THE TICKER

President Trump’s popular support is ebbing again, with a handful of new polls showing his overall approval rating dipping below 40 percent. And as we noted here yesterday, voters are taking an increasingly sour view of the president’s economic leadership, with that erosion of his supposed strong suit weighing on his standing. 

By one important measure, however, Americans continue to see their own economic livelihoods improve, offering the president a potentially potent argument to carry into his reelection fight next year. 

New data from a sweeping Census Bureau survey released Tuesday show rising wages for workers — with real median pay rising 3.4 percent for workers over the past year.

The results were arguably obscured by some grimmer results from the same survey. The rate of Americans without health insurance rose over the past year for the first time in a decade, edging up to 27.5 million people — or 8.5 percent of the population, from 7.9 percent in 2017. And while the survey’s official measure of the poverty rate showed it hitting its lowest level since 2001, the Census Bureau’s more accurate, supplemental poverty measure didn’t meaningfully budge. 

Median household income appeared to stall as well, effectively matching middle-class income from 20 years ago after adjusting for inflation. But several economists tell me the median household income number from the Census survey doesn’t fit other recent data reflecting modest but measurable wage gains for workers. 

“Even if overall household income is not rising much today, the tightness of today's labor market is showing up to some extent in higher pay,” says Glassdoor Chief Economist Andrew Chamberlain, who added the rising pay the census found matches his firm’s data. 

Gary Burtless, an economist at the Brookings Institution, said he was stumped by the household income stagnation in the report, so he checked data he considered more reliable: the national income and product accounts maintained by the Bureau of Economic Analysis at the Commerce Department. Those numbers — which count income as everything from wages to rental income, dividends, and Social Security payments — show real per capita income rising 2.61 percent last year. “The NIPA income totals seem to better reflect our impression that the U.S. economy prospered in 2018, with rising payroll totals and improving real wages,” Burtless said.

Whether voters broadly register those gains — and, more importantly from Trump’s perspective, give him credit — is a different and increasingly pressing question as the 2020 presidential contest gets more intense. 

Besides their own take-home pay, voters have a long list of dicey economic information to digest as they form a picture of Trump’s economy. The president's capricious escalation of trade hostilities with China has whipsawed the stock market; the trade war has sent manufacturers and farmers into skids; and recession warnings appear to be dragging on business and consumer confidence. 

“Sizable shares of Trump’s core supporters say they are worried about price increases because of tariffs, including 55 percent of whites without college degrees, 54 percent of people living in rural areas and 45 percent of white evangelical Protestants,” my colleagues Toluse Olorunnipa and Scott Clement reported in their write-up of the latest Washington Post-ABC News poll. "Concern rises to about 6 in 10 political independents and people living in the suburbs, two key swing voting groups.”

The poll revealed a stark partisan gap in voter assessments of the economy’s strength, with 9 in 10 Republicans saying it is in good or excellent shape while only 33 percent of Democrats say the same. That divide represents the widest divergence on the question dating to the start of the Obama era. 

Yet the census data — and more like it — show the lion’s share of the economic gains in the Trump years are concentrated in areas largely hostile to the president, namely big cities. “Some of the folks who fueled the Trump candidacy and presidency still aren’t doing great,” Matt Weidinger, an American Enterprise Institute fellow who focuses on poverty, tells my colleagues Amy Goldstein and Heather Long. 

Glassdoor’s data backs up the finding. “Although pay growth is underwhelming overall, Glassdoor is seeing pockets of strong pay growth in our data,” Chamberlain says in an email. “For instance, we're seeing strong pay gains in big metros where tech has a big presence like San Francisco, New York City, Boston and Seattle.” 

That said, demand for new workers appears to be falling: A separate report Tuesday from the Labor Department showed new job listings declined in July for the second straight month. It found the number of postings is off 400,000 from its peak of 7.6 million in November. Meanwhile, Trump's trade war has reduced employment by 300,000 jobs and is on pace to cost 450,000 jobs by the end of the year, according to Moody's Analytics. 

Some economists said with all the noise and seemingly contradictory signals, the best bet may be to wait and watch. Harry Holzer, a Georgetown University professor of public policy and former chief economist for the Labor Department, said the census report left him “with a conundrum,” so he’s awaiting more conclusive evidence about whether the expansion has more legs. 

“Everybody is looking to see whether we’ve reached the peak and whether we’re going to start deteriorating,” Holzer, an adviser to the presidential campaign of former Vice President Joe Biden, tells me. “Everybody agrees there’s slowing… You do see a slowdown in new hiring and new job creation… But other numbers remain pretty good, so even though employers aren’t creating new jobs, you haven’t seen any numbers that have gotten adverse. Will this slowdown in hiring translate into rising unemployment and a weakening in earnings?”

That isn’t clear yet. This much is, he said: The Trump administration has failed to deliver on its promise of that the average American family would see a $4,000 raise from his signature tax cut. Per Holzer, “The bump from the tax cut is now starting to fade, as we all knew it would.”

