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Private Effort to Aid Launch of Fed Digital Dollar Accelerates Work
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Good day. A private-sector group today announced a research effort aimed informing the creation of a digital dollar. The work will be independent of a similar project being undertaken by the Boston Fed and the Massachusetts Institute of Technology. Looking ahead, data out this week are expected to show the U.S. economy fully hitting its stride at the start of the second quarter, and the Bank of England is expected to hold interest rates steady on Thursday.
Now on to today’s news and analysis.
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Private Effort to Aid Launch of Fed Digital Dollar Accelerates Work
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The leaders of the Digital Dollar Project say it is critical the U.S. be engaged in setting standards for fully electronic currency. PHOTO: DADO RUVIC/REUTERS
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As the Federal Reserve explores how it could launch a fully digital dollar, a private-sector effort is broadening its work to help the central bank figure out the best way forward.
On Monday, the Digital Dollar Project said that over the next year it will launch a number of projects it hopes will inform the creation of a digital currency some have called Fedcoin. The effort will be overseen by consulting firm Accenture and the nonprofit Digital Dollar Foundation. Accenture is footing the bill for the initial stage of the work.
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Biden’s $4 Trillion Framework Now in Congress’s Hands
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President Biden’s $1.8 trillion child-care and education plan complicates a rocky legislative landscape on Capitol Hill, where Democratic leaders are balancing competing demands as they also juggle the White House’s $2.3 trillion infrastructure package.
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U.S. Companies Scramble to Meet Surge in Demand
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Federal Reserve officials and most economists largely play down supply and cost problems as transitory, saying they aren’t widespread, but problems are acute for some individual businesses and even entire industries.
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U.S. Household Income Surged by Record 21.1% in March
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The 21.1% March surge in income was the largest monthly increase for government records tracing back to 1959, largely reflecting $1,400 stimulus checks included in President Biden’s fiscal relief package signed into law in March. The stimulus payments accounted for $3.948 trillion of the overall seasonally adjusted $4.213 trillion rise in March personal income. Spending was also up sharply, increasing 4.2%, the steepest month-over-month increase since last summer.
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Key Developments Around the World
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Optimism Swells in Europe Despite Recession
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While the eurozone’s GDP was 0.6% lower in the first quarter of 2021 than in the final quarter of 2020, there are signs Europe is overcoming long delays in its vaccine rollout that left much of the region grappling with rolling lockdowns.
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For China’s Small Businesses, Life Is Still Far From Normal
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Smaller businesses are proving to be a weak link in China’s economic recovery as they struggle to fully bounce back from the effects of Covid-19, with some saying they are at risk of failing if conditions don’t improve substantially.
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U.S. Says China Must Do More to Protect Intellectual Property
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The U.S. criticized China’s protection of intellectual property on Friday, saying that measures Beijing adopted—some to comply with the 2020 U.S.-China trade deal—don’t go far enough.
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Financial Regulation Roundup
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Regulator Orders Deutsche Bank to Boost Money-Laundering Controls
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Germany’s financial regulator has ordered Deutsche Bank to take further steps to safeguard against money laundering, suggesting it still has found shortcomings at a bank repeatedly reprimanded for lacking proper controls.
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China Orders Tech Giants to Unbundle Financial Services
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China’s tech giants have turned consumers’ embrace of mobile payment apps into lucrative ecosystems offering a range of financial services, from personal loans to insurance policies. Now, Beijing wants to put a stop to that.
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11 a.m.: European Central Bank’s Enria speaks at Associazione Marco Fanno/UniCredit Foundation event
2:10 p.m.: New York Fed’s Williams speaks at virtual symposium on women in housing and finance
2:20 p.m.: Fed’s Powell speaks virtually on community development to National Community Reinvestment Coalition conference
6 p.m.: Dallas Fed’s Kaplan speaks at his bank’s global perspectives virtual event
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8:30 a.m.: U.S. Commerce Department releases March international trade data
1 p.m.: Dallas Fed’s Kaplan speaks to North Texas Commercial Association of Realtors and Real Estate Professionals; Minneapolis Fed’s Kashkari, San Francisco Fed’s Daly speak virtually to Economic Club of Minnesota
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Dallas Fed: Underlying Inflation Rate Remains Tame
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A surge in inflation as measured by the personal-consumption expenditures index in March hasn’t made it into underlying price pressure levels yet, according to the Federal Reserve Bank of Dallas. The bank said in a report Friday that compared with the 2.3% year-over-year rise in the PCE price index, its Trimmed Mean PCE rose by 1.7% in March, after a 1.6% increase in February. Federal Reserve officials have said they expect inflation to jump largely on comparisons to very weak numbers last year and because of supply-chain bottlenecks tied to the reopening economy. The Trimmed Mean PCE data bolster the view that there hasn’t yet been a real shift in the inflation environment toward higher prices.
—Michael S. Derby
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Biden’s Spending Binge Is Costlier Than Advertised
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President Biden’s first three domestic spending programs will give taxpayers a $5.7 trillion sticker shock, but not seen are the hidden costs and burdens that will accompany the tax increases he proposes, writes Steve H. Hanke, professor of applied economics at Johns Hopkins University, for the WSJ opinion page.
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Profits and Politics in China’s Tech Crackdown
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Is Beijing punishing China’s internet-technology titans because they are too large and powerful or because tech firms are abusing their market power? Following the dramatic fall from grace of billionaire Jack Ma and his fintech brainchild, Ant Group, the question has become an existential one for current and prospective Chinese internet entrepreneurs—and the economy as a whole, Nathaniel Taplin and Jacky Wong write.
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Corporate earnings have rarely looked this good.
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Individual U.S. investors are holding more stocks than ever before as major indexes climb to fresh highs, and they are upping the ante by borrowing to magnify their bets or buying on small dips in the market.
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The share of Black U.S. homeowners in forbearance stood at about 11% in mid-April, more than double the overall rate and that of white borrowers, according to the Federal Reserve Bank of Philadelphia.
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U.S. consumers’ assessment about the economy continued to improve in late April amid surging activity and strong job gains, lifting the University of Michigan’s index of consumer sentiment to 88.3 from the flash estimate of 86.5 two weeks ago and from 84.9 in March. (Dow Jones Newswires)
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The growth pace of business activity in the Chicago region remained at robust levels in April, according to MNI Indicators, whose Chicago Business Barometer rose from 66.3 in March to 72.1, the highest level since December 1983. (DJN)
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Canada’s gross domestic product rose 0.4% in February from the previous month to a seasonally adjusted 1.96 trillion Canadian dollars, or the equivalent of about $1.59 trillion. In the previous month, GDP rose 0.7%. (DJN)
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Germany’s gross domestic product fell by an adjusted 1.7% in the first quarter from the previous quarter, as coronavirus restrictions hurt household consumption, while exports of goods supported the economy, Destatis said. (DJN)
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Taiwan’s gross domestic product jumped 8.16% in the first quarter, rapidly accelerating from a 3.11% rise in 2020, keeping the island among the world’s best-performing economies. (DJN)
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The frenzied climb in lumber prices is generating superlative profits for sawmill owners. Home buyers, renters and do-it-yourselfers are footing the bill.
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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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