Economics overload to end the week
- US President Trump signed trade tax increases yesterday. "Real friends" may be exempt. It is not clear whether one has to be a "real friend" of America, or a "real friend" of US President Trump. Germany (not, seemingly, a "real friend") will publish trade data today.
- Free trade benefits are broad but shallow. The price of a US-made SUV was lower because of free trade in steel. The costs of free trade are narrow but deep. US steelworkers are unemployed. Net, benefits exceed costs. However, steelworkers make for better media. Hence, US President Trump arm-wrestled some suitably iconic steelworkers to serve as backdrop to the tax increase.
- The Germans arm-wrestled ECB President Draghi into softening the ECB statement's accommodative language. Draghi back-pedalled furiously at the press conference. The ECB's quantitative policy is unjustifiable on economic grounds. We believe bond buying will end after September.
- US payrolls and unemployment data will be overshadowed by US average hourly earnings data. Average hourly earnings are not wage growth. The US government data guide clearly states that average hourly earnings are not wage growth. This is why average hourly earnings are not called wage growth. US wage growth has moderated a bit, to a still solid pace of around 3%.