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In today’s issue, Jerome Powell makes his first appearance before lawmakers as Fed chairman, the dollar’s slide is perplexing markets, U.S. coal jobs show some spark, more farmers are forced to take part-time work, German women are left behind in an otherwise stellar labor market, and a special roundup of economic studies on gun violence.
NEW FED CHAIRMAN HEADS TO THE HILL
Jerome Powell’s first appearance on Capitol Hill as chairman of the Federal Reserve highlights busy week for economy watchers. Mr. Powell has a lot to talk about with lawmakers, including the tightening labor market, signs of firming inflation, a major injection of fiscal stimulus, recent market volatility, the dollar’s slide and, of course, the central bank’s plans to gradually raise interest rates.
“We expect Powell will strive to convey policy continuity rather than regime change,” Credit Suisse economists said.
In a report to Congress last week, the Fed signaled it is unperturbed by the volatility earlier this month and remains on track to raise rates gradually this year, Kate Davidson reports. Officials in December penciled in three rate increases for 2018, though many analysts now forecast four due to strengthening economic momentum.
Mr. Powell appears before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday.
DOLLAR DOWN
One mystery for financial markets and policy makers: Why is the dollar slumping even as Fed interest-rate increases boost yields on U.S. Treasury notes?
The U.S. currency has dropped 11% since late 2016 against its main trading partners, including a 2.7% decline this year in the WSJ Dollar Index, Chelsey Dulaney reports. Higher yields tend to draw capital to government bonds. That frequently pushes up foreign-exchange values. But that isn’t happening, perhaps because the dollar is still expensive, or investors expect stronger growth in Europe and Japan.
A weaker dollar makes U.S. exports cheaper overseas but can increase costs at home, fueling inflation.
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WHAT TO WATCH TODAY
The St. Louis Fed’s James Bullard speaks on the U.S. economy and monetary policy at 8 a.m. ET.
The European Central Bank’s Mario Draghi appears before a European parliamentary committee in Brussels at 9 a.m. ET.
U.S. new-home sales for January are released at 10 a.m. ET. They are expected to jump 4% to an annual rate of 650,000. The housing market last year was marked by strong demand, limited supplies and rising prices. Climbing mortgage rates are a new wildcard for home builders and buyers.
The Dallas Fed manufacturing survey for February, out at 10:30 a.m. ET, is expected to slip to 32.0 from 33.4.
The Fed’s Randal Quarles offers an assessment of the U.S. economy at 3:15 p.m. ET.
The calendar gets more interesting later in the week with Mr. Powell’s testimony, measures of U.S. consumer confidence on Tuesday and Friday, revised gross domestic product on Wednesday and the Fed’s preferred inflation gauge on Thursday. The personal consumption expenditure price index for January is expected to show inflation pressures remain in check for now.
TOP STORIES
COAL SPARK
American companies are shipping more coal to Europe and Asia, helping to stop the yearslong drop in the number of U.S. coal-mining jobs.
Exports of U.S. thermal coal used by utilities rose 117% last year, Kris Maher reports. That more than offset the decline in coal used at U.S. power plants. The stronger export market is translating into a bump in coal-mining jobs. Last year, coal companies added about 1,200 jobs, a trickle compared with the number of workers who have lost mining jobs in earlier years.
PART-TIME FARMERS
The U.S. agricultural economy is struggling as prices for corn, wheat and other commodities stay soft.
That’s pushing more farm households to look for outside work, turning what was once a way of life into a part-time job, Jacob Bunge and Jesse Newman write. On average, 82% of U.S. farm household income is expected to come from off-farm work this year, up from 53% in 1960.
U.S. food producers as a result are increasingly exposed to economic forces far beyond the fields. Many farms have become reliant not just on sales of crops and livestock, but on the health of rural businesses such as trucking companies and manufacturing plants.
WHITE HOUSE ELEVATES TRADE HAWK
What’s next for U.S. trade policy?
Here’s one hint: The White House plans to promote an adviser known for his hawkish views, giving economic nationalists a stronger voice in internal debates, Jacob M. Schlesinger reports.
Peter Navarro, an economist who helped shape Donald Trump’s 2016 protectionist campaign platform, will be named an assistant to the president, according to a person familiar with the matter. The move to elevate Mr. Navarro comes as the White House is nearing decisions on several high-profile trade matters.
CHINA EDGES TOWARD ONE-MAN RULE
The world’s second-biggest economy edged closer to a return to one-man rule as China’s Communist Party prepared constitutional changes that would allow Xi Jinping to serve as president indefinitely.
