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U.S. Productivity May Be About to Accelerate; Economic Officials to Meet as Recovery Prospects Diverge
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Good day. A host of meetings this week will take stock of the global economy as part of the IMF and the World Bank's annual spring meeting that begins virtually today. The rebound in the U.S. is helping the global economy recover faster than projected. But many low- and middle-income nations with limited financial resources are lagging behind, an issue the world’s top economic officials are expected to take up.
During the pandemic months, U.S. companies have been pouring money into technology and consumers have embraced digital services, signs that productivity may be poised to pick up. That would enable companies to raise wages without raising prices, damping inflation pressure in a rebound in which the jobs market is gaining momentum as more people get vaccinated, restrictions on business activity are lifted and consumers travel outside their homes.
Now on to today’s news and analysis.
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The annual spring meeting of the IMF and the World Bank will be held virtually starting Monday. PHOTO: DANIEL SLIM/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Nations Begin to Shape Post-Covid-19 Global Economy
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The world’s finance ministers and central bankers plan to meet this week at a virtual meeting that will focus on the prospect of new Covid-19 variants and shutdowns undermining the global rebound, while weighing measures to prevent lasting damage to the poorest and most vulnerable populations.
The international economy is recovering faster than many economists projected just weeks ago, powered by growth in the U.S. and China and by the accelerating pace of vaccinations in many rich countries. Yet a new wave of lockdowns—from Europe to Canada—is threatening that growth, as many low- and middle-income nations with limited resources lag behind.
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Key Developments Around the World
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U.S.’s Long Drought in Worker Productivity Could Be Ending
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After a decadelong drought, worker productivity might be about to accelerate thanks to pandemic-induced technological adoption, which could lift economic growth and wages in coming years while staving off inflation pressure.
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U.S. Added 916,000 Jobs in March as Hiring Accelerated
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U.S. employers added a seasonally adjusted 916,000 jobs in March, affirming an accelerating employment trend after a recent stall and could be the start of a prolonged stretch of strong job creation. The unemployment rate, determined by a separate survey, fell to 6.0%, a pandemic low. Last month more job seekers entered the labor market, which could provide a critical source of labor for employers ramping up hiring in the coming months.
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Covid-19 Kills a Lifeline in Poor Economies—Hustling for Work
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When times get tough in the developing world, many workers eke out a living by doing odd jobs, driving taxis or selling snacks on the street. In the post-Covid economy, even those options aren’t working out for many people.
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What the U.S. Can Learn From China’s Infatuation With Infrastructure
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China’s leapfrogging—practically to bullet trains from bicycles—may have limited direct application to improving U.S. infrastructure, as the two nations have different needs and diametrically opposed political systems.
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Risky Borrowers Are Falling Behind on Car Payments
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A greater share of people with low credit scores has been falling behind on their car payments in recent months, a sign of stress among consumers whose finances have been hit hard by the pandemic. Some 10.9% of subprime borrowers with outstanding auto loans or leases were more than 60 days past due in February, up from 10.7% in January and 8.7% a year prior, according to credit-reporting firm TransUnion.
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Financial Regulation Roundup
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Hong Kong Revives Move to Reduce Corporate Transparency
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The city’s government is seeking to curb public access to details that identify owners and directors, a move that journalist groups and investors say would erode corporate transparency and diminish press freedom.
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Archegos Stock Fallout: How Banks Went From Safe to Sorry
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Losses suffered by some of the world’s biggest banks came in their prime brokerage business, a relatively low-risk operation that trades for and lends to hedge funds and other sophisticated investors such as family offices in the case of Archegos.
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Treasury’s Financial Crimes Unit Shuffles Leadership
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The U.S. Treasury Department’s anti-money-laundering unit is changing leadership as it gears up to write a complex set of regulations enacting an anti-money-laundering reform act approved in January as part of an annual defense-policy bill.
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Air Canada Scraps Proposed Acquisition of Transat
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Air Canada and Transat A.T. Inc. said they agreed to scuttle the proposed acquisition of Transat by Air Canada after European antitrust authorities indicated the deal wouldn’t receive their blessing.
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12:30 a.m.: Reserve Bank of Australia releases policy statement
10 a.m.: U.S. Labor Department releases February Job Openings and Labor Turnover Survey
4:05 p.m.: Chicago Fed’s Evans speaks at High School Fed Challenge winners announcement
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Time N/A: National Bank of Poland releases policy statement
8:30 a.m.: U.S. Commerce Department releases February international trade data
2 p.m.: Federal Reserve releases March 16-17 meeting minutes
3 p.m.: Federal Reserve releases February U.S. consumer-credit data
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Jobs Report Might Shift Thinking on Inflation and Yields
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U.S. employers added 916,000 jobs in March or some 400,000 more than predicted by a Wall Street Journal survey of economists, whose forecasts also indicate fears of major pressure on wages and prices are overblown. The surprisingly quick pace of recovery could force them to rethink their calculations, Spencer Jakab writes, noting a National Federation of Independent Business report shows a one-year high in the share of businesses raising wages to attract workers.
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Yield-chasing investors in the U.S. are snapping up single-family houses to rent out or flip, competing for properties with ordinary Americans, who are armed with the cheapest mortgage financing ever, and driving up home prices.
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Suez Canal authorities said they cleared the massive traffic backlog that resulted when a giant container ship got stuck and blocked the important waterway, disrupting global trade.
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U.S. government-bond yields ticked higher Friday, with the yield on the benchmark U.S. Treasury note settling at 1.721% compared with 1.680% Thursday, as new data showed a big jump in hiring in March, giving investors further cause for optimism about the economic outlook.
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This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London.
Send us your tips, suggestions and feedback. Write to:
Jon Hilsenrath, Michael Derby, Nell Henderson, Nick Timiraos, Jason Douglas, Paul Hannon, Harriet Torry, Kate Davidson, David Harrison, Kim Mackrael, Tom Fairless, Megumi Fujikawa, Michael Maloney, Paul Kiernan, James Glynn
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