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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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Workers Getting Smaller Raises in 2024
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After a few years of hefty pay increases, American workers can expect solid but not spectacular raises in 2024. On average, companies are planning for salary increases of 4% in 2024, according to a December survey of more than 1,800 employers by advisory firm Willis Towers Watson. That is down from the 4.4% raises that businesses handed out in 2023, yet significantly higher than the average 3% increases that marked prepandemic years. A cooling job market and easing inflation are giving companies cover to moderate pay increases as they try to lure and retain workers, Ray A. Smith reports.
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Unity Slashes Another 25% of Its Workforce (Read)
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The U.S. trade deficit is expected to widen slightly to $64.7 billion in November from $64.26 billion one month earlier. (8:30 a.m. ET)
Federal Reserve Board Vice Chair Michael Barr speaks on bank regulation at 11:45 a.m. ET.
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The WSJ’s Evan Gershkovich is being wrongfully detained in Russia after he was arrested while on a reporting trip and accused of espionage—a charge the Journal and the U.S. government vehemently deny. Follow the latest coverage, sign up for an email alert, and learn how you can use social media to support Evan.
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The Latest on the Economy
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New Biden Administration Rule Seeks to Make More Gig Workers Employees
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The Biden administration issued a new rule Tuesday intended to put more gig workers on company payrolls, a change that could reverberate across many industries, most notably at ride-share and food-delivery companies such as Uber Technologies and DoorDash. The rule, which will go into effect in March, would impose a stricter test to determine whether companies can classify their workers as independent contractors, David Harrison and Preetika Rana report.
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Inflation Expectations Ease
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Americans are feeling a lot better about inflation. U.S. consumers think prices will rise 3% this year, according to a Federal Reserve Bank of New York survey, the lowest level for year-ahead expectations since January 2021. Consumers foresee inflation rising 2.6% annually over the coming three years, the lowest such figure since mid-2020. That's likely good news for Fed officials who believe that inflation is influenced by public expectations: If households and businesses think red-hot inflation will persist, it is more likely to do so.
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High and rising prices are still a challenge for many across the economic landscape. A National Federation of Independent Business survey of small-business owners found that almost one-quarter said inflation was their single-biggest problem and nearly one-third planned to raise prices in the coming three months.
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The U.S. Labor Department on Thursday releases its latest consumer-price index. Economists surveyed by the WSJ on average expect annual inflation to pick up to 3.2% in December from 3.1% in November. Core inflation—which strips out volatile food and energy costs—is forecast to ease to 3.8% from 4%. That’s still above the Fed’s target but the downward trajectory has investors and economists penciling in interest-rate cuts from the central bank starting later this year.
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As retailers, in the coming weeks, report on the busy holiday shopping season, investors and analysts will be trying to get more understanding into shrinkage and theft. Finance executives say they are fighting a growing wave of theft, which is cutting into profits that were already under pressure. But theft is just one contributor to shrink, the industry term for the difference between inventory on the books and what’s physically on hand, Jennifer Williams-Alvarez reports.
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America Has Plenty of Natural Gas. So Why Is New England Left Out in the Cold?
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America has become the world’s largest natural-gas producer, but the benefits of that drilling boom remain unevenly distributed. Swaths of the country are flooded with cheap gas, and export facilities have cropped up to sell the excess overseas. Other areas, including New England, are bereft of fuel and pay up for energy. WSJ’s Ryan Dezember and David Uberti explain why the threatened closure of a Massachusetts import facility is sparking fresh worries about the Northeast’s energy supplies.
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Europe Is Guzzling More American Oil Than Ever
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Tankers carried a record haul of U.S. oil to Europe last month, solidifying America's role as the continent's energy backstop. The European Union and United Kingdom imported nearly 2.3 million barrels of crude a day in December, according to ship-tracking firm Kpler, nearly double the amount they did in the months before Russia's invasion of Ukraine whipsawed markets, David Uberti reports.
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China Climbs to the Top of Global Auto Exports
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China’s overseas auto sales surged to a record last year, on track to surpass Japan as the world’s biggest exporter and marking a tectonic shift for the global auto industry. While China has become acknowledged as a world leader in electric vehicles, traditional gas-powered autos were the main driver of the increase, with demand surging especially in Russia. Chinese carmakers seized the void left in the country by the departure of Western carmakers following the war in Ukraine, selling at least five times as many vehicles there last year than the 160,000 it sold in 2022, Selina Cheng reports.
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Biden Urged to Curb China’s Dominance of Older-Generation Chips (Read)
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What Else We're Reading: Leaner Government
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A little time in the anti-corruption spotlight helps wring some of the excess out of China's bureaucracy—and bureaucrats. "We study whether and how the recent anti-corruption campaign in China shapes the body weight and health of public sector employees (PSEs). We find that the anti-corruption campaign significantly decreased the BMI and overweight rates of PSEs. ... The mechanisms underlying the BMI reduction effect include decreased frequency of alcohol consumption and eating out as well as increased time spent on exercise among PSEs post-campaign," Wuhan University's Xun Li, Renmin University of China's Wensi Pan and Nankai University's Gang Xu write in the Journal of Economic Behavior & Organization.
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Real Time Economics comes to you from WSJ reporters and editors around the world. Today's issue was curated and edited by Jeff Sparshott (@jeffsparshott) and Greg Ip (@greg_ip) in Washington, D.C., and editors in London.
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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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