Tag Archives: Economy

For Trump supporters, elections a battle for his vision of America

Supporters applaud U.S. President Donald Trump as he arrives to attend a campaign rally at Middle Georgia Regional Airport in Macon, Georgia, U.S., November 4, 2018. REUTERS/Jonathan Ernst/File Photo

By Maria Caspani, Julia Harte and Ned Parker

MACON, Ga. (Reuters) – For many Americans, Tuesday’s congressional midterm elections are a referendum on President Donald Trump’s divisive persona, hardline policies and pugnacious politics.

But at a Trump rally on Sunday in a crowded airport hangar in Macon, Georgia, and at other such events, the elections are a far different proposition: a vote to protect a leader supporters see as under siege, whose inflammatory rhetoric is a necessary price for a norm-shattering era of change.

“He is putting people back to work,” said Barbara Peacock, 58, a retired postal worker from Macon, Georgia, as she perused Trump 2020 merchandise. “He is telling it like it is.”

At rallies overflowing with red-hatted, mostly white supporters in conservative pockets of the country, she and many other Trump supporters credit the president with making the country – and their lives – better.

Rallying together, bedecked in Trump shirts and waving “Make America Great Again” and “Finish the Wall” signs, they hope to make Trump’s ideas the dominant force in American political life for decades to come.

They face strong headwinds. Nationally, about 52 percent of Americans disapprove of Trump’s performance. More people say they would vote for a Democratic candidate than a Republican in Tuesday’s congressional elections, Reuters/Ipsos polling shows.

But pro-Trump Republicans are eager to defy expectations, just as the president did with his 2016 victory.

In Grand Rapids, Michigan, pro-Trump activist Ben Hirschmann, 23, sees Tuesday’s elections as decisive for Trump’s vision of America.

“Trump’s not on the ballot, but he is on the ballot,” he said at a phone-bank event at the local Republican headquarters. “Everything we voted for in 2016 is on the line in 2018.”

Hirschmann is part of a group that organizes flash mobs at busy intersections in the Grand Rapids area, drawing 30 to 40 people about twice a week to hold campaign signs for Republican U.S. Senate candidate John James.

‘NOW WE’RE LIVING GOOD’

Trump has a clear strategy: drive Republican turnout by focusing on illegal immigration, as a caravan of migrants moves through Mexico toward the U.S. border, while playing up gains in the economy and casting his Democratic opponents as an angry, liberal and dangerous “mob.”

“The choice could not be more clear,” he told supporters at a rally in Missoula, Montana. “Democrats produce mobs, Republicans produce jobs.”

It is unclear if the strategy will work. Republicans are expected to keep control of the Senate. But Democrats are widely favored to win the 23 seats they need to assume control of the House of Representatives, where Republicans are defending dozens of seats in largely suburban districts where Trump’s popularity has languished and Democrats have performed well in presidential races.

Trump’s rallies have focused mostly on Senate and gubernatorial battles in states he won in the 2016 presidential race – from Florida and Missouri to West Virginia and Ohio. A Trump adviser, who asked not to be identified, told Reuters: “These are places where data and polling information tells us that the president is of best use.”

At a rally in Johnson City, Tennessee, in early October, Jessica Lotz, 33, and her fiance, Chad Lavery, said Trump’s immigration policies resonated with them. During the 2008 economic downturn, Lotz and Lavery said they saw construction, landscaping and house painting jobs go to illegal immigrants while they struggled financially.

As the economy rebounded, so, too, did their fortunes.

“Now we’re living good,” Lavery said, crediting their ability to find work and better wages to Trump, who inherited an economy that was already in one of the longest recoveries and gave it an additional boost with tax cuts.

‘FRUSTRATED’

After a Trump rally in September in Springfield, Missouri, pro-Trump activist Brenda Webb sat for a late dinner at a restaurant with five friends who had driven to the rally from the St. Louis suburbs.

Webb and her friends had joined protests against former President Barack Obama in St. Louis in 2009 that were part of a broader conservative“Tea Party” movement centered on calls for smaller government, lower taxes and fewer regulations.

But the energy fizzled, she said. The group became animated talking about how Trump had given new focus to those early Tea Party goals of reclaiming government for ordinary citizens, not just the “elites” in Washington.

“We feel like he’s working to resolve all the problems that we are so frustrated by,” Webb said.

At the Springfield rally, Brian Whorton, who drove a few hours to see the president, confessed he voted for Obama twice before becoming a Republican. “I was not politically aware and awake. I thought, oh he’s cool and he’s a good speaker and an African-American guy,” Whorton said.

Trump’s policies, he said, were making a difference for him: He said his factory manager had credited Trump tariffs with raising profits at his plant.

In Ohio, Republican National Committee spokeswoman Mandi Merritt referred to pro-Trump enthusiasts as a “grassroots army” that could be harnessed and dispatched to boost Republican voter turnout.

On a sunny day in October, Trump supporter Kimmy Kolkovich joined a friend on the sidewalk at a busy intersection near the Ohio Statehouse in Columbus to urge people to register and vote.

