Real Time Economics: Trade, Tariffs, Currencies and the Weaponization of International Finance

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 why Turkey isn’t like other emerging markets, how trade wars are morphing into financial wars, a downward spiral for virtual currencies, America’s love of debt, and whether U.S. workers are finally getting a little bit more productive.  CONTAINMENT The Turkish lira traded higher for the second straight day Wednesday. But Turkey’s currency crisis has led more broadly to fears of contagion in other emerging markets. What causes a panic? If other countries share the same economic weaknesses, if foreign lenders are badly exposed, or if the same external shock hits several nations at once, Mike Bird writes. Turkey might be unique: the country has high inflation, massive external debts and its increasingly autocratic leadership holds unorthodox economic views. President Recep Tayyip Erdogan appointed Continue reading "Real Time Economics: Trade, Tariffs, Currencies and the Weaponization of International Finance"

Real Time Economics: China’s Economy Slows, India’s Rupee Dives and Germany’s GDP Accelerates

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 slower growth in China, more fallout from Turkey’s economic crisis, Germany pulling away from the rest of Europe, and which U.S. manufacturers are driving the sector’s resurgence. SIGNS OF SLOWER GROWTH IN CHINA China’s economy is cooling. Spending on factory machinery, public-works projects and other fixed-asset investments in China’s nonrural areas grew at the slowest pace in nearly two decades. Retail sales also slowed and unemployment ticked up, Liyan Qi, Grace Zhu and Dominique Fong report. The economy is still expanding. But the data suggest further escalation in trade tensions with the U.S. come at a particularly bad time for China. The slowdown in fixed-asset investment reflects Beijing’s campaign to curb risky borrowing by local governments and companies. A government spokesperson said infrastructure investment Continue reading "Real Time Economics: China’s Economy Slows, India’s Rupee Dives and Germany’s GDP Accelerates"

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 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"

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 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"

Real Time Economics: China’s Getting Ready for a Long, Bruising Trade Fight

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 China’s preparations for a knock-down, drag-out trade fight, a warning on the U.S. budget deficit, the EU’s lack of cohesion, and New York’s message to any ride-hailing company looking to get bigger in the Big Apple: fuggedaboutit. LONG GAME China is shoring up its economy for a protracted trade fight with the U.S. For example, Beijing is encouraging infrastructure projects such as rail construction to help insulate itself from trade disruptions. The latest government data showed surging imports of coal, crude oil, iron ore and other resources in July, Yoko Kubota reports. What else can China do? We’ve chronicled the yuan’s fall, which makes Chinese goods cheaper to sell in the U.S. The People’s Bank of China also appears to be engineering a sharp Continue reading "Real Time Economics: China’s Getting Ready for a Long, Bruising Trade Fight"

Real Time Economics: The U.S. Has More Job Openings Than Unemployed; Tariffs Take a Toll On Small Business

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 record number of job openings in the U.S., small businesses struggling with tariffs while the Trump administration readies round two for China, a speed bump for the revised U.S.-South Korea trade pact, and the long-lost Phillips curve’s reemergence in … Japan.  READY, AIM, HIRE Unfilled jobs are piling up across the U.S. economy. U.S. job openings reached 6.7 million last quarter, the highest level on record, as an expanding economy demands more workers and a historically low unemployment rate means fewer are available. The situation is particularly acute in the transportation, retail and business-services sectors, Eric Morath and Jennifer Smith report.
Case study: Scotlynn Group is turning down work for lack of employees. The Fort Myers, Continue reading "Real Time Economics: The U.S. Has More Job Openings Than Unemployed; Tariffs Take a Toll On Small Business"

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 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"

Real Time Economics: U.S. Companies Look for Higher Prices to Offset Rising Costs

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"

Real Time Economics: Employers Are Hiring, the Trade Deficit Is Widening and the Feds Want More Taxes From Your Bottle of Wine