MONEY ON THE HILL

— Biden appears ready to take fight to Warren: "Joe Biden is expected to use this week's debate to argue Democrats should select a nominee who is able to offer 'more than plans,' an adviser to the former vice president says, previewing a potential line of attack against Sen. Elizabeth Warren, whose campaign mantra is 'I've got a plan for that.'" CNN's  Arlette Saenz and Jessica Dean report.

Biden and Warren are set to face off on the debate stage for the first time at the third Democratic presidential primary debate, a one night event featuring 10 candidates in Houston on Thursday.

"'I expect you'll see Biden echo an important point he made during last week' climate forum: we need more than plans, we need a President who can deliver progress on the most pressing issues facing Americans -- which Joe Biden has proven he can throughout his career,' a Biden adviser said.

Pushing back on plans isn't the only potential attack line: "Biden plans to argue at this week’s debate that all presidential candidates -- including the incumbent -- must be transparent about their finances and any business dealings in their past," Bloomberg's Jennifer Epstein reports.

"The approach, described by a Biden adviser on condition of anonymity, could be seen as a veiled attack on [Warren] ... While Warren has posted tax returns dating back to 2008 on her campaign website, the Biden camp appears to be calling for greater scrutiny of the years before 2008, the year she was appointed to the Congressional Oversight Panel that examined the government response to the financial crisis."

— Top CNBC anchors say execs are scared of Warren: “Leaders in the financial industry are really worried about the possibility of [Warren] becoming president, CNBC’s Jim Cramer said Tuesday,” CNBC’s Matthew J. Belvedere reports.

“‘When you get off the desk and talk to executives, they’re more fearful of her winning,’ Cramer said on “Squawk on the Street.” Cramer said he’s hearing a ‘she’s got to be stopped’ mantra bubbling up among executives on Wall Street and elsewhere … Warren, a champion of the left wing for her bank-bashing and wealth-taxing proposals, has been doing better at the polls in the crowded field of candidates vying for the 2020 Democratic presidential nomination.”

A new Washington Post-ABC News poll released this morning may give credence to any fears: Both Warren and Biden lead Trump in a general election matchup, by 7 and 15 points, respectively.

Warren saw it:

MARKET MOVERS

Goldman: Stick with stocks. Bloomberg's Ksenia Galouchko: "Goldman Sachs Group Inc. has a simple yet firm message for its wealthy clients: stick with U.S. equities. 'As we’ve gone through various crises, we’ve still told clients to stay invested and not get out of U.S. equities, it’s too early,' said Sharmin Mossavar-Rahmani, chief investment officer for Goldman’s Private Wealth Management, which oversees about $500 billion and caters to high-net-worth individuals, families and endowments... Mossavar-Rahmani’s advice makes her a contrarian amid this year’s record $683 billion surge of cash into bonds as traders searched for havens amid trade-war-related growth concerns."

Jamie Dimon braces for zero rates. WSJ's David Benoit: "The biggest bank in the U.S. is starting to prepare for how to make money if interest rates in the U.S. drop to zero. James Dimon, chief executive of JPMorgan Chase & Co., said at an industry conference Tuesday the bank has begun discussing what fees and charges it could introduce if interest rates go to zero or lower.

"While Mr. Dimon stressed he wasn’t expecting zero rates at this point, the fact that he would entertain such a conversation is a sign of how sharply the environment has changed. A year ago, the Federal Reserve was still raising rates, and many bankers including Mr. Dimon expected the rate increases to continue into this year."

Meanwhile, European banks are preparing for more deeply negative rates. Bloomberg's Yuko Takeo and Nicholas Comfort: "The European Central Bank is about to turn the screws again on financial institutions by diving even deeper into negative interest rates. Lenders including Deutsche Bank AG and UBS Group AG are bracing for another blow to their profitability after five years of sub-zero monetary policy. While the ECB’s strategy is to boost growth and inflation by lowering borrowing costs for companies and households, squeezing banks too much could hamper their ability to supply the credit that fuels the economy."

Currencies around the world are tumbling to multiyear lows against the dollar, bruising investors’ portfolios and fanning the flames of a global trade war.
WSJ
TRUMP TRACKER

TRADE FLY-AROUND: 

China lifts some tariffs. But not those on pork on soybeans. The Post's Anna Fifield: "China extended an olive twig, rather than a branch, to the United States in their trade war Wednesday, announcing it would exempt 16 American-made products from tariffs as a sign of goodwill ahead of talks scheduled for next month. But the gesture, which Beijing said was designed to ease the dispute’s impact on American companies, does not offer relief from tariffs on the big-ticket agricultural products that are causing the most hurt in the United States...

"China’s Ministry of Finance said that 16 types of U.S. products would be exempt from retaliatory tariffs for a year from next Tuesday. The list included varieties of animal feed such as alfalfa and fish meal, cancer drugs gefitinib and capecitabine, base oil for lubricants and lubricating grease, and some farm chemicals."

