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Good morning. Today we look at the Trump administration’s efforts to isolate China on trade, oil prices climbing to the highest level in almost four years, the Federal Reserve’s two-day policy meeting, and how the rising supply of Uber drivers is driving down their pay.
ONE DOWN
President Trump signed a revised free-trade pact with South Korea, his first successful effort to open rather than close off trade channels. The big question: Will other countries in Asia and Europe follow?
Mr. Trump hopes this week to persuade Japan to enter formal bilateral trade talks, part of a commercial diplomacy effort on the sidelines of United Nations meetings in New York, Jacob M. Schlesinger and Vivian Salama report. Trump aides also have meetings planned with their European Union counterparts to advance a trade-expanding framework unveiled in July.
FOCUS: CHINA
So, what’s the end game? Mr. Trump took office last year vowing to shake up the global free-trading system. But the South Korean pact includes only modest changes. The European talks fall far short of a wide-ranging free-trade agreement, and are currently focused on modest measures like cooperating on regulatory standards. Japan doesn’t want a full-fledged free-trade deal. Talks with Canada to overhaul Nafta broke down last week.
Meanwhile, relations with China are deteriorating and likely to get worse before they get better. It’s far from clear if the Trump administration’s efforts will isolate China and help reshape global trade patterns.
Comments or suggestions? Write to Jeffrey Sparshott at realtimeeconomics@wsj.com, tweet to @WSJecon and visit wsj.com/economy for the latest news. (Responses may be quoted in this newsletter.)
WHAT TO WATCH TODAY
The S&P/Case-Shiller home price index for July is out at 9 a.m. ET. The 20-city index is expected to climb 6.2% from the same month a year earlier.
The Conference Board’s consumer confidence index for September, out at 10 a.m. ET, is expected to slip to 132 from 133.4 a month earlier.
The Richmond Fed manufacturing survey is out at 10 a.m. ET.
The Federal Reserve starts a two-day policy meeting.
President Trump is at the United Nations much of the day.
TOP STORIES
SHOE-LEATHER REPORTING
About 70% of Americans say it’s “very important” or “somewhat important” to buy American-made goods. But only 21% would pay 10% more for an American-made product and only 7% said they would pay 50% more, according to a Reuters/Ipsos poll. The WSJ’s Jacob Gallagher looks at Allen Edmonds’s efforts to tap that 7% sliver with American-made shoes. How? “We’re really targeting men 30 and older who are discerning. They really pay attention to detail and quality. They’re typically consumers of luxury products or better products whether it’s cars, TVs or cameras,” said Malcolm Robinson, the company’s president.
TRADE OFF
The economic outlook among chief executives of America’s largest companies cooled slightly in the third quarter, as confrontational U.S. trade policies weighed on planning for capital spending and hiring. The Business Roundtable CEO Economic Outlook Index, which measures company plans for capital investment, hiring and sales, declined to 109.3 from 111.1 in the second quarter, Sarah Chaney reports. Close to two-thirds of surveyed CEOs said recently enacted tariffs and pending trade policies will have a “moderate or significant negative effect” on their capital spending decisions in the coming months.
OIL TOPS $80
Global oil prices surged to their highest close in nearly four years on Monday. More expensive oil could weigh on U.S. consumers, just as midterm elections near. But it would also support the domestic oil and gas industry and could boost overall economic growth.
Rally causes: OPEC and major producers like Russia over the weekend agreed to hold supplies constant, the U.S. imposed sanctions that will limit exports from Iran, and supplies from Venezuela and Libya are shaky amid political upheaval.
SHAKE IT OFF
Higher (but not too high) oil prices shouldn’t derail Europe’s economic recovery, according to a paper from the European Central Bank. “From mid‑2017 to mid‑2018 oil prices increased from about USD50 to about USD75 per barrel. If they remain at their present level, the increase is unlikely to significantly dent the growth of real disposable income and private consumption,” the authors wrote. “As labor markets continue to improve, private consumption growth is expected to remain robust.” – Brian Blackstone
HAPPY FED WEEK
The Federal Reserve is expected to raise its benchmark rate a quarter point to a range of 2% to 2.25% when its two-day meeting wraps up Wednesday—the third increase this year and the eighth since the end of 2015. There are two competing forces as the central bank weighs its next steps: The unemployment rate is well below the Fed’s long-run forecast, a sign the economy could overheat. But inflation appears in check, suggesting that it’s not. That could well leave Chairman Jerome Powell repeating a familiar mantra: The Fed isn’t on a preset course, and future decisions will be dictated by incoming data.
SUPPLY, MEET DEMAND
The number of drivers for Uber, Lyft and other ride-hailing apps has skyrocketed. The result? As the supply of drivers increases, the monthly income for each one has dropped. The average participant driving for a ride-hailing platform earned $762 in March. That’s down from more than $1,500 in monthly earnings less than five years earlier, Eric Morath reports.
QUOTE OF THE DAY
For decades, politicians have talked about fixing broken trade deals only to do absolutely nothing about them. My administration is the first to actually keep our promise and deliver. – President Trump, at a signing ceremony for the U.S.-Korea Free Trade Agreement
TWEET OF THE DAY
[wsj-responsive-sandbox id = "0" ]WHAT ELSE WE’RE READING
The rich get richer. But how? By rigging the system. “Our hypothesis is that the way it does this is through a political channel that allows the rich to lobby and to have implemented the policies that are in their economic interest,” Roy van der Weide and Branko Milanovic write in the World Bank Economic Review. The paper finds that high levels of inequality reduce the income growth of the poor but, if anything, help the growth of the rich.
In the service sector, bigger isn’t always better. “The most productive firms at the top are not necessarily the largest ones in terms of employment, but they do pay the best. This increases the likelihood of productivity and wage gains being shared with fewer workers, a further challenge to achieving inclusive growth in the new service economy,” Giuseppe Berlingieri, Sara Calligaris and Chiara Criscuolo write at the Center for Economic Policy Research.
UP NEXT: WEDNESDAY
U.S. new-home sales for August, out at 10 a.m. ET, are expected to edge up to an annual pace of 630,000 from 627,000.
The Federal Reserve releases a policy statement and economic projections at 2 p.m., and Chairman Jerome Powell holds a press conference at 2:30 p.m. ET.
from Real Time Economics https://ift.tt/2MZGfFl
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