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Today's Smart Brevity count: 1,265 words, ~5 minute read.
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1 big thing: The 2020 trade war president
Multiple U.S. trade conflicts — with China, Mexico and, waiting their turn, Europe, Japan and Canada — are roiling the world economy. But one or more of them is still likely to be on the boil late next year, when President Trump faces a possibly tough re-election.
- Quick take: Experts queried by Axios say Trump is likely to want to keep needling trade grievances through Election Day next year as evidence that the U.S. faces a showdown in which only he is equipped to prevail.
The big picture: Historically speaking, wartime national leaders anywhere rarely lose re-election. That explains what appears to be a morphing of Trump trade policy from allegations of unfairness to Americans to a 2020 campaign issue.
- "By demonizing his so-called 'enemies,' both domestic and foreign, and presenting himself as the savior and defender of American democracy, whatever the issue of the day is, Trump is likely to present it as a war that he is valiantly fighting on behalf of the people,” said Laura Smith, a historian at the University of Mississippi.
- "Tariff threats against China and Mexico, and potentially Europe, play very well to Trump’s base, and probably speak to other disaffected voters," said Gary Hufbauer, an economist with the Peterson Institute for International Economics.
Just today, on the way out of France back to the U.S. after the D-Day commemoration, Trump threw a new trade salvo at Beijing, threatening tariffs on another $300 billion in Chinese goods unless the right deal is agreed to.
There is no precedent of a president running on a record of being tough with tariffs and trade, said Patrick Maney, a professor at Boston College.
- In fact, until a new 1974 law suddenly granted authority to the president, Congress controlled tariffs, thus pushing the White House to the background in such disputes, Manley said.
Still, presidents have tried generally to look hard-boiled around financial issues:
- For his re-election in 1832, President Andrew Jackson depicted himself declaring war against what he called "the Monster Bank," the precursor to the Fed, Smith said. Jackson won.
- “Candidates and presidential incumbents have historically been creative in what they choose to declare war on and therefore center their campaign around. The key is that they create a sense of urgency, presenting themselves as the candidate who truly understands the issue and can defend the American people," Smith said.
- "Whether Trump in 2020 can re-create Jackson in 1832 is yet to be seen.”
The bottom line: Bruce Mehlman, a Washington, D.C., lobbyist, said that while Trump will want to showcase that he is "standing up to China," he is unlikely to explicitly call himself a “wartime President.” That, Mehlman said, would invite "comparisons to [George W.] Bush wars that Trump opposed and invite easy attacks on his Vietnam nonservice."
- Thought bubble from Axios' Scott Rosenberg: "It's interesting that (a) there was no 9/11 or 'remember the Maine' or Gulf of Tonkin-style precipitating incident to mobilize the country into feeling like 'this is a war;' and (b) the 'trade war' conceit hides the reality that the casualties tend to be on our own side and they are self-inflicted/friendly fire."
2. Walmart and wages
If Walmart CEO Doug McMillon's public challenge to Congress to raise the federal minimum wage from $7.25 turns into reality, it could be a big boon for the retail giant, Erica writes.
The big picture: McMillon issued his call yesterday at Walmart's annual shareholder's meeting, saying the federal rate was "lagging behind." Among the upsides of such a move for Walmart are...
- A higher minimum would put more money in the pockets of low-income consumers — Walmart's customer base — and potentially boost sales.
- It also could improve the chain's already-substantial financial advantage, since in many small towns it competes with local businesses for workers and market share. In those cases, a higher minimum wage that the few remaining smaller shops can't afford could kill them, leaving the behemoth as the only game in town.
"Publicly declaring support for raising a minimum wage that is well below what Walmart already pays its workers is a cost-free way for Walmart to appear 'worker-friendly' while remaining staunchly anti-union and maintaining extremely coercive management tactics," says David Huyssen, a historian of capitalism at the U.K.'s University of York.
Context: Walmart pays its workers a minimum of $11 an hour, which, while significantly above the federal minimum wage, is lower than what rivals Target ($13) and Amazon ($15) pay.
- At the company shareholders' meeting, Sen. Bernie Sanders showed up and accused Walmart of paying "starvation" wages.
- "Walmart has a serious image problem as an exploitative employer, one that Bernie Sanders' presidential campaign is in the midst of highlighting," Huyssen says.
3. Fretfully awaiting the jobs figures
Next month, the U.S. economic expansion will reach 120 months, tied for the longest on record, and economists expect the run to continue comfortably longer. But they are watching fretfully as the signs of a coming recession pile up.
Driving the news: Just yesterday, ADP, the payroll services firm, said the economy created just 27,000 jobs in May, much lower than the approximately 80,000 needed to soak up new job market entrants, and the worst report in almost a decade.
- Mark Hamrick, a senior economic analyst for Bankrate, tells Axios that other headwinds include an ongoing slowdown in the U.S. and global economy and the U.S. trade disputes.
- In a report yesterday, the World Bank cut its global growth forecast this year to 2.6% from 2.9%. The U.S. is forecast to slow to 2.5% growth from 2.9% last year, reports the WSJ's Josh Zumbrun.
The Labor Department's Bureau of Labor Statistics will release official monthly jobs numbers tomorrow morning, and economists tell Axios that they do not expect numbers as gloomy as ADP found. But Andrew Chamberlain, chief economist for Glassdoor, said he will be specifically scrutinizing the health care and professional business services sectors, which have been the engine of job growth.
Another ominous sign is a shift in the fortunes of corporations and labor, writes Axios' Dion Rabouin:
Dating back to the 1940s, corporate profits and labor rose and fell together, reflecting the general growth of the economy, note economists at the St. Louis Fed. But something changed about a decade and a half ago (see chart above).
What's happening: Capital Economics chief economist Neil Shearing says the change has to do with incentives for decision-makers at large companies.
- "There are a whole raft of structural shifts in the developed world over the last 30 years that have weakened the power of unions ... and basically shifted more of the share of income of labor to corporates and rather than being used for investment it's just jacked up share prices."
4. Worthy of your time
5. 1 fun thing: The only furniture you need
If you're decorating an apartment for cheap, you might buy everything — couch, bed, dresser, cupboards, desk — from Ikea.
But what if you're in a tiny, tiny apartment, the kind that's increasingly prevalent in huge, packed cities? Well, you might go instead for Ikea's all-in-one couch-bed-dresser-cupboards-desk, Kaveh writes.
- In a concept video, Ikea envisions the futuristic unit serving every need for a couple living in a super-cramped space, transforming a studio from bedroom to home office to living room throughout the day.
- The trick: It moves. The Swedish company worked with an American startup called Ori on the "robotic furniture," which slides from side to side based on what function it's serving.
The unit will start selling in Hong Kong and Japan — where tiny apartments are the norm — in 2020, reports MIT Technology Review.