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President Trump’s Fed bark may be worse than his bite, U.S. steelmakers keep getting stung by bad tariff calculations, and European Central Bank President Mario Draghi hopes to end his eight-year term with a bang. 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.
Trump’s Fed Bark Shows Less Bite
The Senate this week is poised to confirm Federal Reserve governor Michelle Bowman to a new 14-year term after her current one expires next February. Normally such a reappointment wouldn’t be remarkable. Ms. Bowman was first confirmed last November to fill one of three vacancies on the Fed’s seven-member board. But her speedy reappointment merits notice given President Trump’s hectoring of the Fed this summer.
- Mr. Trump has repeatedly accused Fed Chairman Jerome Powell of damaging the economy. In less than a year on the Fed’s board, Ms. Bowman has consistently voted on policy decisions with Mr. Powell.
- The Bowman reappointment offers one possible insight into Mr. Trump’s approach to governing: His bark may be worse than his bite.
- He has tweeted about the central bank 25 times since Aug. 3. But his administration hasn’t sent any paperwork to the Senate to fill vacancies on the Fed’s board for his announced picks Judy Shelton and Christopher Waller. The one personnel move the Senate and his administration have moved most expeditiously has been a sitting governor.
—Nick Timiraos
WHAT TO WATCH
The U.S. job openings and labor turnover survey for July is out at 10 a.m. ET.
Treasury Secretary Steven Mnuchin and HUD Secretary Ben Carson appear before the Senate Banking Committee to discuss the future of Fannie Mae and Freddie Mac at 10 a.m. ET.
TOP STORIES
He Hates These Cans
U.S. steelmakers, already stung from tariff-related business moves that have backfired, are facing an unexpected new woe: a bad vegetable harvest, Bob Tita reports.
- United States Steel Corp. and ArcelorMittal ramped up production and improved the quality of the tin-coated steel sheet they make for food cans, expecting domestic demand to increase following 25% duties on foreign product. But imports of steel for cans have hardly dropped since the tariff was implemented in March 2018.
- Now, falling demand for steel cans is a fresh ding to producers. The wettest 12 months on record have wreaked havoc across the Farm Belt and hurt this year’s crop of peas, beans and other vegetables. Halfway through the packing season, canned vegetable volumes are running 10% below last year’s level. At that pace, about one billion fewer cans will be needed this year.
- U.S. Steel plans to idle a tinplate mill in East Chicago, Ind., by the middle of November, furloughing about 150 workers and reassigning about 150 more. ArcelorMittal said it would lay off 100 workers at its Weirton, W.Va., mill.
Boom and Bust
Shale companies helped the U.S. become the world’s top oil producer by unlocking crude from dense rock formations using horizontal drilling and hydraulic fracturing. But many of the companies have yet to show they can deliver consistent returns or live within their means as oil prices hover above $50 a barrel. The results: Shale stocks have reached historic lows, many companies are all but cut off from capital markets, and the survivors are refocusing on profits over expanding production, Christopher M. Matthews reports.
Big picture: The shift in priorities is affecting the broader economy. The shift in priorities is affecting the broader economy. Business spending on mining shafts and wells has been a drag on gross domestic product for four straight quarters.
Super Mario
European Central Bank President Mario Draghi hopes to end his eight-year term with a bang. Some fear it could conclude with a fizzle. In the run-up to his departure on Oct. 31, the central banker has signaled plans for a large, final burst of monetary stimulus to prop up the eurozone economy. But critical voices are multiplying, including a growing number from the ECB’s own 25-member rate-setting committee. Those objections raise the prospect of a rare defeat at Thursday’s ECB meeting for Mr. Draghi. Investors are pricing in a roughly 50% chance of a 0.2 percentage-point rate cut, as well as a program to buy about €30 billion to €40 billion of sovereign debt a month, Tom Fairless reports.
Pig Out
Skyrocketing pork prices pushed China’s consumer-price index up 2.8% from a year earlier in August, matching the fastest pace in 17 months. Pork prices jumped nearly 47% as supplies were crimped by outbreaks of African swine fever. That likely won’t be a barrier to further monetary easing: The core consumer-inflation rate, which strips out volatile food and energy prices, slipped to a three-year low in August, Grace Zhu and Liyan Qi report.
Weak domestic demand: The producer-price inflation rate last month fell further into deflationary territory, piling pressure on manufacturers that have been struggling with declining orders as the U.S.-China trade war intensified.
Boris and the Great Big Brexit Caper
British Prime Minister Boris Johnson stuck to his pledge that the U.K. would quit the European Union on Oct. 31—even as a law came into force preventing the country from leaving without an agreement, Paul Hannon and Jason Douglas report.
What’s next? The prime minister promised to “press on with negotiating a deal, while preparing to leave without one.” But lawmakers passed legislation blocking a no-deal exit on Oct. 31 and denied Mr. Johnson a snap election. One key date is Oct. 17, when EU leaders meet in Brussels to discuss a potential Brexit agreement.
Despite Brexit uncertainty and a global slowdown, the U.K. labor market is holding up. The unemployment rate held steady at 3.8% in the three months through July, sticking at its lowest level since 1974. The number of unemployed people fell by 11,000 from the previous three-month period, to 1.294 million.
WHAT ELSE WE’RE READING
For the first time in the U.S., most new working-age hires are people of color. “Women are predominantly driving this trend, which is so powerful that even many women who weren’t thinking about working—because they were in school, caring for kids or at home for other reasons—are being lured into employment,” Heather Long and Andrew Van Dam write in the Washington Post.
Tariffs are not abstract, and they are not distant. “If the full weight of the tariffs goes into effect, the price of, for instance, a pick up truck dash cover will increase $25 in price, a Nissan catalytic converter will increase by $40, and a Honda CR-V driveshaft will increase $50. At a time when studies say 40% of Americans have trouble handling a $400 emergency, such price increases would be problematic for lower-income and even middle-class citizens,” Charles Fischer, chief merchandising officer at CarParts.com, writes in The Hill.
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