“Even if I’m registering people who are going to vote for the other party, they’re seeing us out here in our hats, and that’s what’s important, all the little interactions and conversations we’re having,” Kolkovich said.

For all Reuters election coverage, click: https://www.reuters.com/politics/election2018

(Reporting by Maria Caspani in Macon, Ga., Julia Harte in Grand Rapids, Mich. and Columbus, Ohio, and Ned Parker in Springfield, Mo., and Johnson City, Tenn.; Additional reporting by Steve Holland in Washington; Editing by Jason Szep, Colleen Jenkins and Peter Cooney)

U.S. online spending set to rise 14.8 percent in 2018 holiday season

FILE PHOTO - A worker gift wraps a holiday order for a customer at the Amazon Fulfillment Center in Tracy, California, November 29, 2015. REUTERS/Fred Greaves

NEW YORK (Reuters) – U.S. online spending during the holiday shopping season is likely to grow 14.8 percent this year to $124.1 billion, far outpacing the 2.7 percent growth predicted for brick-and-mortar locations and highlighting the ongoing switch from stores to web shopping.

The forecast was released on Thursday by Adobe Analytics, the web analytics arm of Adobe Systems Inc. The company measures transactions from 80 of the top 100 U.S. retailers and trillions of customer visits to U.S. retail sites.

Online sales this year will benefit from an extra day between Cyber Monday to Christmas, which is likely to provide a $284 million sales boost, the report said.

Adobe also forecasts the best days for shopping online based on prices across product categories during previous years. For example, Thanksgiving is likely to be a good day to buy sporting goods as prices could be 13 percent lower than their average in the first 10 months of the year. Black Friday will still be a good option for television purchases as prices could be about 22 percent lower.

Apparel discounts could make items cheaper by 22 percent than average on Nov. 25, and toys are likely to be 19 percent cheaper on Cyber Monday, the report said.

The November and December holiday shopping season are critical for retailers, when they book an outsized portion of their annual sales and profits.

Overall U.S. holiday sales including stores and online in 2018 will increase by 4.3 percent to 4.8 percent from a year ago, when consumer spending surged to a 12-year high, according to The National Retail Federation.

The trade body said holiday sales growth will be higher than an average increase of 3.9 percent over the past five years but slower than last year’s 5.3 percent gain, when consumer spending grew the most since 2005, boosted by tax cuts.

(Reporting by Nandita Bose in New York; Editing by Cynthia Osterman)

U.S. job growth cools; unemployment rate falls to 3.7 percent

People wait in line at a stand during the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed sharply in September likely as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near a 49-year low of 3.7 percent, pointing to a further tightening in labor market conditions.

The Labor Department’s closely watched monthly employment report on Friday also showed a steady rise in wages, suggesting moderate inflation pressures, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases.

Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment. Data for July and August were revised to show 87,000 more jobs added than previously reported.

The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

“The weaker gain in payrolls in September may partly reflect some hit from Hurricane Florence,” said Michael Pearce, senior U.S. economist at Capital Economics in New York. “There is little in this report to stop the Fed continuing to raise interest rates gradually.”

Economists polled by Reuters had forecast payrolls increasing by 185,000 jobs in September and the unemployment rate falling one-tenth of a percentage point to 3.8 percent.

Fed Chairman Jerome Powell said on Tuesday that the economy’s outlook was “remarkably positive” and he believed it was on the cusp of a “historically rare” era of ultra-low unemployment and tame inflation.

The U.S. central bank raised rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining “accommodative.”

The Labor Department said it was possible that Hurricane Florence, which lashed South and North Carolina in mid-September, could have affected employment in some industries. It said it was impossible to quantify the net effect on employment.

Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed. The average workweek was unchanged at 34.5 hours in September.

The smaller survey of households from which the jobless rate is derived regards persons as employed regardless of whether they missed work during the reference week and were unpaid as result. It showed 299,000 people reported staying at home in September because of bad weather. About 1.5 million employees worked part-time because of the weather last month.

U.S. stock index futures briefly turned positive after the data before reversing course. The dollar <.DXY> was trading lower against a basket of currencies while U.S. Treasury yields were higher.

DIMINISHING SLACK

The drop of two-tenths of a percentage point in the unemployment rate from 3.9 percent in August pushed it to levels last seen in December 1969 and matched the Fed’s forecast of 3.7 percent by the end of this year.

Average hourly earnings increased 0.3 percent in September after a similar rise in August.

With September’s increase below the 0.5 percent gain notched during the same period last year, the annual rise in wages fell to 2.8 percent from 2.9 percent in August, which was the biggest advance in more than nine years.

Wage growth remains sufficient to keep inflation around the Fed’s 2 percent target. As more slack is squeezed out of the labor market, economists expect annual wage growth to hit 3 percent.

Last month, employment in the leisure and hospitality sector fell by 17,000 jobs, the first drop since September 2017. Retail payrolls dropped by 20,000 jobs in September.

Manufacturing payrolls increased by 18,000 in September after rising by 5,000 in August.

