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Fed Set to Raise Rates, Signal Slower Pace of Increases The Loneliest Job in a Tight Labor Market U.S. Existing Home Sales Fell From a Year Ago Current-Account Deficit Widened in Third Quarter Beware the Big Tech Backlash U.S. Housing Starts Grew in November Italy Says It Struck Deficit Compromise With EU A New Way to Spot the Next Financial Crisis Let the Good Times…Stay a Little Longer? U.S. Prepares More Payments to Trade-Hit Farmers Mexico to Give Minimum Wage Another Boost Trump Administration Blocks Tax Break for Alcohol Companies Smaller Fed Moves Have Bigger Market Impacts Fed Faces Communication Challenge on Rates State and Local Investment Gets Lift From Rising Revenues President Donald Trump speaks during a meeting with state and local officials. Photo: Chip Somodevilla/Getty Images
Feb 14, 2018 5:01 am ET

This is the web version of the WSJ’s daily economic newsletter. You can sign up for daily delivery here.

In today's issue, Trump talks tough on trade, inflation is expected to remain tame, Americans are piling on more debt, the White House considers a hawk for a top Fed job, and the world’s third and fourth biggest economies—Japan and Germany—are looking strong, adding to evidence of buoyant global growth.


Economists see a trade war as an unlikely but potentially destabilizing risk to U.S. and global growth.

Is the U.S. edging closer? President Donald Trump said he is eyeing tariffs or quotas on imports of steel and aluminum. "I look at it two ways: I want to keep prices down, but I also want to make sure that we have a steel industry and an aluminum industry, and we do need that for national defense."

Some lawmakers warned Mr. Trump about hurting industries that use steel and aluminum. Sen. Roy Blunt (R., Missouri) cautioned against starting “a reciprocal battle on tariffs.”

The White House is expected to make a decision by early April on whether imports of the metals should be restricted on national-security grounds, William Mauldin reports. Higher tariffs in theory raise prices, helping domestic producers but also raising costs for users of steel, some of whom will become less competitive against foreign firms. They also contribute to inflation, ratchet up political tension and could potentially slow overall growth.


The U.S. consumer-price index for January is due out at 8:30 a.m. E.T. Economists expect headline inflation to rise 1.9% from a year earlier and core inflation, which excludes food and energy, to advance 1.7%, both a slowdown from December’s pace. Price pressure has been muted throughout the latest expansion but investors and economists are alert for any sign that stronger growth and higher wages are percolating through to consumer prices. “Despite the potential for a weak January reading, the trend towards firmer inflation will likely continue,” economists at Deutsche Bank said.

U.S. retail sales for January are expected to rise 0.2% from the prior month, a slowdown from December’s 0.4% pace. That’s partly because auto sales slipped. Otherwise, U.S. consumer spending appears robust. “Strong fundamentals (including solid job growth, accelerating wage gains, and record household net worth) should push retail sales excluding automobiles higher,” economists at Nationwide said.

Business inventories for December are expected to rise 0.3% from the prior month.



U.S. households are managing record levels of debt. The share of loans considered to be seriously delinquent, meaning payment is at least 90 days late, fell slightly in the fourth quarter and is just above 3%, the New York Fed said.

Rising wages and falling tax bills should leave consumer well positioned to handle debt burdens this year, Eric Morath reports. And while it’s a record in nominal terms, as a share of U.S. economic output household debt was about 67% last quarter, well below a high of about 87% in early 2009.

The serious delinquency rate on mortgage loans has trended down for several years. The only possible red flags came with student and auto loans.


Starting around 2011, delinquencies on credit-card debt, mortgages, and other types of loans dropped as unemployment fell and the economy healed.

That didn't happen with student loans. Delinquencies continued rising through 2012 and have remained exceptionally high, Josh Mitchell reports. At this year’s start, 11% of the nearly $1.4 trillion in student debt was delinquent—sitting in an account that hadn’t received a payment in at least 90 days. Strike out the debt held by borrowers not required to make a payment and the share is more like 22%.

That's one big reason the Trump administration and congressional Republicans are looking to revamp student lending.


The White House is considering nominating Loretta Mester, the president of the Federal Reserve Bank of Cleveland, as vice chairwoman of the Federal Reserve Board in Washington, Nick Timiraos reports.

The Trump administration is interested in filling the vice chairman post with a well-respected expert in monetary economics. Ms. Mester would satisfy that criterion and possibly others for the White House’s search, now in its fourth month.

The Cleveland Fed president is considered moderately hawkish. The White House has interviewed Ms. Mester and several other economists for the position. It isn’t clear whether there is a front-runner, and a nomination doesn’t appear to be imminent.


Japan recorded its eighth straight quarter of growth, the longest streak since its heyday in the late 1980s, and economists generally expect modest expansion to continue this year.

The economy expanded an annualized 0.5% in the last three months of 2017 from the previous quarter, Megumi Fujikawa and Mayumi Negishi report. The economy grew 1.6% in 2017—the fastest pace in seven years—an indication that Prime Minister Shinzo Abe is succeeding in generating more stable, albeit modest, growth.

Policy makers say Japan’s economy is on a more solid footing than in the late-1980s bubble years, which turned at the beginning of the 1990s into decades of stagnation and deflation.


Europe's biggest economy reported more solid growth today.

Germany's fourth-quarter gross domestic product grew at an annualized rate of 2.5% as exports picked up. The nation's economy has remained strong and its jobs market buoyant despite a rising euro and an inconclusive election result in the fall of 2017.

The eurozone economy advanced at a 2.4% annualized pace in the fourth quarter, according to revised numbers out today.


Senator Patrick J. Toomey, Republican of Pennsylvania, urged the president "to go very, very cautiously" and focus specifically on countries that have unfair trading practices.

Mr. Trump replied, “That’s all countries.”

— Ana Swanson (@AnaSwanson) February 13, 2018


An increase in monopoly power and a decline in interest rates explain everything. Well, not everything. But new research suggests they are behind a handful of puzzling developments in the U.S. economy, including a declining share of income going to labor and a rising share going to profits. “There are important welfare implications to an increase in market power. Most directly, an increase in markups has a negative impact on GDP,” Brown University's Gauti B. Eggertsson, Jacob A. Robbins and Ella Getz Wold write. The research paper is here and a reader-friendly blog post here.

Opening a supermarket in a so-called food desert has little impact on the nutritional choices of people who live there. Instead, people tend to buy products they like regardless of how far they travel to shop, New York University's Hunt Allcott, Stanford University's Rebecca Diamond and the University of Chicago's Jean-Pierre Dubé write. “For a policymaker who wants to help low-income families to eat more healthfully, the analyses in this paper suggest an opportunity for future research to explore the demand-side benefits of improving health education—if possible through effective interventions—rather than changing local supply."


Thursday brings more inflation data. The U.S. producer price index is out at 8:30 a.m. E.T. Economists expect headline prices to advance 0.4% and core prices to climb 0.2%.

U.S. jobless claims are forecast to rise to 230,000 from 221,000, remaining at a historically low level.

The New York Fed’s Empire State manufacturing survey for February is expected to register at 17.3, down slightly from  17.7 a month earlier.

The Philadelphia Fed’s manufacturing survey for February is forecast to slide to 20.4 from 22.2.

The Federal Reserve’s January industrial production index is expected to rise 0.3%. Previous The Student-Loan Problem That Won't Go Away Next Want Better Pay Than the Bosses? Get a Job in Elevator Repair

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