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It’s jobs day! The March employment report is out at 8:30 a.m. ET; Greg Ip and I will follow up with a special edition of our newsletter in time for your lunch-time reading. Good morning. Jeff Sparshott here to take you through the day’s top economic news. Send us your questions, comments and suggestions by replying to this email.
YES WE CAIN
President Trump plans to nominate former GOP presidential candidate Herman Cain to the Federal Reserve’s board of governors. The selection, following the president’s decision to nominate his former campaign adviser Stephen Moore, marks an effort to install two Fed critics and loyal Trump supporters on the central bank’s powerful seven-seat board. The picks underscore Mr. Trump’s growing unhappiness with Fed policy under Chairman Jerome Powell, Nick Timiraos and Alex Leary report.
The central bank has guarded its independence to set monetary policy since the 1970s, when President Nixon privately pressured Chairman Arthur Burns to ease policy ahead of the 1972 election. Mr. Burns acceded. Inflation later surged.
WHAT THEY’RE SAYING
Fed officials almost certainly hear Mr. Trump’s complaints about too-high rates. But are they listening?
Cleveland Fed President Loretta Mester: “Could we be done with policy rate increases this cycle? It is possible, but if the economy performs along the lines I think is the most likely case…the fed-funds rate may need to move a bit higher than current levels.”
Philadelphia Fed President Patrick Harker: “I continue to be in wait-and-see mode” with expectations of “at most, one hike for 2019 and one for 2020.”
WHAT TO WATCH TODAY
U.S. nonfarm payrolls for March are expected to increase 175,000 from the prior month, and the unemployment rate is forecast to hold steady at 3.8%. (8:30 a.m. ET)
The Baker-Hughes rig count is out at 1 p.m. ET.
U.S. consumer credit for February is out at 3 p.m. ET.
The Atlanta Fed’s Raphael Bostic speaks at Georgia State University at 3:30 p.m. ET.
TOP STORIES
JOBS DAY PREVIEW: BLUE-COLLAR BLUES
Traditional blue-collar industries helped drive employment growth in 2018. But those sectors may have cooled. In February construction, mining and transportation all shed jobs; manufacturing added at the slowest pace since mid-2017.
More broadly, though, those industries have enjoyed incredibly long stretches of job creation—manufacturers are on their longest streak since the 1990s—pulling more workers off the sidelines and underscoring the labor market’s enduring strength. March’s report may help show whether an early-2019 slowdown reflected temporary factors or a broader pullback across the sectors that make and haul stuff around the country.
PARTICIPATION TROPHY
Another key labor-market metric: the labor-force participation rate. Last month it matched its highest level since September 2013, defying broader demographic trends (mostly retiring Baby Boomers). That could be a sign low unemployment and better pay are drawing workers off the sidelines. If the participation rate keeps rising, it suggests: “One, there is more labor slack than thought, which means job gains can continue at a healthy pace. Two, an influx of labor will cap wage growth for a time, all else being equal,” says Natixis’s Joseph Lavorgna.
Read more in labor-policy reporter Eric Morath’s jobs day preview.
U.S.-CHINA: GETTING CLOSER…
President Trump said the U.S. and China are aiming to reach a trade deal in the next four weeks. The president and his trade team say negotiations are in their final stages, but caution that daunting issues remain—including when to lift punitive tariffs against Chinese imports, protection of U.S. intellectual property and enforcement of the pact’s provisions. That suggests the two nations will struggle to meet their informal goal of a deal by the end of April, Bob Davis, Alex Leary and Vivian Salama report.
Underscoring the difficulty, Mr. Trump on Thursday failed to announce a much-anticipated summit with Chinese leader Xi Jinping. The two men are expected to eventually sign a pact at a face-to-face meeting.
CONGRESS: GREAT DEAL OR NO DEAL
U.S. lawmakers are worried Mr. Trump’s trade deal will fall short—particularly on enforcement. Sen. Marco Rubio (R., Fla.) said any agreement “must allow us to do in China what they can do in the US & it must have real enforcement mechanisms.” Sen. Sherrod Brown, an Ohio Democrat on the Senate committee that oversees trade, said, “I want to see the details of any agreement and how we are going to enforce it to make sure there are long-lasting structural changes that will really stop China’s cheating.”
BORDER WARS
President Trump backed away from his recent threats to imminently close the U.S. border with Mexico to stop immigrants and illicit drugs. Instead, he raised the possibility of imposing tariffs on cars. “We’re going to give them a one-year warning and if the drugs don’t stop, or largely stop, we’re going to put tariffs” on cars, he told reporters Thursday. “And if that doesn’t stop the drugs, we close the border.”
HOARDERS
British manufacturers for nearly half a century have built their supply chains and export markets around free trade with Europe. On April 12, that could come to an end, rupturing one of the world’s most advanced, cross-border assembly lines. To get ready, British companies are hoarding at rates rarely seen outside of wartime. Manufacturers, from cookie makers to metal fabricators to Airbus, are stockpiling imported ingredients, raw materials, car and plane parts and packaging. In March, British firms built inventories at the fastest pace since tracking began in 1992, Jason Douglas and Alistair MacDonald report.
Breaking: Prime Minister Theresa May asked the European Union to delay to Brexit until June 30. The later date would give her more time to get a divorce deal through Parliament.
QUOTE OF THE DAY
A dollar should be defined—as it was prior to 1971 under the postwar Bretton Woods system—as a fixed quantity of gold. —Herman Cain, in a 2012 WSJ op-ed
TWEET OF THE DAY
[wsj-responsive-sandbox id = "0" ]WHAT ELSE WE’RE READING: CITY STREETS EDITION
New York City traffic jams signal something: there’s a shortage of road space. “Congestion pricing has the potential to significantly change how traffic flows through Manhattan streets, how commuters get around the city, how companies like Uber and Lyft operate. But most radically, if the policy spreads it could challenge a deeply embedded cultural idea, requiring people to pay for something Americans have long demanded—and largely believe they’ve gotten—free of charge,” Emily Badger writes in the New York Times.
What’s an appropriate fine for a seriously drunk driver? “Drinking 10 or more units of alcohol in a single session increases road accidents by 18.6%, injury-related [emergency room] attendances by 6.6%, and arrests by 72%. … The externality per mile driven by a binge drinker is about 5 pence and the punishment that internalizes this externality is equivalent to a fine of £22,800 [$29,890] per drunk driving arrest,” Marco Francesconi and Jonathan James write in The Economic Journal.
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from Real Time Economics https://on.wsj.com/2FQgSUR
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