Construction companies hired 23,000 more workers last month after increasing payrolls by 26,000 jobs in August. Professional and business services employment increased by 54,000 jobs last month and government payrolls rose 13,000.

While surveys have shown manufacturers growing more concerned about an escalating trade war between the United States and China, it does not appear to have affected hiring. In fact, the Fed’s latest survey of national business conditions reflected concerns about labor shortages that are extending into non-skilled occupations as much as about tariffs.

Washington last month slapped tariffs on $200 billion worth of Chinese goods, with Beijing retaliating with duties on $60 billion worth of U.S. products. The United States and China had already imposed tariffs on $50 billion worth of each other’s goods. The trilateral trade agreement between the United States, Canada and Mexico was salvaged in an 11th-hour deal on Sunday.

Despite the Trump administration’s protectionist trade policy, the trade deficit continues to deteriorate. The trade gap increased 6.4 percent to a six-month high of $53.2 billion in August, the Commerce Department reported on Friday.

The politically sensitive goods trade deficit with China surged 4.7 percent to a record high of $38.6 billion.

(Reporting by Lucia Mutikani; Editing by Leslie Adler and Paul Simao)

Record U.S. job openings, quits rate boost wage growth outlook

FILE PHOTO: People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings surged to a record high in July and more Americans voluntarily quit their jobs, pointing to sustained labor market strength and confidence that could soon spur faster wage growth.

The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday also suggested a further tightening in labor market conditions, with employers appearing to increasingly have trouble finding suitable workers.

While the tightening labor market could boost wage gains, some economists warned that worker shortages could over time negatively impact economic growth. The JOLTS report cemented expectations the Federal Reserve will raise interest rates at its Sept. 25-26 policy meeting. The Fed has raised rates twice this year.

“The economic expansion is on a collision course with a lack of workers to man the shop floors, work the restaurants and stores at the shopping malls across America,” said Chris Rupkey, chief economist at MUFG in New York. “No workers, no growth, it’s that simple.”

Job openings, a measure of labor demand, increased by 117,000 to a seasonally adjusted 6.9 million in July. That was the highest level since the series started in December 2000. The jobs openings rate was 4.4 percent, unchanged from the previous month and an all-time high first touched in April.

The current level of job openings means there is a job for every one of the 6.2 million people who were unemployed in August. Hiring was little changed at 5.7 million in July, keeping the hiring rate at 3.8 percent for a second straight month.

There were 46,000 unfilled jobs in the finance and insurance industry in July. Nondurable goods manufacturing had 32,000 vacancies. The job opening rate in the overall manufacturing industry climbed to a record high of 3.8 percent in July from 3.6 percent in June.

But job openings in the retail trade industry fell by 85,000. There were also decreases in education and federal government job vacancies in July.

WORKER SHORTAGES

The scarcity of workers was also corroborated by a survey of small businesses published on Tuesday. The NFIB survey found that job openings at small businesses hit a 45-year high in August. A record number of businesses reported they could not find qualified workers to fill open positions.

According to the NFIB, job openings were mostly prevalent in construction, manufacturing and wholesale trade. There was also a dearth of truck drivers.

“Looming shortages of qualified workers could prove detrimental to business expansion plans in coming months,” Dante DeAntonio, an economist with Moody’s Analytics in West Chester, Pennsylvania. “In the meantime, the increasing tightness in the labor market is spurring more workers to re-enter the workforce as well as leave their jobs in search of better opportunities.”

The worker shortages, especially for truck drivers, are already contributing to bottlenecks in the supply chain, which could slow the vibrant economy. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent pace set in the January-March period.

Growth this year is expected to top 3 percent.

The Labor Department’s JOLTS report also showed the robust labor market is giving Americans confidence to quit their jobs for other positions. The quits rate increased to 2.4 percent in July, the highest level since April 2001, from 2.3 percent in June. Fed officials look at the quits rate as a measure of job market confidence.

The increase in job mobility supports economists’ optimism that job growth may be finally on a faster path. The government last week reported a surge in annual wage growth in August, with average hourly earnings increasing 2.9 percent, the largest gain since June 2009, from 2.7 percent in July.

Wage gains have largely remained moderate even as the unemployment rate has dropped to near an 18-year low of 3.9 percent.

“Workers are leveraging the tighter labor market to find new opportunities and employers are poaching workers from other firms,” said Nick Bunker, an economist at job search website Indeed in Washington. “The next question is how more quitting will translate into higher wage growth.”

 

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. job growth surges; annual wage gain largest since 2009

A man holds his briefcase while waiting in line during a job fair in Melville, New York July 19, 2012. REUTERS/Shannon Stapleton

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in August and wages notched their largest annual increase in more than nine years, strengthening views that the economy was so far weathering the Trump administration’s escalating trade war with China.

The Labor Department’s closely watched employment report published on Friday also showed slack in the jobs market was rapidly diminishing, with a broader measure of unemployment falling to a level not seen since 2001. The report cemented expectations for a third interest rate increase from the Federal Reserve this year when policymakers meet on Sept. 25-26.

