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 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"

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 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?"

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 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?"

Real Time Economics: Americans Are Working Less and Watching TV More

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"

Real Time Economics: The Fed Raises Rates, the White House Eyes More Tariffs on China

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 next salvo in the Trump administration’s global trade offensive, the Fed’s decision to raise interest rates, and the rather poor economics of the World Cup. TRUMP WEIGHS MORE TARIFFS ON CHINA The Trump administration is preparing to levy tariffs on tens of billions of dollars of Chinese goods. The move may come as soon as Friday and will likely spark heavy retaliation from Beijing. President Donald Trump hasn’t given his final approval and could have second thoughts, Bob Davis and Lingling Wei report. The U.S. wants Beijing’s cooperation on North Korea. But China has done nothing to do address concerns about its trading practices since initial warnings of $50 billion in tariffs. Reminder: Each round of tariffs by itself is fairly minor in the grand Continue reading "Real Time Economics: The Fed Raises Rates, the White House Eyes More Tariffs on China"

Real Time Economics: The Fed Is Expected to Raise Rates Wednesday. Then What?

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 Fed’s latest challenge—how to stop the economy from overheating—the price of trade tensions, mismeasurement of the gig economy (maybe), and the skyrocketing cost of washing machines. COOL IT Federal Reserve officials are almost certain to raise the central bank’s benchmark interest rate Wednesday. The big question: How many more will follow this year and next? The economy is growing at the strongest pace in four years (tracking estimates put second-quarter GDP above 4%), the unemployment rate is down to levels rarely seen in the past half century, and the latest inflation data shows the Fed’s 2% goal is in reach. Higher rates seem pretty certain, right? “We expect rising interest rates to cause economic growth to slow sharply next year, especially as the boost from fiscal stimulus fades. Continue reading "Real Time Economics: The Fed Is Expected to Raise Rates Wednesday. Then What?"

Real Time Economics: Is the Labor Market Too Hot? Inflation Too Cold? Will the Fed Get it Just Right?

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 Fed’s path through low unemployment and firming inflation, the reemergence of political risk, President Trump’s snub of old friends, and a Republican move to undo the White House’s deal with China’s ZTE. TOO MUCH OF A GOOD THING? The Federal Reserve’s dual mandate is maximum employment and stable prices. Let’s take those one at a time, starting with an unemployment rate at 3.8%. The U.S. has seen such lows only twice in the past half-century, for a few years in the late 1960s and one month in 2000, WSJ Fed watcher Nick Timiraos writes. The former preceded years of soaring inflation that took a decade for policy makers to wrestle to the ground. The latter coincided with the tech bubble, followed by the 2001 recession. The big question: Continue reading "Real Time Economics: Is the Labor Market Too Hot? Inflation Too Cold? Will the Fed Get it Just Right?"

Real Time Economics: Friends, Neighbors Prepare to Strike Back at U.S. Tariffs

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 mounting economic cost of U.S. tariffs, the steady-as-she-goes U.S. economy, and why now is one of the best times to be a high-school dropout. U.S. IMPOSES TARIFFS, ALLIES RETALIATE The Trump administration’s tariffs on steel and aluminum prompted swift pledges of retaliation and raised the prospect of a global trade war. Canada, Mexico and the European Union are all planning to hit back against U.S.-made metals, farm products and other goods. Stocks tumbled after the tariff announcement, though the immediate economic impact will be muted. Things start to add up when you pile on tariffs aimed at China ($50 billion related to intellectual property abuses and another $100 billion in penalties on the way). Barclays’s Tomasz Wieladek estimates the steel tariffs and retaliation Continue reading "Real Time Economics: Friends, Neighbors Prepare to Strike Back at U.S. Tariffs"

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: 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"

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 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"

Real Time Economics: China’s Shopping List | Rising Costs Squeeze Businesses | California Insists On Solar

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"

Real Time Economics: Any Sign of Inflation? | Oil Prices Rise as U.S. Drops Iran Deal | Americans to Employers: I Quit

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"

Real Time Economics: The Fed | Chinese Trade Politics | Jobs Guarantee

In today’s issue, the Federal Reserve isn’t afraid of inflation, Chinese trade politics are more complicated than Americans think, New York’s new tax loophole finds few takers, and the pros and cons of a federal jobs guarantee. FED: WE’RE NOT SWEATING INFLATION, NEITHER SHOULD YOU Inflation is rising, but the Federal Reserve isn’t bothered. It left its interest rate target at 1.5% to 1.75% Wednesday, though still on course to raise it in June.  In their statement Fed officials noted inflation has finally risen to their target without belaboring the fact. They expect it to run near their “symmetric 2% objective over the medium term.” The word “symmetric” led some to speculate the Fed wants inflation to overshoot its target to compensate for undershooting for so long. Not so, says WSJ Fed reporter Nick Timiraos. Rather, it means they won’t overreact if it goes a bit over 2% (as seems Continue reading "Real Time Economics: The Fed | Chinese Trade Politics | Jobs Guarantee"

Real Time Economics: Is Inflation Peaking? | Tariff Reprieve | Italian Uncertainty

This is the web version of the WSJ’s daily economic newsletter. You can sign up for daily delivery here. Good morning. In today’s issue, inflation hits the Fed’s 2% target, President Donald Trump gives trading partners another month’s reprieve from steel and aluminum tariffs, small towns lure workers with cash, and Italian politicians give up trying to form a government. INFLATION HITS THE TARGET … It finally happened: inflation hit the Fed’s 2% target in March for the first time since 2012, except for a brief spike early last year. Excluding food and energy, core inflation, using the Fed’s preferred index, climbed to 1.9%. Core inflation last reached that level in  summer of 2016 only to sink back. That seems less likely now: many economists see it topping 2% in coming months. At a two day meeting starting today Fed officials will discuss whether they can stick to just two rate hikes penciled Continue reading "Real Time Economics: Is Inflation Peaking? | Tariff Reprieve | Italian Uncertainty"