Real Time Economics: The Global Economy Is Slowing

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It’s jobs day! Look for a special issue of our newsletter after the U.S. employment report is released. But first, Jeff Sparshott here to take you through the day’s key economic news. Send us your questions, comments or suggestions by replying to this email.

U.S.-CHINA TRADE DEAL? NOT YET.

The U.S. and China have yet to set a date for a summit to resolve their trade dispute. Neither side feels an agreement is imminent. “Both sides agree that there has to be significant progress, meaning a feeling that they’re very close before that happens,” Terry Branstad, the U.S. envoy to Beijing, said in an interview with The Wall Street Journal. “We’re not there yet. But we’re closer than we’ve been for a very long time.”

The remarks add to growing doubt that President Trump and President Xi Jinping can speedily resolve their yearlong trade battle. Negotiators have been trying to put together an agreement for their presidents to clinch face to face, with both sides discussing a summit around March 27 in Florida.

WHAT TO WATCH TODAY

U.S. nonfarm payrolls for February are expected to increase by 180,000 and the unemployment rate is expected to tick down to 3.9%. (8:30 a.m. ET) See our preview here.

U.S. housing starts for January are expected to rise to an annual rate of 1.18 million from 1.078 million a month earlier. (8:30 a.m. ET)

China’s consumer-price index for February is out at 8:30 p.m. ET.

Fed Chairman Jerome Powell speaks on monetary policy normalization at 10:00 p.m. ET.

TOP STORIES

WHAT A DIFFERENCE 3 MONTHS MAKES

The global economy is slowing. Central bankers noticed. The European Central Bank announced surprise plans to stimulate the Continent’s flagging economy and Federal Reserve officials signaled their growing reluctance to raise U.S. interest rates at all, Nick Timiraos, Tom Fairless and Brian Blackstone report.

The ECB said it would hold interest rates at their current levels at least through the end of this year—months longer than it previously planned. It also will issue a fresh batch of cheap long-term loans starting in September. The stimulus comes less than three months after the ECB phased out a €2.6 trillion ($2.9 trillion) bond-buying program.

Fed officials have stopped talking about the need to lift interest rates, a stark change from three months ago. The U.S. economic outlook “appears to have softened against a backdrop of greater downside risks,” Fed governor Lael Brainard said.

Spanning the globe: The Bank of Canada revised down domestic growth forecasts. Australia’s central bank warned of growing risks to the global economy. China’s government has unveiled new tax cuts and increased bank lending to small and private companies to spur growth.

WHAT HAPPENED?

Europe’s economy has been rattled by shocks ranging from a slowdown in China to mass protests in France and bottlenecks in Germany’s auto industry. China has been held back by trade tensions, a cooling property market, slowing infrastructure investment and massive debt levels. The U.S. isn’t immune to global crosscurrents.

The latest bad sign: China’s exports tumbled in February, reflecting weaker global demand, the bite of U.S. tariffs and distortions from the Lunar New Year holiday. To get rid of holiday-related skew, combine January and February: Exports during the two months were 4.6% lower than a year earlier, similar to December’s drop of 4.4%. The overall picture is of China starting to feel real heat from U.S. trade pressure—but not utter collapse, Nathaniel Taplin writes.

IT’S NOT ALL BAD!

The U.S. employment report is expected to show the economy added jobs for the 101st straight month, pushing the streak further into record territory. What’s going on under the hood? We’ve noted that young women are driving a resurgence in labor force participation. The Atlanta Fed’s John Robertson slices the data again and finds Hispanic women, in particular, are supporting those numbers: They accounted for almost two-thirds of the increase in female participation rates during the last three years. One big factor: a decline in family or household responsibilities. That corresponds with: 1.) Falling fertility rates, which means fewer kids to take care of, and 2.) Improving educational attainment and placement in higher-wage jobs, which means women who do have kids are better able to afford child care.

HOT LABOR MARKET, PART 1

Where are the strongest labor markets in the U.S.? Technology hotbeds, energy hubs and college towns, according to a new WSJ ranking. See how your city stacks up here.

HOT LABOR MARKET, PART 2

Costco Wholesale Corp. said it has raised starting wages for store workers to $15 an hour, as a tight U.S. labor market continues to drive fierce competition for hourly staffers. It is the second such increase in less than a year—the retailer raised its hourly minimum to $14 from $13 last June, Sarah Nassauer and Micah Maidenberg report. Costco employs around 245,000 workers.

WORK SMARTER, NOT HARDER

In theory, companies that can’t find enough workers should be investing in labor-saving technology. It’s too soon to say that’s happening on a broad scale, but U.S. worker productivity is showing glimmers of recovery. Between April and December, worker output per hour registered the strongest nine-month stretch of growth since 2010, Sharon Nunn reports.

Productivity and labor force growth are two key components of overall economic activity. Worker productivity gains can support rising wages, and improving living standards, without spurring too much inflation.

QUOTE OF THE DAY

In a dark room, you move with tiny steps. —European Central Bank President Mario Draghi, discussing the ECB’s latest stimulus measures

TWEET OF THE DAY

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WHAT ELSE WE’RE READING

BlackRock CEO Larry Fink’s take on modern monetary theory? “That’s garbage,” Fink said in an interview on Bloomberg Television. “I’m a big believer that deficits do matter. I’m a big believer that deficits are going to be driving interest rates much higher and it could drive them to an unsustainable level.”

Pass the baton. Harvard Economics Professor N. Gregory Mankiw will step down from teaching the school’s flagship introductory course on economics. “After 14 years as ec 10 course head, as well as one year long ago as a section leader, I decided it was time to pass the baton,” he told the Harvard Crimson. “Teaching ec 10 has been a wonderful experience, but I am looking forward to new pedagogical challenges.”

The “Made in China 2025” program was a waste of taxpayers’ money. “[The government] wants industries to be at the top notch by then, but those industries are not predictable and the government should not have thought it had the ability to predict what is not foreseeable,” China’s former finance minister Lou Jiwei says in the South China Morning Post.

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