“The economy is on an adrenalin rush,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Given the amount of fiscal stimulus that the economy is benefiting from, it’s going to take a lot to get it off that high.”

Nonfarm payrolls surged by 201,000 jobs last month, boosted by hiring at construction sites, wholesalers and professional and business services, the Labor Department said. There were also gains in transportation and healthcare employment.

Job growth averaged 185,000 per month in the past three months. The economy needs to create 120,000 jobs per month to keep up with growth in the working-age population.

Average hourly earnings increased 0.4 percent, or 10 cents in August after rising 0.3 percent in July. That raised the annual increase in wages to 2.9 percent in August, the largest gain since June 2009, from 2.7 percent in July.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell one-tenth of a percentage point to 7.4 percent, the lowest level since April 2001. The unemployment rate was unchanged at 3.9 percent.

Economists polled by Reuters had forecast nonfarm payrolls increasing by 191,000 jobs last month and the unemployment rate falling to 3.8 percent. The economy created 50,000 fewer jobs in June and July than previously reported.

The dollar firmed against a basket of currencies after the report, while U.S. Treasury yields rose. U.S. stock index futures extended losses.

Analysts say the administration’s $1.5 trillion tax cut package and increased government spending were shielding the economy from the trade tensions, which have also seen Washington engaged in tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

They also note that the import duties implemented so far have affected only a small portion of the American economy, but warned this could change if President Donald Trump pressed ahead with additional tariffs on Chinese imports.

The United States and China have slapped retaliatory tariffs on a combined $100 billion of products since early July.

LIMITED IMPACT FROM TARIFFS

Americans had until Thursday to comment on a list of $200 billion worth of Chinese goods widely expected to be hit with tariffs soon. The government imposed import duties on goods including steel, aluminum, washing machines, lumber and solar panels early this year to protect American industries from what Trump says is unfair foreign competition.

Global outplacement firm Challenger, Gray & Christmas said on Thursday there were 521 tariff-related job cuts in August, but these were largely offset by the hiring of 359 workers by steel producers.

The employment report added to manufacturing and services industries surveys in suggesting the Trump administration’s protectionist trade policy was having a marginal impact on the economy for now. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent pace set in the January-March period.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell two-tenths of a percentage point to 62.7 percent last month, putting a wrinkle on an otherwise upbeat employment report.

Job gains in August were almost across all sectors, though manufacturing payrolls fell by 3,000. That was the first drop since July 2017 and followed an increase of 18,000 in July. Manufacturing employment was weighed down by declines in machinery, computer and electronic products and motor vehicle and parts industries.

Construction companies hired 23,000 more workers last month. They increased payrolls by 18,000 jobs in July. Wholesalers added 22,400 jobs last month. Payrolls in the professional and business services industries rose by 53,000 jobs in August.

Employment at sporting goods, hobby, book and music stores rebounded by 9,200 jobs in August after shedding 30,300 jobs in July related to the closing of all Toys-R-Us stores.

But retail payrolls fell 5,900 last month and government shed 3,000.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. homebuilding slowing; labor market strong

FILE PHOTO: Construction workers are pictured building a new home in Vienna, Virginia, outside of Washington, October 20, 2014./File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. homebuilding rebounded less than expected from a nine-month low in July, suggesting the housing market was likely to tread water for the rest of this year against the backdrop of rising construction costs and labor shortages.

But the fundamentals for the housing market remain strong. New filings for jobless benefits fell again last week, other data showed on Thursday, pointing to sustained labor market strength despite an escalating trade war between the United States and China that has rattled financial markets.

“It is more expensive to buy a new home for the American worker,” said Chris Rupkey, chief economist at MUFG in New York. “We cannot be confident that home construction will pick up in the near future.”

Housing starts rose 0.9 percent to a seasonally adjusted annual rate of 1.168 million units in July, the Commerce Department said. Starts fell to a nine-month low in June.

Groundbreaking activity increased in the Midwest and South, but dropped in the Northeast, and hit a more than 1-1/2-year low in the West. Last month’s increase in starts still left the bulk of June’s 12.9 percent plunge intact.

Building permits increased 1.5 percent to a rate of 1.311 million units, snapping three straight months of decreases. With permits now outpacing starts, homebuilding could pick up in the months ahead. But gains are likely to be limited as builders continue to complain about rising construction costs as well as shortages of skilled labor and land.

Lumber prices shot up after the Trump administration slapped anti-subsidy duties on imports of Canadian softwood lumber. Though prices have dropped in the past months, they remain high.

The housing market has underperformed a robust economy, with economists also blaming the slowdown on rising mortgage rates, which have combined with higher house prices to make home purchasing unaffordable for some first-time buyers.

The 30-year fixed mortgage rate has risen more than 50 basis points this year to an average of 4.53 percent, according to data from mortgage finance agency Freddie Mac. While that is still low by historical standards, the rise has outpaced annual wage growth, which has been stuck below 3 percent.

At the same time, house prices have increased more than 6.0 percent on an annual basis, largely driven by a dearth of properties available for sale. Residential investment contracted in the first half of the year and economists do not expect housing to contribute to growth in the final six months of 2018.

