Monday Moneybeat: A long-term Cold War

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: Government economists put out the August jobs report on Friday, and in a sign of just how strong the labor market has been, the numbers were a disappointment.

American employers added 130,000 new jobs, slightly lower than the average over the last six months. It’s substantially below last year’s pace of more than 200,000 jobs added per month. 

But the unemployment rate remained near its lowest point in half a century, 3.7 percent. That’s three months in a row at that same rate. 

Economists consider an unemployment rate like this virtual “full employment,” and the biggest challenge for job creators is to find job seekers.

The law of supply and demand applies to all markets and that includes labor markets. So when the supply of available workers dips and demand remains constant or increases a bit, that’s going to drive wages up, and it has. Average hourly pay is running well ahead of the inflation rate: wages are up 3.2 percent year on year.

REICHARD: A second straight winning week on Wall Street. All the major indexes of stocks posted gains between a percent-and-a-half and 2 percent for the week. 

The relative calm on the New York Stock Exchange is a welcome break from panicky days of selling in August, prompted by mixed signals about a looming global recession and trade-war concerns.

EICHER: About those trade-war concerns: White House economic adviser Larry Kudlow provided reporters with a bit of context and an analogy from history, in trying to explain the trade dispute with China. 

First, it’s a long-running conflict that Kudlow said presidents of both parties have largely ignored. 

American negotiators insist that China is guilty of a range of illegal and unfair trading practices, including stealing sensitive technology and forcing American companies to hand over trade secrets in exchange for access to its vast market. 

Kudlow added that human-rights concerns are in the mix, too, concerns over Hong Kong, and unspecified national-security concerns. 

He likened it to the Cold War.

KUDLOW: Look, I’m an old Reagan guy. I worked across the street as a Reagan cub scout when I was an OMB deputy. I remember President Reagan waging a similar fight against the Soviet Union. 

These are different times now, I get that. Everybody said, “We couldn’t win. Best we could do is contain them.” He said, “No, we can overturn them and overthrow them.”

Kudlow did add immediately that the administration isn’t thinking about overthrowing the Chinese communist party. 

His point was more that the issues that separate Washington from Beijing are big and serious and the 18-month standoff, which may seem long, is not all that long, given what’s at stake. 

Later in the media gaggle, Kudlow returned to the theme, and ended there. It’s worth listening to. I cut it a bit so it’s not as long as it actually was, but I’ve retained the essential meaning. Have a listen.

KUDLOW: President Trump has persuaded people in America of the importance of this.

And so it’s going to take … You know what? I don’t think the election goal posts have any meaning on this, to be perfectly candid. This is the kind of thing, ma’am, where you’re looking at far-reaching consequences. I don’t mean like another year. I mean 50 years. Or a hundred years. 

And every time we get together with them, every step of the way, there is progress of sorts. And it’s going to last a long time. 

Again, when I worked across the street under President Reagan, I watched him operate. That was eight years. It turned out to be a big success. Eight years is more than 18 months, but the stakes are so high, we have to get it right. And if that takes a decade, so be it.

And that is today’s Monday Moneybeat.

(AP Photo/Evan Vucci) White House chief economic adviser Larry Kudlow talks with reporters outside the White House, Friday, Sept. 6, 2019, in Washington. 

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