Publications

The Wall Street Journal reports that U.S. energy companies are worrying about a possible elimination of the NAFTA Investor-State Dispute Settlement system. Under the current system, companies that have foreign assets nationalized can appeal the action to an independent NAFTA panel, a process that American companies view as a necessary protection for international investments. WSJ

Sarah Chaney of the Wall Street Journal writes that more than half of U.S. states lack enough unemployment funding to be prepared for another recession. Chaney also points out that federal budget deficits are expected to worsen substantially in the coming years due to higher spending and lower revenues, which may leave the federal government less able to support states who run out of funding for unemployment benefits. WSJ

According to the Wall Street Journal, the Trump administration is pushing to finish NAFTA talks over the next two weeks. The president has repeatedly signaled willingness to withdraw from NAFTA, though many members of Congress, especially from the Republican party, have voiced their opposition to a withdrawal from NAFTA. WSJ

The Financial Times reports that financial markets indicate a growing probability of four Fed rate hikes this year, a sharp divergence from the consensus at the beginning of the year. Investors say that the Fed will walk a fine line between tamping down inflationary pressures and not slowing down the U.S. economy. FT

James Mackintosh of the Wall Street Journal says that it is not yet time to worry about the flattening yield curve. Mackintosh attributes part of the flattening of the yield curve to the massive quantitative easing programs the Fed conducted in response to the last recession, arguing that low long-term yields are not yet signaling an impending recession. WSJ

The Wall Street Journal reports that New York Fed President William Dudley warned yesterday that the U.S. cannot win a trade war. Dudley also said that trade frictions were contributing to a more uncertain economic outlook, making it more difficult for the FOMC to achieve its dual mandate of stable prices and maximum employment. WSJ

Sharon Nunn of the Wall Street Journal writes that a new report from the Federal Reserve shows that businesses across the U.S. are facing higher steel prices due to recent tariffs on steel. Some firms reported that prices for specialized steel products produced only in China have increased over 100%, while other firms report that they plan to pass on roughly half of their higher costs to consumers. WSJ

Greg Ip of the Wall Street Journal writes that recently-passed tax cuts are likely to widen the U.S. trade deficit. Ip points out that the corporate and individual cuts are expected to provide a short-term boost to spending, which should translate into higher demand for imported goods, widening the deficit. WSJ

According to Nick Timiraos of the Wall Street Journal, President Trump’s nomination for the vice chair of the Federal Reserve indicates a continuation of the status quo for interest rate hikes. Timiraos contends that Richard Clarida, Trump’s nomination for vice chair, is likely to support gradual interest rate hikes over the near term. WSJ