Date: July 18, 2019
U.S. Job Growth Looks Set to Power Record Back-to-School Spending
“Last Christmas may have been a let down, but American shoppers are finally warmed up just in time for back-to-school spending. U.S. outlays this summer will rise 5.1% — the most in eight years — as wage gains and near-peak employment translate to higher sales, retail research firm Customer Growth Partners estimates. Americans will spend a record $616 billion this year, accelerating from last year’s growth of 4.5%. “After a slow start due to the long winter, retail has inflected sharply up since mid-April, and has hardly looked back,” President Craig Johnson said in the report. However, if new tariffs on Chinese goods are implemented, growth could be as low as 3.5%, according to the study. New duties on an additional $300 billion of Chinese goods had been slated to go into effect but were put on hold after U.S. and Chinese leaders agreed to renew trade talks. Still, tensions linger as President Donald Trump has repeatedly said he could impose more tariffs on Chinese imports if he wants. Online sales are forecast to climb almost 12% this back-to-school season while sales at big-box stores will rise 5.5%, according to Customer Growth Partners’ surveys of more than 100 malls and shopping venues. For now, 5.1% back-to-school growth “is fully consistent with a 3% GDP pace for the second half of 2019,” Johnson said, “as the consumer — again — straps the economy on her back and powers forward.” ”
ECB Studies Revamping Inflation Goal in Twilight of Draghi Era
“European Central Bank staff have begun studying a potential revamp of their inflation goal, according to officials familiar with the matter, in a move that could embolden policy makers to pursue monetary stimulus for longer. The staff are informally analyzing the institution’s policy approach, including the question of whether the current target of consumer-price growth “below, but close to, 2%” is still appropriate for the post-crisis era. President Mario Draghi favors a “symmetrical” approach, meaning flexibility to be either above or below a specific 2% goal, the officials said, asking not to be identified as the work so far is confidential and preliminary. That would allow the ECB to keep inflation elevated for a while after a period of weakness to ensure price growth is entrenched. Governing Council members were given a presentation last week on symmetrical approaches to the current target. Changing the goal itself would probably require a formal review, the officials said. An ECB spokesman declined to comment. Bonds and stocks jumped on the report. The euro slid to its lowest of the day, trading down 0.2% at $1.1206 at 12:40 p.m. Frankfurt time. A shakeup of the framework would be another step in the ECB’s transformation over the past two decades from a traditional central bank, modeled on the Bundesbank, to one adopting innovative strategies for a world in which standard economic models no longer seem to work.”
U.S. Targeting of Chinese Scientists Fuels a Brain Drain
“It was a big opportunity for a small research university. In 2013, Xin Zhao, a prize-winning Ph.D. from the College of William & Mary, landed venture funding to commercialize some of the school’s patented nanotechnology. Zhao’s startup rented space nearby, hired local graduates and agreed to fund $1 million of new research at the Williamsburg, Virginia, campus. “It was what everyone wants to see—a success story of a university spinout,” says Jason McDevitt, the school’s director of technology transfer. Six years later, Yick Xin Technology Development Ltd. is up and running, but not in Virginia. The company’s R&D and new patent registrations—the lifeblood of any technology startup—have moved to China. The planned William & Mary spinout left the U.S. after federal agents hounded its founder, Zhao, for two years, and prosecutors accused him of trying to smuggle a robotic arm from Florida to a university in China that U.S. officials had linked to the nation’s top nuclear weapons lab. The charges were dismissed in December 2017—but Zhao, shaken by the ordeal, gave up his U.S. research operations. The 44-year-old applied physicist’s struggle to clear his name, extricate himself from a persistent undercover sting and overcome a 2016 arrest shows how America’s heightening cold war with China presents risks for ethnic Chinese scientists working in the U.S. He’s among a growing number who are leaving behind their families and taking their skills and business opportunities to—where else?—China. “My dream was defeated,” says Zhao, whose crew-cut and boyish face belie the brash candor with which he tells his story. “I came here for freedom and security. Now fear is pushing us back to China.” A spokeswoman for the Department of Homeland Security, which led the investigation, disputed any suggestion that the government was unfair to Zhao, noting that he agreed to enter a pretrial diversion program, which included performing 30 hours of community service. It’s rare for federal prosecutors to offer diversion in felony cases like Zhao’s, but in many respects, his case resembles a paperwork problem that got way out of hand.”
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