This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.
The Trump administration is getting ready to sock Europe with tariffs, Walmart is hiring robots, and house flipping is back to bubble-era levels. Good morning. Jeff Sparshott here to take you through key developments in the global economy. Send us your questions, comments and suggestions by replying to this email.
U.S. READIES TARIFFS FOR EU
The Trump administration moved toward imposing tariffs on about $11 billion in imports from the European Union. The trigger isn’t steel or cars. It’s airplanes. The U.S. has been in litigation at the World Trade Organization over Airbus subsidies since 2004, and said it was releasing a list of items proposed for tariffs in anticipation of a WTO ruling, Josh Zumbrun reports.
Though the tariffs are in response to the WTO case, the move is sure to ratchet up tensions between Washington and Brussels, where negotiators have struggled for nearly a year to make progress on trade talks. The proposed list contains a number of civil-aviation products, including Airbus aircraft, the USTR said. It also includes a wide range of non-aviation items, from cheese to bicycles to kitchen knives to artists’ brushes.
WHAT TO WATCH TODAY
The International Monetary Fund releases its World Economic Outlook at 9 a.m. ET. In January, the IMF said the “global expansion has weakened” and cut its forecasts for 2019.
The job openings and labor turnover survey for February is out at 10 a.m. ET.
Treasury Secretary Steven Mnuchin appears before House panels at 10 a.m. ET and 2 p.m. ET. The official topics are Treasury’s budget and the international financial system—but don’t be surprised if the handling of President Trump’s tax returns takes center stage.
Fed Vice Chairman Randal Quarles speaks on financial regulation at 5 p.m. ET and Vice Chairman Richard Clarida speaks on the Fed’s review of its strategy at 6:45 p.m. ET.
TOP STORIES
CLEANUP IN AISLE 6? SEND A ROBOT
Walmart is expanding its use of robots in stores to help monitor inventory, clean floors and unload trucks. It’s part of the retail giant’s efforts to control labor costs as it raises wages and offers new services like online grocery delivery, Sarah Nassauer and Chip Cutter report.
- What are they doing? At least 300 stores this year will add machines that scan shelves for out-of-stock products. Autonomous floor scrubbers will be deployed in 1,500 stores to help speed up cleaning. And the number of conveyor belts that automatically scan and sort products as they come off trucks will more than double to 1,200.
- Why are they doing it? Retailers and other companies that hire large numbers of low-skilled hourly workers are increasingly looking to automation as they face higher labor costs amid the lowest unemployment in decades. Amazon raised starting wages to $15 last year, Costco followed last month and Target plans to match them next year.
GOODS AND SERVICES
The service sector—retail, transportation, finance, health care, education, food service, lawyers, IT, and the list goes on—dominates the U.S. labor market. There are six jobs in services for every one in goods-producing industries.
The service sector is also generally more stable, adding jobs at a steadier pace—or losing them at a slower pace—through economic cycles.
Which brings us to the latest (broadly positive) U.S. jobs report. Construction, manufacturing and to a lesser degree mining have been on a tear since 2017, but there are signs that run is faltering. Manufacturing shed jobs for the first time in 19 months in March, construction is down from a January peak. A warning for the labor market? Back in December, Indeed.com economists Martha Gimbel and Jed Kolko cautioned: “Today’s goods-driven jobs boom is a precarious base for longer-term growth.”
BUSINESS INVESTMENT SOFTENS
One possible reason manufacturing employment has weakened: a step back for the global economy. A proxy for business investment, new orders for nondefense capital goods excluding aircraft, has moderated in recent months.
SURPRISE PARTY
Even with some underlying notes of caution, the March jobs report was a pleasant surprise. There may be more to come. The recession fears that captured the markets’ attention in recent weeks appear to be fading. Some investors now say a better-than-expected return to growth could be next. The catalysts: a healthier direction for China and the U.S., the dominant forces in the global economy, Paul J. Davies reports.
Looking past the first quarter: The opening months of the year were artificially weak and difficult to estimate because of things like the government shutdown, the polar vortex and last year’s boost from tax cuts. “But the labor market is solid and fiscal policy remains supportive,” said Ralf Preusser, rates strategist at Bank of America. “I think there is quite a high chance of a positive GDP surprise, Q2 and Q3 should be above trend.”
THIS TIME IS DIFFERENT
House flipping is back to nearly the same level it was around the 2006 peak of the housing boom, when it became a symbol of the rampant speculation that soared before the bubble burst. A new analysis from CoreLogic suggests most of the current flips are less risky than the ones more than a decade ago. The reason: Flippers today have much larger profit margins than at the peak of the previous housing cycle. By one measure, the trades are more than twice as profitable as the flips made in 2006. That offers current flippers more of a cushion if home prices begin to flatten or fall, Laura Kusisto reports.
QUOTE OF THE DAY
I think the American dream is lost. —Bridgewater Associates’s Ray Dalio, in an interview with 60 Minutes
TWEET OF THE DAY
[wsj-responsive-sandbox id = "0" ]WHAT ELSE WE’RE READING
The side hustle is the new moonlighting. It isn’t any more glamorous. “Side hustles are not simply a new version of working as a ‘wage slave’ so that we can do what we love in our off hours. Instead, far more often, people take on second or third side hustles because of wage stagnation or low pay at their full-time jobs,” the Economic Hardship Reporting Project’s Alissa Quart writes in the New York Times.
International economic interdependence, at least theoretically, reduces the likelihood of war. So, what happens when countries get more protectionist and globalization goes into reverse? “In case you’re wondering, yes, I’m going there: The current rise in protectionism could be the precursor to World War III,” Tufts University’s Daniel Drezner writes in Reason.
SIGN UP FOR OUR CALENDAR
Real Time Economics has launched a downloadable Google calendar with concise previews, forecasts and analysis of major U.S. data releases.
- To add to your Google Calendar on desktop, click here.
- To add to your Google calendar app on mobile, click here.
- If you prefer to view the calendar using a web browser, with the option of adding select Real Time Economics entries to your calendar, click here.
- And here’s our how-to.
Let us know what you think. This is a pilot project, so we’d appreciate your feedback.
from Real Time Economics https://on.wsj.com/2UrtThC
No comments:
Post a Comment