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Real Time Economics
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Good morning. Jeff Sparshott here with the latest on the economy. You can send questions, comments and suggestions by replying to this email.
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Companies Plan Big Raises
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Companies are planning for steep wage increases next year, according to a new report, amid a tight labor market and the highest inflation in three decades. A survey by the Conference Board finds that companies are setting aside an average 3.9% of total payroll for wage increases next year, the most since 2008. The survey also shows that companies are planning on raising salary ranges, which would result in higher minimum, median and maximum salaries. That suggests pay raises could be broad-based and affect workers across a company’s pay scale. The results are a sign the recent acceleration in private-sector wages is likely to carry over into 2022, David Harrison reports.
🎧 WSJ podcast: Economics reporter David Harrison discusses who could benefit most from planned raises, and how inflation factors into the picture.
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The U.S. job openings and labor turnover survey is expected to show job openings rose to 10.6 million in October from 10.4 million one month earlier. (10 a.m. ET)
The Bank of Canada releases a policy statement at 10 a.m. ET.
The chief executive officers of half a dozen cryptocurrency firms are set to appear before the House Financial Services Committee at 10 a.m. ET. Follow our coverage here.
China's producer-price index for November is expected to increase 12% from one year earlier, and the consumer-price index is forecast to rise 2.6% from one year earlier. (8:30 p.m. ET)
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Amazon is emerging as a de facto wage-and-benefit setter for a large pool of low-skilled workers. Business experts have long researched what is known as the Amazon effect in disrupting traditional retailers. Now Amazon’s every move is causing ripple effects well beyond the retail space in local markets throughout America, including on inflation, regional job markets and labor standards. The nation’s second-largest private employer is bombarding job boards with promises of large sign-on bonuses and pay—in some cases nearly triple the federal minimum wage, Sebastian Herrera reports.
“Everyone is comparing job offers, and they always have Amazon as a benchmark.” —Lynn Reaser, professor at Point Loma Nazarene University
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U.S. job openings continue to far outpace the number of available workers. There are around 11 million job openings in the U.S., according to estimates from job-search site ZipRecruiter, based on their analysis of online job postings and government data sources. That compares to 6.9 million people who are without jobs and actively seeking work. “That’s the lowest ratio of unemployed people to job openings we’ve ever seen and that is contributing to unprecedented tightness in the labor market,” said Julia Pollak, chief economist for ZipRecruiter. The Labor Department on Wednesday releases its own survey of October job openings and turnover in the labor market, Gabriel T. Rubin reports.
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The rate at which people are quitting jobs has also been at record levels in recent months. Workers are quitting for higher wages in other positions, more flexibile working conditions and better benefits.
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U.S. Trade Deficit Narrows
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The U.S. trade deficit narrowed sharply in October as an increase in exports of energy and agricultural commodities outpaced growth in imports, which were restrained by a backlog at U.S. ports that month. The deficit in trade of goods and services fell by 17.6% to a seasonally adjusted $67.1 billion in October, the Commerce Department said, compared with a record $81.4 billion gap in September. The report covered a period in which disruptions to the supply chain had grown especially acute, Josh Zumbrun and Anthony DeBarros report.
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The strong month for U.S. exports was driven by a range of factors, some of which are unlikely to persist. A jump in crude-oil exports reflected U.S. refineries that came back online in October after being partially shut down in September after Hurricane Ida struck Louisiana. China stepped up soybean purchases in the final months of the two-year U.S.-China trade deal which called for Beijing to hit certain purchase targets of U.S. goods. Despite the increase in October, China is poised to miss its purchasing goals for U.S. agriculture, manufacturing and energy by wide margins.
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Retailers have been ordering goods earlier and in larger volumes to guard against shortages. Delivery delays could leave them with excess or outdated inventory. The stakes for retailers during the fourth quarter, when sales and profits traditionally peak, are high this year because of supply-chain volatility, transport bottlenecks and the uncertain impact of the Omicron variant of Covid-19 on shopper behavior, Jennifer Smith and Lydia O’Neal report.
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Voters Worry About Inflation
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Inflation has emerged as a pressing concern for American voters, with majorities saying it is causing them at least some financial strain and is bound to get worse, a new Wall Street Journal poll finds. The survey helps to explain why voters believe the economy is headed in the wrong direction at a time when it is creating jobs, and while wages are rising and stock markets have made gains during the year, Aaron Zitner reports.
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Turkey's Currency Crisis, Germany’s New Chancellor
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The Turkish lira has shed nearly half of its value against the dollar this year and inflation is spiraling skyward. For Turkey’s embattled economy, investors and economists fear it could get a lot worse before it gets better. At the center of Turkey’s troubles are years of unorthodox economic policies championed by Turkish President Recep Tayyip Erdogan. Mr. Erdogan argues that higher interest rates stoke inflation and lower rates will cause inflation to ebb. This is the opposite of what economies around the world have experienced through history, Caitlin Ostroff reports.
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Mr. Erdogan's policies also goes against what most other emerging market central banks have done this year. Places such as Russia, Mexico and Brazil have lifted rates to fight inflation and stave off a stronger dollar, which makes foreign-currency debts harder to pay off.
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Germany’s parliament elected a new chancellor on Wednesday, ending Angela Merkel’s 16-year rule. Olaf Scholz, 63, and his Green and free-market coalition partners have agreed on a four-year program to overhaul Germany’s economy, fight climate change, digitize public services and reverse its demographic decline. For now, however, they will have to manage the country’s worst Covid-19 wave to date, rising inflation, rocketing energy prices, falling consumer confidence, and a manufacturing sector that faces a toxic combination of supply bottlenecks, falling orders and skilled labor shortages, Bojan Pancevski reports.
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Italy faces a dilemma at a critical moment for its economy and the fight against Covid-19: Should Mario Draghi remain prime minister for another year or become the country’s largely ceremonial president for the next seven?
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German Chancellor Olaf Scholz will have to manage the country’s worst Covid-19 wave to date. PHOTO: CLEMENS BILAN/SHUTTERSTOCK
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Real Time Economics offers a downloadable calendar with concise previews, forecasts and analysis of major U.S. data releases. To add to your calendar, please click here.
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How are we doing? Please send us any questions, comments or suggestions by replying to this email. Thank you.
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