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 another month in the longest U.S. hiring streak on record, widening trade deficits and stockpiles of kidney beans, and the Trump administration’s latest battlefront: a tax loophole enjoyed by the wine industry. CAREER OPPORTUNITIES It’s jobs day! The U.S. employment report for July is expected to show a net gain of 190,000 jobs and an unemployment rate at 3.9%. Those are undeniably good numbers. Can they get better? Last month the unemployment rate ticked up to 4% for the right reasons: more people started looking for work. But the participation rate for prime-age workers remains below historical norms, suggesting the labor market has further to run—if employers can entice people off the sidelines.
HOW TO GET MORE WORKERS? 1.) Pay up. Continue reading "Real Time Economics: Employers Are Hiring, the Trade Deficit Is Widening and the Feds Want More Taxes From Your Bottle of Wine"

Real Time Economics: U.S. Ratchets Up Pressure On China; What to Watch in the July Jobs Report

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 Washington’s tougher stance toward China, what to look for in Friday’s U.S. jobs report, and what spiraling deficits may mean for the economy. HEAT WAVE The U.S. is turning up the heat on China. The Trump administration threatened to more than double proposed tariffs on imports while Congress passed a defense bill designed to restrict Beijing’s economic and military activity. The moves come as Beijing and Washington have failed to ease an escalating trade dispute, prompting the administration to seek additional leverage, Bob Davis and Lingling Wei report. China’s Commerce Ministry responded to the tariff threat, saying the country was “fully prepared” to retaliate to defend its interests. Key takeaway: President Trump has sparred with some Republicans in Congress over trade conflicts with allies Continue reading "Real Time Economics: U.S. Ratchets Up Pressure On China; What to Watch in the July Jobs Report"

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 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"

Real Time Economics: China Signals Slower Growth, Europe’s Economy Sputters

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 signs of weaker growth in Asia and Europe, the best-case scenario for the Fed, a massive deficit for U.S. pensions, and the so-so startup scene in the U.S. TARIFFS SQUEEZE CHINA’S ECONOMY China’s business activity faltered in July. Official surveys of factories and service providers highlighted sluggish domestic demand, and slower production and investment, Liyan Qi and Grace Zhu report. The manufacturing purchasing managers’ index fell to a five-month low, while the import subindex of slipped to a 23-month low. Exports held steady thanks to a weaker yuan. The first official data reflecting the impact of U.S. tariffs adds to signs that trade tensions have started to pinch China’s economic growth. EUROPE DECELERATES The eurozone’s economy slowed in the three months Continue reading "Real Time Economics: China Signals Slower Growth, Europe’s Economy Sputters"

Real Time Economics: The Labor Market Is Tight, the Economy Is Strong, and Companies Are Raising Prices

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"

Real Time Economics: Did Trump Give Us a Hint on GDP? ‘If It Has a 4 In Front of It, We’re Happy’

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’"

Real Time Economics: Trump Announces ‘New Phase’ For U.S.-EU Trade, Auto Tariffs On Hold

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 thaw in U.S.-EU relations, trade fallout for Detroit’s Big Three, how China killed Qualcomm purchase of a Dutch chip maker, a big drop for Chinese investment in the U.S., and how many steel jobs there are in America. FRIENDSHIP NEVER ENDS President Donald Trump and European Commission President Jean-Claude Juncker turned down the heat on a trade dispute between two of the world’s largest economic powers. The leaders agreed to begin discussions on eliminating tariffs and subsidies, and to resolve U.S. Steel and aluminum tariffs as well as Europe’s retaliatory measures, Valentina Pop, Vivian Salama and Bob Davis report. The deal: The EU buys more natural gas and soybeans from the U.S., and the two sides “work together toward Continue reading "Real Time Economics: Trump Announces ‘New Phase’ For U.S.-EU Trade, Auto Tariffs On Hold"

