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Real Time Economics | High Times, Trade Truces and Fed Independence
Real Time Economics
American workers are smoking more marijuana, the European Union and
Japan are trying to keep the peace with President Trump, and Fed
officials at least sound like they're trying to ignore political
pressure. 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.
Because I Got High
The share of American workers and job
applicants who tested positive for marijuana climbed 10% last year,
according to an analysis by Quest Diagnostics, one of the nation’s
largest drug-testing laboratories. Quest found 2.3% of the analyzed
samples contained traces of marijuana and 4.4% contained traces of both legal and illegal controlled substances
including pot, prescription painkillers and other drugs—the highest
such rate since 2004. Since then, the number of drug tests showing signs
of cocaine, heroin, prescription sleep aids and certain opiates has
fallen sharply. But marijuana use has steadily risen for the general
U.S. workforce, including among employees in safety-sensitive jobs such
airplane pilots, nuclear power-plant operators and train conductors,
Kelsey Gee reports.
Lawmakers in New Jersey and Illinois are pushing to join nearly a dozen
more states where recreational use of the drug is now legal.
What to Watch Today
U.S. import prices for March are expected to rise 0.5% from a month earlier. (8:30 a.m. ET)
The University of Michigan consumer-sentiment index for April is expected to slip to 98.0 from 98.4 at the end of the prior month. (10 a.m. ET)
The Bank of England’s Mark Carney, Bank of Russia’s Elvira Nabiullina and Bank Negara Malaysia’s Nor Shamsiah Mohd Yunus speak on managing capital flows at World Bank/International Monetary Fund meetings at 12:30 p.m. ET.
The Baker-Hughes rig
count is out at 1 p.m. ET.
President Trump delivers remarks on 5G deployment at 2:25 p.m. ET. The White House plans to ramp up the government’s role in speeding next-generation technologies, a key area of competition with China.
The Bank of Japan’s Haruhiko Kuroda speaks in Washington, D.C., at 4:00 p.m. ET.
Keeping the Peace
The European Union agreed to launch talks for a trade pact with the U.S.,
seeking to preserve a truce with President Trump despite competing
demands over agriculture. EU governments directed the bloc’s executive
arm to focus on slashing tariffs on industrial goods, explicitly
excluding agriculture. Two days earlier, the U.S. envoy to the EU said
agriculture must be included, Emre Peker reports.
U.S. Trade Representative Robert Lighthizer
is set to meet his Japanese counterpart in Washington next week, nearly
seven months after President Trump and Japanese Prime Minister Shinzo
Abe agreed to start
two-way trade talks.
negotiations come at a critical time, with U.S. officials saying their
patience is wearing thin and Mr. Trump considering tariffs on U.S. auto
The number of Americans filing applications for new unemployment benefits fell last week to the lowest level in nearly half a century. On the one hand, the numbers reinforce other data suggesting the labor market regained its footing after a weak February.
On the other, jobless claims, which
measure how many people file for unemployment benefits, are increasingly
detached from actual layoffs.
That's likely a function of several
factors: Fewer jobs qualify for benefits, it's harder to apply for
benefits and a strong labor market means fewer people bother. So while
claims are plumbing new depths, layoffs are not.
Republicans Trip Trump's Fed Pick
Four Republican senators have now said they would oppose the nomination
of former restaurant executive Herman Cain to the Federal Reserve
board, effectively dashing President Trump’s hopes of putting a
political ally on the powerful body. With 53 seats in the Senate, the
Republicans can afford no more than three defections to maintain the
majority needed to win a confirmation vote, Paul Kiernan and Rebecca
No votes: Sens. Mitt Romney (R., Utah), Cory Gardner (R., Colo.), Lisa Murkowski (R., Alaska) and Kevin Cramer (R., N.D.).
What They're Saying
Mr. Trump picked Mr. Cain and his former
campaign adviser Stephen Moore for Fed jobs after growing more and more
frustrated with central bank policy. The Fed raised rates four times
last year—the president wants them cut. Fed officials appear inclined to
"We need to make a judgment about whether we are stimulating or restricting the economy. It is hard to know for
sure - we have to estimate it. I think we are close to neutral today." —Minneapolis Fed President Neel Kashkari
WSJ Survey of Economists
Speaking of the Fed, economists expect the central bank to keep interest rates unchanged
at least through the end of 2021, according to a Wall Street Journal
survey. Just 1% of respondents predicted a rate cut this year, but about
a third saw one or more reductions by the end of 2021.
China’s exports rebounded strongly in March, the latest sign of
stabilization in the world’s second-largest economy. China’s exports
rose 14.2% from a year earlier, partially reversing a 20.7% drop in
February. Imports fell 7.6% from a year earlier in March and 5.2% in
February, Chao Deng reports. China's Lunar New Year holiday often
distorts data during the opening months of the year, clouding the
Mexico’s lower house passed a landmark
labor reform that empowers unions to bargain more effectively on behalf
of workers and clears one of the last obstacles to ratifying the North
American Free Trade Agreement's successor. The overhaul is meant to
comply with labor requirements laid out in the U.S.-Mexico-Canada
Agreement, or USMCA. The trade pact seeks to curb Mexico’s labor advantage
by strengthening worker protections and bringing Mexican wages more in
line with the rest of North America, Robbie Whelan and Juan Montes
Quote of the Day
Today I challenge our top retail competitors (you know who you are!) to
match our employee benefits and our $15 minimum wage. Do it!