The daily business briefing: August 22, 2019
Trump says he's the "Chosen One" to challenge China on trade, Fed minutes show deep division on interest rate cuts, and more


1. Trump says he's 'Chosen One' to take on China over trade
President Trump on Wednesday framed his trade war with China in religious terms, saying he was "the Chosen One" to confront Beijing over economic policies he considers unfair to the U.S. "This isn't my trade war, this is a trade war that should have taken place a long time ago. Somebody had to do it," Trump said. He then looked up and pointed to the heavens, saying, "I am the Chosen One." The Trump administration has imposed 25 percent tariffs on $250 billion in Chinese goods, and is preparing to slap 10 percent levies on all other Chinese imports by mid-December. China has retaliated with duties on $110 billion in U.S. imports, and also is planning to stop buying U.S. agricultural products.
2. Minutes show Fed division over rate cut
Federal Reserve policy makers were split when they voted last month to cut interest rates for the first time since the financial crisis a decade ago, according to minutes from the meeting released Wednesday. The Fed reduced its target short-term interest a quarter point, but the minutes indicated that "a couple" of people in the meeting were in favor of a half-point cut. "Several" people wanted to keep rates unchanged, citing the strong job market. Leaders of the central bank said the aim of the rate cut was to support the economy in the face of slowing global growth, persistently low inflation, and the possible impact from President Trump's trade war with China. The division demonstrated the uncertainty about how the trade tensions will affect an otherwise strong economy.
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3. CBO says deficit will hit $1 trillion faster than expected
The Congressional Budget Office on Wednesday said the federal deficit will rise faster than previously forecast due to increased military and social spending in the bipartisan budget deal lawmakers reached this summer. This year's deficit will increase by $63 billion to $960 billion, and the shortfall will exceed $1 trillion in 2020, a threshold it previously had been expected to reach two years later. It would be the first trillion-dollar deficit since 2012 as the country was still struggling to recover from the 2008-2009 financial crisis. The deficit also is being fueled by "sluggish growth in federal revenue" after the Trump administration's 2017 tax cuts went into effect.
4. Stock futures struggle for traction after Wednesday's gains
U.S. stock index futures edged lower early Thursday, struggling for footing after Wednesday's strong gains. Futures for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq fluctuated between gains and losses of 0.1 percent or less ahead of the start of trading as investors awaited news from the Federal Reserve's two-day central banking meeting in Jackson Hole, Wyoming. On Wednesday, the Dow and the Nasdaq closed 0.9 percent higher, while the S&P 500 rose by 0.8 percent. Retailers led the gains. Target's stock surged by 20 percent to a record after it reported better-than-expected quarterly sales. Lowe's shares jumped by 10 percent after the home-improvement giant also posted strong quarterly results. Nordstrom shares rose by 5 percent in extended trading after it, too, beat expectations.
5. U.S. 2018, 2019 job gains adjusted down by 500,000
The Labor Department said Wednesday that U.S employers added about 500,000 fewer jobs in 2018 and early 2019 than initially reported. Hiring figures remained strong despite the revisions, but the average monthly job gain fell from 223,000 to under 200,000, just slightly exceeding the 179,000 monthly employment gain posted in 2017. The change added to mounting evidence that the U.S. economy got less of a boost from President Trump's tax cuts than initial data suggested. "The pace of job growth in 2018 was a significant upside surprise," said Stephen Stanley, chief economist of investment firm Amherst Pierpont Securities. "The revision kind of brings things back into line with what the original thought process had been."
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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
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