A proposal to eliminate presidential term limits, announced Sunday by state media, would abolish an institutional check introduced after Mao Zedong’s death in 1976, Chun Han Wong reports. With China likely to face a prolonged economic slowdown in coming years as the government tries to rein in debt, Mr. Xi may be trying to capitalize on his current popularity.
MOTHERHOOD IN THE FATHERLAND
In the last five years, Germany’s booming economy has created so many jobs that it has made unemployment almost a thing of the past.
But women have been left by the wayside, Nina Adam and Andrea Thomas report. They remain comparatively underemployed and underpaid, a trend that economists say is already holding back the country’s growth, exacerbating its skill shortages and leaving some scrambling to make ends meet in retirement.
One factor: Motherhood. The scarcity of childcare in Germany plays a crucial role in limiting women to part-time work.
TWEET OF THE DAY
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WHAT ELSE WE’RE READING
The Feb. 14 school shooting in Parkland, Fla., renewed attention on gun violence and potential measures to curb it. But what do we know about the effects of tightening or loosening access to firearms? Here’s is a roundup of some economic literature. Hat tip to University of Virginia professor Jennifer Doleac for tweeting out the links. Her thread includes additional research.
What else is out there? Please feel free to send us relevant research at realtimeeconomics@wsj.com.
Right-to-carry laws lead to more violent crime, John Donohue, Abhay Aneja and Kyle Weber write in National Bureau of Economic Research working paper (January 2018). Violent crime is estimated to be 13-15% higher than it would have been without legalization of concealed carry. “There is not even the slightest hint in the data that RTC laws reduce violent crime.”
But wait! Right-to-carry laws increase some crimes, decrease some crimes and have effects that vary over time for others, Charles Manski and John Pepper write in the Review of Economics and Statistics (posted online in June 2017). “In this light, we do not report findings with incredible certitude: there are no simple conclusions. Still, our findings may inform the policy debate by providing credible information that constrains the resulting discussion to lie within a set of bounds.”
Stand-your-ground laws lead to a statistically significant increase in murders, Cheng Cheng and Mark Hoekstra write in The Journal of Human Resources (Summer 2013). “Results indicate the laws do not deter burglary, robbery, or aggravated assault. In contrast, they lead to a statistically significant 8% net increase in the number of reported murders and nonnegligent manslaughters.”
More recent research in The Journal of Human Resources shows similar results: Stand-your-ground laws result in an increase in homicides, Chandler McClellan and Erdal Tekin write in the Journal’s Summer 2017 issue. “According to our estimates, at least 30 individuals are killed each month as a result of Stand Your Ground laws.”
Juvenile curfews increase gun violence, Jillian Carr and Jennifer Doleac write in a working paper (June 2017). “We find that, contrary to its goal of improving public safety, [Washington,] D.C.’s juvenile curfew increases the number of gunfire incidents by 150% during marginal hours.”
Child access prevention gun laws promote a safer school environment but have no observable impact on school-associated shooting deaths, Joseph Sabia writes in a discussion paper for the Institute of Labor Economics (March 2016). “Our results suggest that CAP laws are associated with a 13% decrease in the rate of past month gun carrying and an 18% decrease in the rate at which students reported being threatened or injured with a weapon on school property.”
There’s no evidence that gun shows increase either gun homicides or suicides, Mark Duggan, Randi Hjalmarsson and Brian Jacob write in The Review of Economics and Statistics (August 2011). “The similarity of our estimates for California and Texas suggests that the much tighter California gun show regulations do not substantially reduce the number of firearms-related deaths in that state.”
A rise in demand for guns following the Sandy Hook school murders led to an increase in the murder rate, particularly in states with no mandatory waiting period or other hurdles for purchases, Christoph Koenig and David Schindler write (January 2018). “Our findings suggest that in each month of 2013 alone, between 45 and 102 murders could have been prevented if all states had implemented delays for gun purchases.”
Gun sales spiked by 3 million following Sandy Hook, increasing exposure to guns and leading to more accidental deaths, Phillip Levine and Robin McKnight write in Science (Dec. 8, 2017). “We find that an additional 60 deaths overall, including 20 children, resulted from unintentional shootings in the immediate aftermath of Sandy Hook.”
UP NEXT: TUESDAY
U.S. durable-goods orders for January are out at 8:30 a.m. ET. Economists expect a 2.7% drop from the prior month.
The S&P/Case-Shiller 20-city home-price index for December is out at 9 a.m. ET.
The Fed’s Jerome Powell appears before the House Financial Services Committee at 10 a.m. ET.
Consumer confidence for February, out at 10 a.m., is expected to tick up to 126.4 from 125.4.
The Richmond Fed manufacturing survey is out at 10 a.m. ET.
from Real Time Economics http://ift.tt/2HMnKTp
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