The economy grew at a 4.1 percent annualized rate in the second quarter, the fastest in nearly four years and almost double the 2.2 percent pace logged in the January-March period.

Economists polled by Reuters had forecast housing starts rising to a pace of 1.260 million units last month and permits increasing to a rate of 1.310 million units.

“Given the chronic lack of affordable housing and rapidly escalating home prices, it is worrisome that on a per capita basis, the country is producing new single-family housing stock at a rate that is similar to the trough of a typical recession,” said Sam Khater, chief economist at Freddie Mac.

The PHLX housing index <.HGX> was trading higher, tracking a broadly firmer U.S. stock market. The dollar slipped against a basket of currencies and U.S. Treasury prices fell.

TIGHT SUPPLY

Single-family home building, which accounts for the largest share of the housing market, rose 0.9 percent to a rate of 862,000 units in July. Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years.

Permits to build single-family homes jumped 1.9 percent in July to a pace of 869,000 units. Single-family building permits in the South, where more than half of homebuilding occurs, vaulted to an 11-year high in July.

Starts for the volatile multi-family housing segment gained 0.7 percent to a rate of 306,000 units in July. Permits for the construction of multi-family homes climbed 0.7 percent to a pace of 442,000 units.

With the moderate rise in homebuilding last month, housing inventory is likely to remain tight. In addition, housing completions fell for a third straight month, hitting an eight-month low rate of 1.188 million.

Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap. The stock of housing under construction was little changed at 1.122 million units.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 212,000 for the week ended Aug. 11.

The claims data is being closely watched for signs of layoffs as a result of the Trump administration’s protectionist trade policy, which has also led to tit-for-tat import tariffs with other trading partners, including the European Union, Canada, and Mexico.

There have been reports of some companies either laying off workers or planning to as a result of the import duties. But with many companies reporting difficulties finding qualified workers, the fallout from the trade tensions might be minimal.

A third report showed factory activity in the mid-Atlantic region slowing sharply in August as new orders growth cooled. The Philadelphia Federal Reserve said its business conditions index tumbled 14 points to a 21-month low of 11.9 this month. Manufacturers were, however, optimistic about business prospects over the next six months.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. job growth slows in July, unemployment rate dips

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that the labor market was tightening.

Nonfarm payrolls increased by 157,000 jobs last month, the Labor Department said on Friday. The economy created 59,000 more jobs in May and June than previously reported and needs to generate about 120,000 jobs per month to keep up with growth in the working-age population.

The unemployment rate fell one-tenth of a percentage point to 3.9 percent in July, even as more people entered the labor force in a sign of confidence in their job prospects. The low unemployment rate could allow the Federal Reserve to raise interest rates again in September.

The jobless rate had risen in June from an 18-year low of 3.8 percent in May. Economists polled by Reuters had forecast nonfarm payrolls increasing by 190,000 jobs last month and the unemployment rate falling to 3.9 percent.

The slowdown in hiring last month likely is not the result of trade tensions, which have escalated in recent days, but rather because of a shortage of workers. There are about 6.6 million unfilled jobs in the nation. A survey of small businesses published on Thursday showed a record number in July of establishments reporting that they could not find workers.

According to the NFIB, the vacancies were concentrated in construction, manufacturing and wholesale trade industries. Small businesses said they were also struggling to fill positions that did not require skilled labor.

The Fed’s Beige Book report last month showed a scarcity of labor across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, information technology professionals and truck drivers.

The shortage of workers is steadily pushing up wages.

Average hourly earnings increased seven cents, or 0.3 percent, in July after gaining 0.1 percent in June. The annual increase in wages was unchanged at 2.7 percent in July.

U.S. stock market futures dipped after the data while the dollar <.DXY> fell against a basket of currencies. Prices of U.S. Treasuries were slightly higher.

TRADE TENSIONS

President Donald Trump’s administration has imposed duties on steel and aluminum imports, provoking retaliation by the United States’ trade partners, including China, Canada, Mexico and the European Union. It has also slapped 25 percent tariffs on $34 billion worth of Chinese imports.

Beijing has fought back by slapping tariffs on U.S. exports to China. On Friday, China’s Commerce Ministry said a new set of proposed import tariffs on $60 billion worth of U.S. goods are rational and restrained and warned that it reserves the right of further countermeasures in the intensifying trade war.

On Wednesday, Trump proposed a higher 25 percent tariff on $200 billion worth of Chinese imports.

Economists have warned that the tit-for-tat import duties, which have unsettled financial markets, could undercut manufacturing through disruptions to the supply chain and put a brake on the strong economic growth.

There have also been concerns that the trade tensions could dampen business confidence and lead companies to shelve spending and hiring plans. But a $1.5 trillion fiscal stimulus, which helped to power the economy to a 4.1 percent annualized growth pace in the second quarter, is assisting the United States in navigating the stormy trade waters.

