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Good morning! Today we look at the gig economy, President Trump as the odd man out on trade policy, record household wealth in the U.S., Germany’s economic hangover, and the struggles of being a part-time worker.
NO GIGGETY, NO DOUBT
There’s a messy family feud brewing in the Group of Seven. We’ll get to that. But first let’s take a look at what may be one of the most overblown phenomena of the past decade: the gig economy. WSJ labor reporter Eric Morath sums up a new government survey: The emergence of the gig economy in the past decade has scarcely changed the U.S. labor market. Indeed, all those Uber drivers, contractors and temp workers added up to a scant 6.9% of the labor force last year, down from 7.4% in 2005, the last time the survey was taken. More than 90% of Americans were on the payroll of the firm for which they performed work. “This should throw some cold water on those hyping the explosion of freelancing and the rapidly changing nature of work,” said the Economic Policy Institute’s Lawrence Mishel.
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WHAT TO WATCH TODAY
Group of Seven leaders (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) assemble in La Malbaie, Quebec. Trade is certain to dominate the two-day meeting.
TOP STORIES
FAMILY FEUD
Leaders from the world’s Group of Seven industrialized countries will start their summit Friday by dealing upfront with U.S. tariffs on steel and aluminum. Trade tensions between the Trump administration and its allies are set to dominate the two-day gathering, positioning President Donald Trump as the odd-man out, Paul Vieira and Kim Mackrael report. It also sets up arguably the most fractious G-7 meeting in recent history. Already, the leaders of France, Canada and the U.S. have engaged in something of a Twitter smackdown. But Mr. Trump has made clear he has no plans to back down. So far, economic fallout from the spat is negligible. The broader concern is escalation—with China as well as Europe and North America—which could ultimately trim global growth.
WELL…HOW DID I GET HERE?
Competition on the White House trade team is intense, with Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, White House trade aide Peter Navarro, economic adviser Lawrence Kudlow and others routinely jockeying for position. The result has been conflicting signals from the U.S. on its goals and how far it will go to achieve them, Bob Davis, Peter Nicholas and Lingling Wei write. For now, hawks appear ascendant, with a turn to a tougher stance that has trading partners up in arms.
LIFELINE FOR ZTE
One area where the White House has been accused of going soft: Chinese telecommunications giant ZTE Corp. The Trump administration announced a deal Thursday to resuscitate the company by allowing it to resume buying components from U.S. suppliers. A bipartisan group of U.S. lawmakers responded with legislation to undo the deal, Siobhan Hughes, Kate O’Keeffe and John D. McKinnon report. The lawmakers view ZTE as a potential national security threat. To be sure, Congress has been more bark than bite and complaints over administration trade policy have amounted to little so far, leaving President Trump firmly in control.
WE’RE RICH!
Here’s some good and thoroughly uncontroversial news: Americans’ wealth surpassed the $100 trillion mark for the first time in early 2018, as rising home prices offset the hit to households’ assets from a stock-market swoon in the first quarter. Household net worth—the value of all assets such as stocks and real estate minus liabilities like mortgage and credit-card debt—rose by 1% from the previous quarter, Harriet Torry reports.
TOO MUCH JAGERMEISTER?
While the U.S. economy is chugging along, Europe is flashing some warning signals. German industrial production and exports declined in April, another sign that Europe’s largest economy is struggling to gain momentum following a weak start to the year. Here’s ING economist Carsten Brzeski’s take: “It’s almost like a hangover which does not want to go away. This morning’s macro data suggests the German economy has had more trouble re-accelerating than previously thought.” Things weren’t much better in neighboring France. Industrial production there slid 0.5% on the month in April versus expectations for a slight rise. - Brian Blackstone
CHARTS OF THE DAY: PART TIME
The Labor Department report on the gig economy was a bit of a damp squib, showing the share of contingent and alternative work arrangements in decline. That’s probably good, but all isn’t well with the labor market if you’re one of the Americans who wants full-time work but is stuck in a part-time job.
The 4.9 million involuntary part-timers face an array of difficulties, including more irregular hours and more trouble getting a raise than full-time counterparts. A Federal Reserve survey estimates that about 71% of people working part-time didn’t get a pay raise last year. The Atlanta Fed’s wage-growth tracker highlights the disparity.
TWEET OF THE DAY
[wsj-responsive-sandbox id = "0" ]WHAT ELSE WE’RE READING
Why is the U.S. lagging its economic peers in labor-force participation? “The biggest difference between employment rates in the United States and other advanced economies has been changes in female employment rates, which, adjusting for changing age structures, were stable in the United States but increasing elsewhere,” economists Jason Furman and Wilson Powell write at the Peterson Institute for International Economics. That may in part be due to stingy flexible workplace benefits in the U.S.—things like paid leave and childcare subsidies.
Former Fed Chairman Alan Greenspan and Economist correspondent Adrian Wooldridge have a new book out: “Capitalism In America.” It’s billed as the complete story of America’s evolution from a patchwork of colonies to the world’s biggest and most dynamic economy. Maybe this a little more what-else-we-may-read-at-a-later-date than what we’re reading…?
UP NEXT WEEK
The Federal Reserve’s two-day policy meeting is next week’s highlight. The central bank lifted its benchmark rate in March, and economists surveyed by The Wall Street Journal unanimously predicted it would do so again at its June 12-13 meeting; 84% said the Fed would move again in September. Overall, economists expect a total of four rate increases this year. The Fed’s policy statement is due out at 2 p.m. ET on Wednesday. Fed Chairman Jerome Powell’s press conference is at 2:30 p.m.
We’ll also get a look at U.S. inflation, with the consumer price index out Tuesday and producer prices on Wednesday.
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