Real Time Economics: White House Readies Aid for Farmers Hurt In Trade Battles

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 who’s vulnerable in escalating trade fights, President Trump’s warning ahead of the EU’s White House visit, how some (but not all) manufacturers are shrugging off tariffs, and why China is letting the yuan fall. RESCUE ME The Trump administration is extending $12 billion in emergency aid to farmers as U.S. agriculture feels the impact of escalating trade disputes. The U.S. government plans to provide incremental payments to support prices of some of the hardest-hit commodities, including soybeans, sorghum, cotton, corn, wheat and pork, Vivian Salama and Jacob Bunge report. It’s a short-term solution for a sector that’s taken a series of hits. China, a huge market for U.S. agricultural exports, has applied tariffs on $34 billion worth of U.S. goods, including soybeans and Continue reading "Real Time Economics: White House Readies Aid for Farmers Hurt In Trade Battles"

Real Time Economics: The U.S. Housing Market Is Stuck In a Rut

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 sluggish U.S. housing market, the man President Trump called a “brutal killer,” a boost for uranium prices, stimulus and oil demand in China, and what it’s like to be bludgeoned to death with a Nerf bat. HOME SWEET HOME U.S. home sales are slumping, a potentially worrying trend for a key sector of the economy. Housing contributes about 15% to 18% of gross domestic product and drives home-improvement spending, construction and mortgage lending. For now, the housing slowdown is a blip in an otherwise booming stretch for GDP—Macroeconomic Advisers is tracking a 5% pace of growth in the second quarter. Longer term, a hot economy could compound problems: in this case with rising interest rates and spiraling construction costs. More entry-level buyers will end Continue reading "Real Time Economics: The U.S. Housing Market Is Stuck In a Rut"

Real Time Economics: $500B In Tariffs on Chinese Goods? ‘Definitely a Realistic Possibility’

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 Trump administration’s frustration with the Fed and China, U.S. industrial policy, how manufacturers are getting squeezed by rising costs, China’s tech catch-up, freezers full of meat, and why there aren’t enough caregivers for the elderly.  TARGET: THE FED, CHINA Last week ended with a bang. President Donald Trump signaled for a second straight day his frustration with the Federal Reserve’s policy of gradually raising interest rates, and then said he was prepared to impose U.S. tariffs on $500 billion worth of imports from China as part of his push to narrow U.S. trade deficits. The tough comments suggest the president could continue to escalate a feud with the Fed and take aim at currency markets, Nick Timiraos reports. Earlier in Continue reading "Real Time Economics: $500B In Tariffs on Chinese Goods? ‘Definitely a Realistic Possibility’"

Real Time Economics: Trump Complains About the Fed, China Weakens the Yuan

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 President Trump’s interest-rate lament, China’s currency, the first big change to foreign-investment rules in a decade, auto tariffs, manufacturing’s shifting politics, and the White House’s new estimate on deficits.  I AM NOT HAPPY ABOUT IT President Donald Trump delivered a rare presidential critique of the Federal Reserve, saying he hoped the central bank would stop raising interest rates. “I am not happy about it,” Mr. Trump said. Central bankers have long argued for independence from political pressure, saying it gives investors greater confidence that officials will make unpopular decisions in the long-run best interest of the economy, Nick Timiraos writes. And for the past few decades, presidents have refrained from speaking specifically on monetary policy. So what? Mr. Trump’s comments appear unlikely to sway Continue reading "Real Time Economics: Trump Complains About the Fed, China Weakens the Yuan"

Real Time Economics: Trump Complains About the Fed, China Weakens the Yuan

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 President Trump’s interest-rate lament, China’s currency, the first big change to foreign-investment rules in a decade, auto tariffs, manufacturing’s shifting politics, and the White House’s new estimate on deficits.  I AM NOT HAPPY ABOUT IT President Donald Trump delivered a rare presidential critique of the Federal Reserve, saying he hoped the central bank would stop raising interest rates. “I am not happy about it,” Mr. Trump said. Central bankers have long argued for independence from political pressure, saying it gives investors greater confidence that officials will make unpopular decisions in the long-run best interest of the economy, Nick Timiraos writes. And for the past few decades, presidents have refrained from speaking specifically on monetary policy. So what? Mr. Trump’s comments appear unlikely to sway Continue reading "Real Time Economics: Trump Complains About the Fed, China Weakens the Yuan"