The Fed left interest rates unchanged on Wednesday while painting an upbeat portrait of both the labor market and economy. The U.S. central bank said “the labor market has continued to strengthen and economic activity has been rising at a strong rate.” It increased borrowing costs in June for the second time this year.

The moderation in employment gains and steady wage growth could ease concerns about the economy overheating, and keep the Fed on a gradual path of monetary policy tightening.

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding the volatile food and energy components, increased 1.9 percent in June. The core PCE hit the central bank’s 2 percent inflation target in March for the first time since December 2011.

Manufacturing payrolls rose by 37,000 jobs last month after increasing by 33,000 in June. Construction companies hired 19,000 more workers after increasing payrolls by 13,000 jobs in June. Retail payrolls rebounded by 7,100 jobs last month after losing 20,200 in June.

Education and health services added 22,000 jobs last month, the fewest since October 2017, after boosting payrolls by 69,000 jobs in June. July’s slowdown in hiring reflected a loss of 10,800 education services jobs.

Transportation payrolls dropped by 1,300 jobs last month, with transit and ground transportation employment declining by 14,800 jobs. Utilities employment fell for a third straight month and the finance and insurance industry shed 9,400 jobs last month.

Government employment fell by 13,000 jobs in July.

(Reporting by Lucia Mutikani; Editing by Jonathan Oatis and Paul Simao)

Author delves into U.S. Social Security’s origins to debunk myths

A sign is seen on the entrance to a Social Security office in New York City, U.S., July 16, 2018. REUTERS/Brendan McDermid

By Mark Miller

CHICAGO (Reuters) – Social Security is unaffordable due to our aging population.

Social Security is a driver of our national debt.

Social Security is built on a house of cards – its assets are just IOUs.

No doubt you have heard some or all of these statements from politicians and pundits debating how to “fix” our most important retirement program. The combined trust funds for the retirement and disability programs will be depleted in 2034, a problem that would require a draconian 23 percent across-the-board benefit cut if left unaddressed. (https://reut.rs/2K8VASy)

But Nancy Altman argues that these claims are not just wrong, but part of a purposeful campaign to undermine and dismantle Social Security that has been underway since the program’s creation in the 1930s.

Altman makes her case in a provocative new book, “The Truth About Social Security: The Founders’ Words Refute Revisionist History, Zombie Lies, and Common Misunderstandings” (Strong Arm Press).

Altman is a well-known progressive advocate for defending and expanding Social Security. She also is an expert on the program’s history, having served as a staff member of the bipartisan 1983 commission that developed the most recent set of important reforms to Social Security. Altman also serves on the Social Security Advisory Board, an independent, bipartisan agency that advises the White House, Congress and Social Security Administration.

Her new book debunks a number of prevalent myths about Social Security, relying on the historical record left by President Franklin Roosevelt and the other founders of the program.

Below is an edited version of my recent interview with Altman, where I asked her to discuss some common misperceptions about Social Security’s origins.

Q: Why is it so important to pay attention to the vision of the founders of Social Security? As you note, the program has always evolved and changed over time.

A: Opponents of Social Security mischaracterize the founders’ vision and then use the mischaracterization as a shield against improvements which the founders, I believe, would have applauded. In response to proposals to expand benefits, for example, opponents argue that the founders never intended Social Security to be more than a foundation on which to build.  So, it is important to set the record straight.

Q: You’re referring to the often-heard comment that Social Security is part of a “three-legged stool” of retirement security. Not true?

A.  It is historically inaccurate. The metaphor of a three-legged stool was first used in 1949 by an insurance executive whose company sold supplemental annuities. There is no evidence whatsoever that Roosevelt and his colleagues intentionally designed Social Security simply to be part of what is needed in retirement. In fact, there is substantial legislative history that the exact opposite was true.

Q: What is the role of Social Security in the federal government’s debt problems?

A: Social Security does not and, by law, cannot add even a penny to the federal deficit. It can only pay benefits if it has sufficient revenue not only to cover all benefit costs but also the administrative costs associated with the payment of those benefits. And it has no borrowing authority to make up any shortfall.

The federal government issues Treasury bonds to finance its own debt, and some of those bonds are purchased by Social Security. Though Treasuries held in reserve by Social Security are sometimes derisively called “IOUs,” they are not casual promises. They are legal arrangements, which have the same legal status as bonds bought by you, me, a foreign government, or any other person or entity that invests in U.S. Treasuries.

Q: We hear often that Social Security is becoming unaffordable because our population is aging so fast. You argue this is incorrect. Why?

A: People are living somewhat longer, on average. It is not the cause of our aging population, however. Rather, it is due to the decline in our fertility rates, and a resulting shift in the ratio of beneficiaries to workers. Social Security is extremely affordable – at the end of the 21st century, Social Security will cost, as a percentage of GDP, around what it costs today. That assumes that life expectancies continue to improve.

Q: Why should Social Security not be means-tested? After all, Warren Buffett and Bill Gates don’t need their Social Security benefits, right?

A: Social Security is a benefit that is earned; it is not based on need. No one would argue that Buffett or Gates should not collect on their fire insurance, if their home burned down, just because they didn’t “need” the proceeds. The same is true with Social Security. No one has to claim their Social Security benefits, but everyone should know that they have earned them.

