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Real Time Economics
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Good morning. This is Jeff Sparshott with the latest on the economy. You can send questions, comments and suggestions by replying to this email.
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Gender Pay Gap Opens Early
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Broad new data on wages earned by college graduates who received federal student aid showed a pay gap emerging between men and women soon after they joined the workforce, even among those receiving the same degree from the same school. The data, which cover about 1.7 million graduates, showed that median pay for men exceeded that for women three years after graduation in nearly 75% of roughly 11,300 undergraduate and graduate degree programs at some 2,000 universities. In almost half of the programs, male graduates’ median earnings topped women’s by 10% or more, a Wall Street Journal analysis of data from 2015 and 2016 graduates showed.
Economists who have long examined pay gaps between men and women cite the so-called motherhood penalty—referring to the perception that mothers are less committed to their jobs—and say this affects hiring, promotions and salaries. Determining why those gaps appear earlier isn’t simple. The federal data don’t account for such factors as recipients of the same degrees seeking different types of jobs and career paths, some of which pay far more than others, Melissa Korn, Lauren Weber and Andrea Fuller report.
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U.S. nonfarm labor productivity is expected to fall at a 5% annual pace in the second quarter from the prior quarter, and unit labor costs are forecast to rise 9.5%. (8:30 a.m. ET)
China's consumer-price index for July is expected to rise 2.9% from one year earlier, and its producer-price index is forecast to increase 4.5%. (9:30 p.m. ET)
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Workers’ wages are rising briskly, a factor contributing to four-decade high U.S. inflation. Average hourly earnings grew 5.2% in July from a year earlier, and annual wage gains have exceeded 5% each month this year, the Labor Department said Friday. The rapid earnings growth adds to other evidence that employers are continuing to increase pay as they try to find and keep workers in a tight job market. Wage gains help consumers spend money in the face of higher prices for restaurant meals, groceries and lodging. But many companies are having to pay more for labor at the same time that other business expenses are rising, leading firms to pass rising costs on to consumers, Sarah Chaney Cambon reports.
The Labor Department releases July consumer-price data on Wednesday, and economists surveyed by The Wall Street Journal think annual inflation cooled to 8.7% in July from 9.1% in June.
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Consumers are choosing to buy chicken and cheaper cuts of beef, Tyson Foods said on Monday, a sign shoppers are becoming more cost-conscious as food prices rise. Rather than buying more expensive steaks and loins, consumers are spending more on less expensive chicken and other meats, company officials said. Consumers are becoming more frugal as prices for essentials such as food and gasoline have become more expensive in recent months. Companies are paying close attention to shifts in demand as some retailers and consumer companies have issued profit warnings or projected falling sales in recent weeks as customers start to pull back on spending on certain items, Ashlea Ebeling reports.
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Americans are expecting less inflation in coming years, according to a recent survey by the Federal Reserve Bank of New York. Respondents’ median expectation in July was for an annual inflation rate of 6.2% in one year, down from the 6.8% they expected in June, the regional reserve bank said Monday. They expected inflation in three years to be at 3.2%, down from the 3.6% they expected in June, and inflation in five years to be at 2.3%, down from a previous 2.8%. Economists don’t see consumer expectations as a formal forecast, but pay attention to such surveys as a sign of popular psychology that can influence price pressures, Austen Hufford reports.
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More Americans are taking vacations. That doesn’t mean they’re staying off work email or truly checking out. Notorious for not taking time off, U.S. workers are vacationing in numbers not seen in years, booking flights and heading out on getaways they put off because of Covid-19 disruptions. Nearly 60% of Americans say they took at least a week of vacation in the past year, up from 44% in 2021 who said the same, according to a recent survey of more than 2,000 people by Allianz Partners USA. Many, though, say they aren’t taking a real break—and point to a hot but turbulent job market as one of the biggest reasons. Millions of U.S. workers have recently left or switched jobs, and some say they are reluctant to
completely check out for a week or two while still settling in with new employers. Others say they worry there isn’t enough staff to fully cover for them if they go totally offline, Ray A. Smith reports.
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The looming prospect of a recession has Wall Street shifting its bets on which debts Americans will make good on and which could lapse. Some investors are spurning low-rated bonds backed by pools of consumer loans. Others are steering clear of debt tied disproportionately to people with low credit scores. Those who invest across many types of Americans’ $16 trillion of household debt—such as mortgages, car loans and credit-card lines—are confronting a question that demands imagination as well as analysis: Which payments will families make first if hard times force hard choices over which bills to cover, Matt Grossman reports.
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Europe Steels Itself to Maintain Economic Pressure on Russia
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European countries are feeling the pain of an economic war with Russia triggered by its invasion of Ukraine. But governments are unlikely to back off, seeing no alternative to maintaining sanctions on Moscow and support for Kyiv. Economic data around Europe show a looming downturn, albeit delayed in parts of the continent by the summer tourism season, while high food and energy prices are fueling discontent and putting pressure on governments to offer relief. Some politicians in Western Europe are questioning the usefulness of sanctions on Russia, calling for greater efforts to de-escalate the conflict. But senior officials and analysts say Moscow’s moves to slash gas deliveries to European Union countries in retaliation for
EU sanctions as well as the growing evidence of war crimes committed by the Russian invaders have left the region with no option of rapprochement with Russia any time soon, Bojan Pancevski and Sam Schechner report.
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WSJ video: Western leaders are preparing for the possibility that Russian natural gas flows through the key Nord Stream pipeline may never return to full levels. WSJ’s Shelby Holliday explains what an energy crisis could look like in Europe, and how it might ripple through the world. Illustration: David Fang
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Record Car Sales in China, U.S. Digital Dollars
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China’s homegrown new-energy vehicle makers are booming as demand surges, with sales now forecast to hit a record six million this year in the world’s largest auto market. Warren Buffett-backed BYD Co., which has emerged as a formidable rival to Tesla, more than tripled its sales of passenger cars in July to more than 162,000 vehicles from a year earlier, the China Passenger Car Association said Tuesday. BYD’s own data shows about half of those were pure electric and the rest hybrids. Tesla’s China unit saw sales fall 14% last month from a year ago to just over 28,000 cars, the association said. A number of lesser-known Chinese startups are also emerging in a wider field of competitors, with some clocking up record sales last
month, Raffaele Huang reports.
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U.S. lawmakers are pushing the Federal Reserve to move swiftly toward issuing a digital dollar, to combat steps from China and others they say could one day threaten the U.S. status as the global reserve currency, Andrew Ackerman reports.
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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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