is Tight, the Economy Is Strong, and Companies Are Raising Prices"
Good overview of where we are: click for ginormous graphic Source: Torsten Sløk, Ph.D., Deutsche Bank Securities See also: Inflation Is Coming Thanks to Trump’s Tariffs The post Global Growth: Robust, but Downside Risks Increasing appeared first on The Big Picture.
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 U.S. economic growth, inflation expectations, Trump’s tactical shift on trade, slower growth in China and France, and how investors unfriended Facebook. TRUMP PREVIEWS GDP Hoping for a sneak peek of Friday morning’s GDP numbers? President Donald Trump outlined his expectations for the economic growth report: “Somebody actually predicted today, 5.3. I don’t think that’s going to happen; 5.3. If it has a 4 in front of it, we’re happy. If it has like a 3, but it’s a 3.8, 3.9, 3.7 we’re OK.” So, high 3s or low 4s? We’ll know for sure when the Commerce Department publicly releases its first official estimate of second-quarter gross domestic product at 8:30 a.m. ET. The president is privy to the report Continue reading "Real Time Economics: Did Trump Give Us a Hint on GDP? ‘If It Has a 4 In Front of It, We’re Happy’"
Inflation Is Coming Thanks to Trump’s Tariffs Levies on steel and aluminum have yet to filter through to prices. But they will. Bloomberg, July 26, 2018 Did the global economy dodge an economic bullet yesterday? I doubt it. The plan to make a plan in the future does not give me much confidence… Read More The post Bloomberg: Inflation Is Coming Thanks to Trump’s Tariffs appeared first on The Big Picture.
Steel prices are up 40% this year since tariffs were introduced: Source: Torsten Sløk, Deutsche Bank Securities More on this later today . . . When prices of imported steel and aluminum increase it will hurt states that are big importers of steel and aluminum, see chart below Source: Torsten Sløk, Deutsche Bank Securities The post The Impact of Steel & Aluminum Tariffs on Inflation appeared first on The Big Picture.
Where’s Your Raise? It Should Be Coming Pressures for bigger pay increases are building, but have yet to show up in the data. Bloomberg, July 11, 2018 During the past few years, I have written that I expected wages would begin to rise. They have, at least on a nominal basis, or… Read More The post When Will Wage Growth Begin in Earnest ? appeared first on The Big Picture.
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 inflation and stagnating blue-collar wages, how trade skirmishes are rippling through the economy, Trump’s Brexit warning, and expectations that the U.S. unemployment rate will fall to the lowest level since 1969. THE PRICE IS RIGHT U. S. inflation hit its highest rate in more than six years, with rising consumer prices eating away at modest wage gains for American workers. Prices rose 2.9% in June from a year earlier, the fastest pace since February 2012, Paul Kiernan reports. For a second month in a row, annual inflation fully offset average hourly wage growth over the previous year. Production and nonsupervisory employees, a category which includes blue-collar workers, saw their real average hourly wages fall 0.2% in June from a year earlier Continue reading "Real Time Economics: Inflation Is Gobbling Up Worker Wages"
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 inflation pressures, economic fallout from U.S. trade policy, and Chinese telecoms giant ZTE getting back into business. INFLATION WATCH Inflation is back in the spotlight. Are we in for some surprises? First, let’s look at pipeline prices. The producer-price index, a gauge of what businesses are paying, jumped 3.4% from a year earlier in June. That’s the strongest gain since late 2011, when oil was going for more than $100 a barrel. Rising prices for transportation and warehousing services helped push overall costs higher, Sarah Chaney and Sharon Nunn report. Trucking freight prices, for example, saw the largest monthly increase on record, partly because of higher fuel and labor expenses. Companies can’t always pass on costs, so rising producer prices don’t necessarily Continue reading "Real Time Economics: Inflation Is Perking Up. Will Tariffs Push Consumer Prices Even Higher?"
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 the U.S. economic expansion on its ninth birthday, a subtle Trump warning for the Fed, the automotive industry as collateral damage in the U.S. trade fight, Mexico’s presidential election, and all the signs that inflation really, finally—maybe—is here to stay. HAPPY BIRTHDAY! The U.S. economic expansion turns nine this week on a high note, with second-quarter activity looking particularly strong. Another 12 months, and the economy will enter the longest stretch of growth in the country’s history. “This has understandably raised concerns that the clock is running down on the expansion and the next recession is around the corner,” J.P. Morgan Michael Feroli and Ben Jarman write in a research note. Indeed, economists polled by the WSJ have a rough consensus that the Continue reading "Real Time Economics: The U.S. Economic Expansion Enters Its 10th Year…How Much Longer Does It Have?"
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 how Americans are spending their time, death by overwork in Japan, firming but still fairly subdued inflation, Europe’s economic clout, and China’s dawning realization that it still doesn’t match U.S. technical prowess. TAKE IT EASY Americans worked less and played more last year. The average amount of time spent daily on relaxation and leisure jumped seven minutes, to three hours and 58 minutes. It’s not that the country is getting lazier. It’s getting older. The elderly—people 65 years or older—are growing as a share of the population and they just don’t work as much. People in their prime working years, however, spent more hours per day on the job than in any year since 2007, Paul Kiernan reports. For those who are relaxing, the most Continue reading "Real Time Economics: Americans Are Working Less and Watching TV More"
Why to Keep Your Inflation Anxiety in Check Yes, prices are rising faster, but all signs suggest it won’t amount to much. Bloomberg, June 18, 2018 For those feeling the vague pangs of inflation anxiety — nothing special, just the plain-old-run-of-the-mill cost of living price increases — this one is for you. This… Read More The post Inflation Is Not a Problem (Yet) appeared first on The Big Picture.