Q: What should be done to fix Social Security’s financial problems, and should we be doing something beyond that?

A. The only problem that I believe Social Security has is that its benefits are too low. They should be increased. Expanding Social Security and restoring it to balance by requiring the wealthiest to pay their fair share is a solution to a number of challenges. In addition to addressing our looming retirement income crisis, it would slow our rising income and wealth inequality and the decline of our middle class.

(Editing by Matthew Lewis)

Exclusive: North Korean fuel prices drop, suggesting U.N. sanctions being undermined

FILE PHOTO: North Koreans take a truck through a path amongst the fields, along the Yalu River, in Sakchu county, North Phyongan Province, North Korea, June 20, 2015. REUTERS/Jacky Chen/File Photo

By Hyonhee Shin

SEOUL (Reuters) – Gasoline prices in North Korea have nearly halved since late March, market data analyzed by Reuters shows, adding weight to suspicions that fuel is finding its way into the isolated economy from China and elsewhere despite U.N. sanctions.

The United Nations Security Council passed a resolution in December to ban nearly 90 percent of refined petroleum exports to North Korea over its nuclear and missile programs.

But as North Korean leader Kim Jong Un has moved to improve relations with the United States, China and South Korea, concerns have grown that the policy of “maximum pressure” through sanctions and isolation, is losing steam.

Kim and U.S. President Donald Trump agreed to work toward denuclearization at their summit in Singapore on June 12. Experts say any fuel aid in breach of sanctions could erode the diplomatic progress.

China said on Tuesday it strictly abided by U.N. sanctions, but indicated it may have resumed some fuel shipments to North Korea in the second quarter of this year.

Gasoline was sold by private dealers in the North Korean capital Pyongyang at about $1.24 per kg as of Tuesday, down 33 percent from $1.86 per kg on June 5 and 44 percent from this year’s peak of $2.22 per kg on March 27, according to Reuters analysis of data compiled by the Daily NK website. Diesel prices are at $0.85 per kg, down about 17 percent from March.

The website is run by North Korean defectors who collect prices via phone calls with multiple traders in the North after cross-checks to corroborate their information, offering a rare glimpse into the livelihoods of ordinary North Koreans.

In North Korea, gas is sold via informal channels such as street stalls and informal markets and by weight rather than by volume, as it is in South Korea, the United States and elsewhere, so North Koreans prefer to quote “per kg” rates, said Kang Mi-jin, who works at Daily NK. A 200 liter barrel of petrol holds around 180 kg.

U.S. prices stand at around 75 cents per liter or $2.839 per gallon.

“My assessment is that there was a greater inflow (of fuel supplies) from abroad, especially China since Kim’s trips there,” said Kang, who speaks regularly to sources inside North Korea.

Kim first visited China to meet President Xi Jinping in March, and they held two more summits, in May and June.

SANCTIONS

The latest fuel data comes amid mounting suspicion in Washington that North Korea may be using the recent diplomatic thaw to get a lifeline from China.

North Korea gets most of its fuel from China, its biggest trading partner, and some from Russia. Washington and Seoul officials have said the North imports some 4.5 million barrels of refined petroleum products and 2 million barrels of crude oil each year.

Last year’s U.N. resolution capped refined imports at 500,000 barrels a year.

Chinese Foreign Ministry spokesman Geng Shuang told reporters on Tuesday that China has consistently and strictly abided by U.N. Security Council resolutions on North Korea.

China had exported 7,432 tonnes of refined oil products to North Korea in the first six months of this year, out of a total of 60,000 tonnes a year stipulated by the U.N. sanctions.

China had reported its exports to the Security Council’s sanctions committee in a timely manner, Geng added.

“The relevant situation is totally open and transparent,” he said, without elaborating.

Since official Chinese customs data showed no gasoline and diesel exports to North Korea from January to March, Geng’s comments suggested China resumed some shipments some time after Kim and Xi’s first meeting.

Overall, China’s trade with North Korea in the first half of this year tumbled 56 percent on the back of the tightening sanctions, customs data showed on Monday.

Last week, U.S. Secretary of State Mike Pompeo accused North Korea of “illegally smuggling petroleum products into the country at a level that far exceeds quotas” established by the UN.

“Illegal ship-to-ship transfers are the most prominent means by which this is happening. Every UN member state must step up enforcement,” he wrote on Twitter, without naming any country.

China and Russia delayed a U.S. push last week for a UN Security Council panel to order a halt to refined petroleum exports to North Korea, asking for more detail on a U.S. accusation that Pyongyang breached sanctions, diplomats said.

The United States provided a list to the committee earlier this month of 89 illicit North Korean transactions and a few select photos, seen by Reuters.

Seoul’s foreign ministry said last week that the authorities were investigating two ships with Panama and Sierra Leone flags suspected to have illegally transferred North Korean coal into South Korea via Russia.

NO MAJOR SUFFERING

North Korean rice prices have also been stable since a spike last September, when the UN Security Council imposed new sanctions. Rice has hovered around $0.62 per kg throughout this year.