— Navarro tamps down hope for China talks: “A senior White House adviser tamped down expectations on Tuesday for the next rounds of U.S.-China trade talks, urging investors, businesses and the public to be patient about resolving the two-year trade dispute between the world’s two largest economies,” Reuters’s David Lawder and Susan Heavey report.

“‘If we’re going to get a great result, we really have to let the process take its course,’ Peter Navarro said on CNBC.”

  • More from Navarro: “‘We're hoping to get this thing done within the next 30 to 60 days,’ [Navarro] said, referring to the USMCA as the ‘big deal,’ Politico’s Megan Cassella reports. “Navarro called the next 30 days ‘critical’ to getting the agreement passed, as lawmakers return to Washington this week after summer break and House Democrats continue to negotiate with the Trump administration to make changes to reflect their priorities.”
THE REGULATORS

— Mnuchin pushes Fannie, Freddie plan: “The Trump administration plans to require Fannie Mae and Freddie Mac to begin paying a fee for support from the Treasury Department in exchange for a change to the mortgage-finance companies’ status that will allow them to retain their earnings, Treasury Secretary Steven Mnuchin said Tuesday,” the Wall Street Journal’s Andrew Ackerman reports

“Mr. Mnuchin, testifying before Senate lawmakers, said he hopes to quickly reach a deal with the regulator of Fannie and Freddie, the Federal Housing Finance Agency, to amend the terms of the firms’ government bailout agreements that would end an existing sweep of nearly all their profits to the Treasury. The change is seen as the first major step toward privatizing the companies after 11 years under government control.”

Housing groups say mortgages could be more expensive: “The Trump administration’s plan to overhaul the country’s housing finance system would make mortgages more expensive for minority borrowers and aspiring homeowners in the South, the Midwest and rural communities, according to fair housing and lending groups,” my colleagues Tracy Jan and Renae Merle report.

“ … Housing advocates say the administration’s plan would lead to a bifurcated market that would block first-time home buyers and low-income borrowers, many of whom are people of color, from lower-cost conventional loans. Borrowers who cannot afford 20 percent down payments and have less-than-pristine credit scores would be channeled into more-expensive loans insured by the Federal Housing Administration, whose insurance premiums last for the life of the loan.”

POCKET CHANGE

— California bill targets gig economy: ” A pack of Teamsters fanned out through California’s Capitol building last week, marching into legislators’ offices and pressing them to pass a bill that would force Uber and Lyft to treat their drivers as employees. The measure, Assembly Bill 5, would entitle gig workers to protections like a minimum wage and unemployment benefits,” the New York Times’s Kate Conger and Noam Scheiber report.

“Legislators are expected to pass the bill before their session ends this week, presenting the strongest challenge yet to Uber and Lyft’s business model, which relies on a corps of drivers who can be enlisted and deployed essentially as freelancers. The measure could affect millions of Californians beyond ride-hail drivers, including janitors, nail salon workers and cable-television installers. And it would give momentum to an emerging consensus on the center-left that workers are entitled to a basic level of economic security that many Americans now live without. ”

— Corporate bond rush reflects cautious optimism: “Some investors are shifting money from stocks into corporate bonds, a sign that concern about slower earnings growth isn’t leading to worries about the ability of companies to pay back their debts,” WSJ’s Daniel Kruger reports.

“Investors tend to seek the stability of bonds when they are nervous about growth. But the additional yield, or spread, investors demand to hold junk-rated company debt instead of safer U.S. government bonds was recently 3.72 percentage points, its lowest level since July and below the average for this year, according to Bloomberg Barclays data. That is a sign investors don’t expect a slowdown tipping companies into default.”

A Twitterstorm erupted after the list, developed by business professors and published by Forbes, included only one woman. Forbes has created a task force in response.
CHART TOPPER

Bolton exit drives down oil prices. Investors typically ignore staff-level turmoil in the White House these days, but the oil market saw a dramatic reaction Tuesday to National Security Advisor John Bolton's messy exit, with Brent crude oil prices dropping 2 percent. The response came with a good reason, considering Bolton's hawkish approach to oil giant Iran. Per Bloomberg, Bolton's firing "could be a catalyst for a material de-escalation in the Iran standoff" that brings back about 700,000 barrels of Iranian crude daily, according to Helima Croft, global head of commodity strategy for RBC Capital Markets LLC.

Here, via Bloomberg's Joe Weisenthal, is a look at how the commodity market responded in the immediate aftermath of the news: 

DAYBOOK

Today:

  • The House Financial Services Committee Subcommittee on National Security, International Development, and Monetary Policy holds a hearing on the macroeconomic effects of climate change.
  • The Peterson Institute for International Economics holds an event on a 2019 IMF report on exchange rates and external adjustments 
  • Brookings Institution holds an event on the status of anti-money laundering efforts. 

Upcoming:

  • The Financial Services Task Force on Artificial Intelligence holds a hearing on the future of identity in financial services on Thursday.
THE FUNNIES
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