Newsletter: Layoffs, Trade Talks and the Fed’s Outlook
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On the Mend, Slowly
New applications for unemployment benefits have eased in recent weeks but remain at historically high levels, indicating that the labor market is healing but still far from recovered from the economic shock caused by the coronavirus pandemic. Economists surveyed by The Wall Street Journal are forecasting 923,000 new claims in the week ending Aug. 15, another weekly decline but still well above the highest level recorded before this year. Claims are a rough proxy for layoffs. Meanwhile, a federally funded $600-per-week enhanced unemployment benefit expired at the end of July. That caused the payment to recipients on regular state programs—more than 15 million people near the end of July—to fall to levels approved by their states, which average a little more than $300 a week, Eric Morath reports.
The Labor Department releases the latest claims data today at 8:30 a.m. ET.
WHAT TO WATCH TODAY
The European Central Bank releases minutes from its July 15-16 meeting at 7:30 a.m. ET.
U.S. jobless claims for the week ending Aug. 15 are expected to fall to 923,000 from 963,000 a week earlier. (8:30 a.m. ET)
The Philadelphia Fed manufacturing survey for August is expected to fall to 20.0 from 24.1 a month earlier. (8:30 a.m. ET)
The Conference Board’s leading economic index for July is expected to rise 1.1% from the prior month. (10 a.m. ET)
San Francisco Fed President Mary Daly speaks on the future of work at a virtual event hosted by her bank at 1 p.m. ET.
Japan’s consumer-price index for July is out at 7:30 p.m. ET.
A Little Less Conversation
U.S.-China trade talks are delayed, not derailed. Negotiators plan to confer by video in the coming days over progress in fulfilling terms of the “Phase One” trade deal and U.S. actions against Chinese technology firms, according to officials in both nations. The talks were thrown into doubt Tuesday night when President Trump said that he had canceled a virtual meeting because of his anger over the way Beijing handled the coronavirus pandemic. The two sides still haven’t picked a specific date and it wasn’t clear why, though a delay gives Chinese officials more time to buy U.S. goods and show that they are trying to live up to the deal’s ambitious purchase targets, Bob Davis and Lingling Wei report.
- China is targeting top scientific and technological expertise in the U.S. and other advanced nations through an expanding network of 600 talent-recruitment stations world-wide, Kate O’Keeffe and Aruna Viswanatha report.
Counting Down the Minutes
Federal Reserve officials last month saw the need for additional support for the economy. Minutes from the Fed’s July 28-29 meeting released Wednesday showed officials believed more government spending would be needed to prevent a longer or deeper downturn amid difficulties suppressing the coronavirus. A number of officials also believed more stimulus from the Fed could be required. With interest rates already cut to near zero, Fed officials could do this by providing more specifics about how long they will keep rates low, Nick Timiraos reports.
No deal. Lawmakers from both parties are growing increasingly worried by the stalemate over a coronavirus aid package.
The letter of the month is…W. That is perhaps the most striking takeaway from Bank of America’s monthly survey of global fund managers. Just 17% expect a V-shaped recovery for the economy. The plurality, some 37%, now expect a W shape, also known as a double dip. That is up from 30% in the prior month’s survey. And 31% now expect a recovery that resembles a U, Aaron Back reports.
Covid-19 Appeared to Be Under Control in Europe…
Coronavirus infections are surging again across much of Europe and governments are racing to prevent a full-fledged second wave of the pandemic —without resorting to the kind of broad lockdowns that devastated their economies in the spring.
Copper rose above $3 a pound for the first time in more than two years on Wednesday, extending a recent rally driven by steady Chinese demand and disruptions to global supply. The industrial metal is used to manufacture everything from smartphones to homes. Prices tumbled early in the year when the coronavirus shut down the Chinese economy, but they have rebounded lately with manufacturing activity in China accelerating, Amrith Ramkumar reports.
Winners and Losers
Apple Inc. on Wednesday became the first U.S. public company to eclipse $2 trillion in market value, a dizzying achievement that highlights the iPhone maker’s commanding role in the world economy. The stock has more than doubled from its March 23 low, boosted by steady demand for the company’s devices and better-than-feared results in its core iPhone business as millions of Americans work from home, Amrith Ramkumar reports.
Finance chiefs are writing down the value of company assets such as airplanes, cruise ships and movie theaters in response to changes in consumer behavior during the coronavirus pandemic. The 2,000 largest U.S. businesses by market capitalization—from oil companies to airlines and restaurant chains—have been recording higher pre-tax impairments as existing assets and investments produce poor returns amid the economic downturn, Mark Maurer reports.
WHAT ELSE WE’RE READING
What happens if Congress and the White House don’t agree on a new stimulus program? Less direct aid to households and a likely blow to the economy. “To illustrate the potential macroeconomic impact of lowering support, we assume that direct aid to households will fall by $500 billion. We estimate that the impact would be a deeper recession, a loss of GDP of 4% to 5%, and an associated 4% to 5% increase in the unemployment rate,” Sherman Robinson and Raul Hinojosa-Ojeda write at the Peterson Institute for International Economics.
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