Stable fuel and rice prices suggest no immediate signs of major suffering in North Korea despite South Korea’s recent estimates the impoverished state’s economy contracted at its sharpest rate in two decades last year.

South Korea’s central bank said North Korea’s gross domestic product shrank 3.5 percent last year, marking the biggest decline since 1997, citing international sanctions and drought.

While other defectors reported some suffering in remote rural regions, Daily NK’s Kang said fuel demand has been steady in North Korea, and overall living conditions have improved in line with a booming unofficial market economy.

The unofficial markets, known as jangmadang, have grown to account for about 60 percent of the economy, according to the Institute for Korean Integration of Society.

“I’ve seen signs the economy was slowly improving over the past five years, and in last year things are still developing but perhaps not as fast as before,” a Western consultant who makes regular trips to North Korea told Reuters.

Kim, who vowed not to let the people “tighten their belt again” in his first-ever public speech in 2012, announced in April a shift in focus from nuclear programs to the economy. Analysts say that will be difficult while sanctions remain in place.

“I don’t think there is an outcry in the markets now, but there could be one toward the end of this year,” said Kim Byeong-yeon, a North Korea economy specialist at the Seoul National University.

(Reporting by Hyonhee Shin. Additional reporting by Josh Smith and Cynthia Kim in SEOUL and Ben Blanchard in BEIJING. Editing by Lincoln Feast.)

U.S. weekly jobless claims hit more than 48-and-a-half-year low

FILE PHOTO: Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits dropped to a more than 48-1/2-year low last week as the labor market strengthens further, but trade tensions are casting a shadow over the economy’s outlook.

Other data on Thursday showed manufacturing activity in the mid-Atlantic region accelerated in July amid a surge in orders received by factories. But the Philadelphia Federal Reserve survey also showed manufacturers paying more for inputs and less upbeat about business conditions over the next six months.

Fewer manufacturers planned to increase capital spending, suggesting trade tensions, marked by tit-for-tat import tariffs between the United States and its trade partners, including China, Canada, Mexico and the European Union, could be starting to hurt business sentiment.

The survey came on the heels of the Federal Reserve’s Beige Book report on Wednesday, showing manufacturers in all districts worried about the tariffs and reporting higher prices and supply disruptions, which they blamed on the new trade policies.

“Yesterday’s Beige Book and the recent decline in the investment intentions balance in the Philly Fed survey show that escalating trade tensions are starting to have a material impact on companies’ confidence about the future,” said Brian Coulton, chief economist at ratings agency Fitch.

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 207,000 for the week ended July 14, the lowest reading since early December 1969, the Labor Department said. Economists polled by Reuters had forecast claims rising to 220,000 in the latest week.

The second straight weekly decline in claims, however, likely reflects difficulties adjusting the data for seasonal fluctuations around this time of the year when motor vehicle manufacturers shut assembly lines for annual retooling.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 220,500 last week.

The dollar firmed against a basket of currencies. Stocks on Wall Street were lower, while prices for U.S. Treasuries rose.

WORKER SHORTAGE

The claims data covered the survey week for the nonfarm payrolls component of July’s employment report. The four-week average of claims dipped 500 between the June and July survey periods, suggesting solid job growth this month.

The economy created 213,000 jobs in June, with the unemployment rate rising two-tenths of a percentage point to 4.0 percent as more Americans entered the labor force, in a sign of confidence in their job prospects.

Federal Reserve Chairman Jerome Powell told lawmakers this week that with appropriate monetary policy, the job market will remain strong “over the next several years.”

The labor market is viewed as being near or at full employment. There were 6.6 million unfilled jobs in May, an indication that companies cannot find qualified workers.

That was reinforced by the Beige Book, which showed worker shortages persisting in early July across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, information technology professionals and truck drivers.

Thursday’s survey from the Philadelphia Fed showed its business conditions index jumped to a reading of 25.7 in July from 19.9 in June. The survey’s measure of new orders increased to 31.4 from a reading of 17.9 in June.

But its gauge of factory employment fell as did the average workweek. Manufacturers also continued to report higher prices for both purchased inputs and their own manufactured goods. The survey’s prices paid index soared to 62.9 this month, the highest level since June 2008, from 51.8 in June.

The index has risen 30 points since January. Sixty-three percent of manufacturers in the region reported paying more for inputs this month compared with 54 percent in June.

The price increases are likely related to tariffs on steel and aluminum imports, which were imposed by the Trump administration to protect domestic industries from what it says is unfair foreign competition.

Wednesday’s Beige Book mentioned a machinery manufacturer in the Philadelphia area who described the effects of the steel tariffs as “chaotic to its supply chain, disrupting planned orders, increasing prices, and prompting some panic buying.”

The Philadelphia survey’s index for future activity decreased for the fourth straight month. Capital spending plans over the next six months also fell as did intentions to hire more factory workers.

“Further escalation could create worse conditions and this remains a downside risk to the otherwise positive outlook over the next year,” said Adam Ozimek, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)