This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.
Good morning. Jeff Sparshott here to take you through the latest on the labor market, consumer spending, trade, the Fed and bond markets. Send us your questions, comments and suggestions by replying to this email.
Holes in the Safety Net?
Fewer jobless Americans are relying on unemployment insurance. One reason: Tighter state rules on obtaining the benefits, Sarah Chaney reports.
- The share of jobless people receiving unemployment benefits fell after the 2007-09 recession and has stagnated at a historically low level since. Last year, 28% of jobless people received benefits, down from 37% in 2000—a period of similarly low unemployment.
- Cause and effect: After the last recession ended, state legislatures passed policies reducing unemployment benefits and tightening eligibility requirements. Ten states cut the duration of benefits, five adopted stricter work-search requirements and several trimmed the average weekly-benefit amount, according to the National Employment Law Project.
- A strong labor market also means many jobless people today quit their jobs voluntarily and so are ineligible for benefits in most cases.
WHAT TO WATCH TODAY
U.S. retail sales for October are expected to climb 0.2% from the prior month. (8:30 a.m. ET)
U.S. import prices for October are expected to fall 0.2% from the prior month. (8:30 a.m. ET)
The New York Fed’s Empire State survey for November is expected to tick up to 5.0 from 4.0 a month earlier. (8:30 a.m. ET)
U.S. industrial production for October is expected to fall 0.5% from the prior month. (9:15 a.m. ET)
U.S. business inventories for September are expected to rise 0.1% from the prior month. (10 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
The San Francisco Fed’s Mary Daly speaks at an Asia economic policy conference at 3:30 p.m. ET.
TOP STORIES
Shop or Stop
American consumers showed no signs of belt-tightening in sales results from Walmart. Sales from stores and websites operating for at least 12 months rose 3.2% in the period ended Oct. 25, marking a five-year streak of quarterly sales gains. Walmart’s e-commerce sales in the U.S. rose 41% from a year earlier, bolstered by grocery orders. Finance chief Brett Biggs told reporters the company is keeping tabs on employment rates, fuel prices and wage growth for any economic shifts. “What we are seeing from the consumer is pretty good and pretty consistent,” Mr. Biggs told the WSJ’s Sarah Nassauer.
Walmart’s results offer comfort to retailers and economists worried about fallout from the trade war and the health of the global economy. We’ll get a broad-brush snapshot of consumer spending at 8:30 a.m. ET when the Commerce Department releases its retail sales report for October. Even if we get a solid report, two things seem clear:
- Relatively strong aggregate numbers aren’t trickling down to each and every retailer’s bottom line.
- Consumers are shifting away from brick-and-mortar stores.
Are tariffs now squeezing profits as well? The three factors combined could help explain a big dropoff in construction spending this year. Outlays on multi-retail—a category that includes department stores, shopping centers and malls—are down by about half from a year earlier. That’s weighing on overall construction spending and the broader economy. (h/t to Associated General Contractors economist Ken Simonson for flagging the construction spending figures.)
Mood Music: the Chicken Dance
The U.S. and China are nearing a trade deal, but President Trump isn’t ready to sign off, White House economic adviser Lawrence Kudlow said Thursday. “The mood music is pretty good,” Mr. Kudlow said, adding that Mr. Trump “likes what he sees, he’s not ready to make a commitment, he hasn’t signed off on a commitment for phase one, we have no agreement just yet for phase one.” Negotiators for the U.S. and China have been working to come up with a written “phase one” trade deal, Harriet Torry reports.
One possibly good sign: China agreed to lift a more than four-year-old ban on U.S. chicken imports. American poultry had been banned in China since 2015 following an outbreak of avian influenza, and the two sides have discussed lifting the ban as part of trade negotiations, Josh Zumbrun reports.
The Good Place
Federal Reserve Chairman Jerome Powell said the central bank was optimistic its interest-rate cuts this year would buoy the U.S. economy against lingering headwinds, including trade uncertainty and a slowdown in global growth, Nick Timiraos reports. While the amount of tariffs imposed on U.S. trade with China is quite small so far, the uncertainty over the broader tactics of the dispute have weighed on business sentiment. “Uncertainty is huge for businesspeople making decisions,” Mr. Powell said. “There’s always the ability to wait, just wait, to make a decision if you think something’s going to be resolved.”
The WSJ’s Michael S. Derby rounds up comments from other Fed officials:
Vice Chairman Richard Clarida said the U.S. economy may be testing the edge of full employment. “Although the labor market is robust, there is no evidence that rising wages are putting excessive upward pressure on price inflation,” Mr. Clarida said.
New York Fed President John Williams said interest-rate policy is in the right place to deal with the current environment of uncertainty. “The economy is in a good place, and monetary policy is as well,” Mr. Williams said.
St. Louis Fed President James Bullard said he doesn’t see any need to lower interest rates beyond the three cuts the U.S. central bank has made this year. “Now it makes sense to wait and see how the economy responds during the fourth quarter here and into 2020,” he said.
Bond Signal
Yields on U.S. government bonds have rebounded from near-historic lows hit just two months ago, sending one of the clearest signals yet that investors’ recent recession fears have waned. A series of developments have combined to boost the economic outlook, powering a steep climb in the 10-year Treasury yield—a key benchmark that helps set borrowing costs on everything from corporate debt to mortgages. Those include the Fed’s cuts to short-term interest rates, steps toward a trade agreement by the U.S. and China and a series of economic reports that turned out better than some investors had feared. The yield’s climb marks a significant reversal for the bond market. At one point this summer, U.S. yields were falling so quickly that some investors and analysts wondered if they could drop below zero, Daniel Kruger and Sam Goldfarb report.
WHAT ELSE WE’RE READING
Yes, robots are stealing your job. “We have to stop denying the effects of automation on our people and focus on 21st-century solutions to these problems. Looking at gross domestic product, the stock market and unemployment is a very 20th-century way of measuring the economy. Self-driving trucks will be great for the GDP; they’ll be terrible for millions of truck drivers,” Andrew Yang, a Democratic candidate for president, writes in the New York Times.
SIGN UP FOR OUR CALENDAR
Real Time Economics has launched a downloadable calendar with concise previews, forecasts and analysis of major U.S. data releases. To add to your calendar, please click here.
from Real Time Economics https://ift.tt/358Ct67
No comments:
Post a Comment