Trump warns China: 'I'm a tariff man'

Uncertainty over a trade truce with China wiped out the market rally from a day before. CNN's Clare Sebastian reports.

Posted: Dec 6, 2018 7:36 PM
Updated: Dec 6, 2018 7:55 PM

America's economy is flashing some warning signs, but -- for now -- the labor market appears to be going strong.

In advance of Friday's jobs report, economists polled by Refinitiv estimate that employers added 200,000 jobs in November, with the unemployment rate remaining at 3.7% and average hourly earnings growing 3.1% from the same month last year. The numbers will reflect higher-than-usual holiday hiring, as retailers anticipate a robust Christmas season.

America's employers have added an average of 215,000 jobs per month over the past year and wages have been slowly creeping higher as the economy has soaked up nearly all its available workers, prompting businesses to offer higher salaries, better benefits and more perks. Some economists expect the unemployment rate to sink even lower by the end of 2019, bottoming out at 3.2%. That would be the tightest labor market in 65 years.

"At this point in an expansion, we should have seen much higher wages, so I think that's finally starting to kick in," says Robert Frick, chief economist for Navy Federal Credit Union. Mentions of labor shortages and fatter paychecks peppered Wednesday's edition of the Federal Reserve's Beige Book, with one report of employees "ghosting" on companies for better jobs elsewhere.

Faster wage growth can rattle Wall Street, as it puts pressure on corporate profit margins and raises fears that the Fed will hike interest rates to forestall inflation. But recent statements from Fed officials, including Chairman Jay Powell, have indicated mounting caution about moving too quickly.

"With inflation tame, this is the perfect time for people to be making more," Frick says. "As long as spending is going up, profits are going to go up and companies are going to have to invest to become more efficient, and that's an absolute good."

However, the jobs report will land at a time when markets are getting increasingly nervous that an economic cooling off period is around the corner.

One indicator: The housing market is in the middle of a dramatic slowdown, as low inventory and rising mortgage rates have dissuaded would-be home buyers and sellers. Housing accounts for nearly 15% of the economy, and the decline in new home sales may turn into a decline in construction jobs -- even as falling prices could be good news for Americans struggling to afford a place to live.

Another troubling sign: The "yield curve," or the difference between interest rates on 3-year and 5-year bonds, inverted for the first time since the Great Recession this week. Historically, when investors think that short-term bonds are riskier, economic downturns nearly always follow. (Another closely-watched pairing, the difference between 2-year and 10-year bonds, hasn't turned negative yet.)

Declining growth in other countries could eventually create a drag on America as well.

That doesn't mean a recession is necessarily around the corner. Most forecasters don't expect any kind of crash in 2019, unless trade wars escalate or the Fed hikes rates too quickly. This won't be the last solid jobs report — but there may not be many in the not-too-distant future.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 549830

Reported Deaths: 7067
CountyCasesDeaths
Hennepin1145171675
Ramsey47380851
Dakota42007420
Anoka38065415
Washington24723273
Stearns20819218
St. Louis16620297
Scott15798117
Wright14643125
Olmsted1268297
Sherburne1046080
Carver970145
Clay777389
Rice7554101
Blue Earth690640
Kandiyohi623979
Crow Wing607986
Chisago543749
Otter Tail539373
Benton526097
Mower449532
Douglas438970
Goodhue438271
Winona437249
Nobles398748
Morrison391159
McLeod387854
Beltrami370557
Isanti370359
Itasca366052
Polk362467
Steele357714
Becker350248
Lyon346748
Carlton327052
Freeborn325029
Pine309221
Nicollet304142
Brown293139
Mille Lacs277350
Le Sueur268022
Todd267230
Cass247426
Meeker232737
Waseca229520
Martin211529
Wabasha19913
Roseau195518
Hubbard170541
Dodge17033
Renville169743
Redwood165435
Houston162114
Cottonwood155320
Fillmore15149
Pennington149519
Chippewa144636
Faribault142919
Wadena142721
Sibley134910
Aitkin127836
Kanabec127621
Watonwan12529
Rock121719
Jackson115910
Yellow Medicine110119
Pipestone109125
Murray10209
Pope10146
Swift98618
Marshall85317
Stevens80510
Lake78019
Clearwater76614
Wilkin76512
Koochiching76212
Lac qui Parle73422
Big Stone5594
Lincoln5572
Grant5438
Norman5209
Mahnomen4948
Unassigned48278
Kittson46222
Red Lake3857
Traverse3595
Lake of the Woods2993
Cook1440

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 356912

Reported Deaths: 5810
CountyCasesDeaths
Polk55819602
Linn20248329
Scott18949234
Black Hawk15517306
Woodbury14872220
Johnson1397781
Dubuque13115202
Dallas1087696
Pottawattamie10703162
Story1028547
Warren553586
Clinton536490
Cerro Gordo521186
Webster507991
Sioux505073
Marshall476874
Muscatine457896
Des Moines440665
Wapello4250120
Buena Vista421440
Jasper407670
Plymouth396779
Lee367755
Marion354375
Jones292955
Henry285937
Carroll279050
Bremer278960
Crawford262039
Boone257833
Benton249655
Washington249249
Dickinson240643
Mahaska224049
Jackson217842
Kossuth212362
Clay209825
Tama206571
Delaware202539
Winneshiek193933
Page190320
Buchanan188231
Cedar183423
Fayette182841
Wright180135
Hardin179242
Hamilton177949
Harrison175373
Clayton166655
Butler162434
Mills158020
Cherokee156738
Floyd155242
Lyon154341
Madison153519
Poweshiek152433
Allamakee149051
Iowa145324
Hancock143334
Winnebago135831
Grundy135032
Cass134354
Calhoun133111
Jefferson130535
Emmet128340
Shelby127337
Sac126819
Appanoose126647
Louisa126549
Mitchell125241
Union124032
Chickasaw122515
Humboldt118126
Guthrie117729
Franklin112521
Palo Alto110421
Howard102822
Montgomery100237
Unassigned10020
Clarke98023
Keokuk94430
Monroe93528
Ida89433
Adair84332
Pocahontas83321
Monona80930
Davis79924
Greene76410
Osceola75016
Lucas74922
Worth7078
Taylor65112
Fremont61210
Decatur5899
Van Buren55518
Ringgold53423
Wayne51923
Audubon4949
Adams3284
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