Overnight Finance: Unemployment rate lowest since 2000 | Trump asks China to slash trade deficit $200B by 2020 | NJ gov signs bill to skirt GOP tax law provision

Happy Friday and welcome back to Overnight Finance, where we are celebrating Star Wars Day with a few laughs and a vigorous defense of Porgs. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@digital-stage.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

THE BIG DEAL: The U.S. economy added 164,000 jobs in April, a modest number that was less than expected as the nation’s labor market maintains a steady rate of growth. 

The unemployment rate fell to 3.9 percent – the lowest level since December 2000 – from 4.1 percent in March, where it had held for six months, the Labor Department reported on Friday. Analysts expected an April gain of about 190,000 jobs.

The economy is maintaining growth even as President Trump’s threats of steep tariffs on China and some U.S. allies have unnerved businesses and stock markets, injecting uncertainty into the economy. The Hill’s Vicki Needham breaks down the data for us here.

 

Wage growth still lags: With a tightening labor market, job growth is expected to slow down somewhat as the unemployment rate drops into the rarely seen 3-4 percent range.

And wage growth remains stubborn, while companies have been slow to raise wages despite getting a boost to their bottom lines from the GOP’s tax-cut bill.

Businesses continue to complain that they can’t find enough qualified workers to fill openings.

In April, average hourly earnings were up 2.6 percent for the year.

Jason Furman, former head of the Council of Economic Advisers under President Obama who now teaches at Harvard, said that while the 3.9 percent unemployment rate “is positively exciting,” the slow rate of pay increases is “pretty disappointing.”

Robert Frick, corporate economist with the Navy Federal Credit Union, said the slower pace of wage growth shows that “workers are not sharing in the expansion as they should, and that has consequences for the expansion given two-thirds of [gross domestic product] is consumer spending.”

“We need wage increases well above 3 percent for consumer spending to accelerate at a healthy pace,” Frick said.

Reactions:

• “JUST OUT: 3.9% Unemployment. 4% is Broken! In the meantime, WITCH HUNT!” — President Trump

• “The percent of the labor force that is working part-time for economic reasons has been hovering around 3.1 percent for a few months, which may mean that recovery in this measure is stalling out.” — Martha Gimbel, director of economic research at Indeed

• “The Trump administration’s govern-by-chaos mentality is continuing to put unnecessary burdens on working families. His policies are creating stagnant wages and shrinking markets for American agricultural goods overseas.” — Rep. Joe Crowley (D-N.Y.), House Democratic Caucus chairman

• “With the lowest unemployment rate since 2000, this report shows an expanding economy – which was our goal when Republicans passed pro-growth tax reform.” — Rep. Kevin Brady (R-Texas), chairman of the House Ways and Means Committee.

• “April’s job report shows our continued economic strength built on what President Obama left to his successor: a combination of declining deficits and robust job growth.” — Rep. Steny Hoyer (D-Md.), House minority whip.

• “The bad news is that there was no measured employment growth in the household sector; the decline in the unemployment rate was solely because the labor force fell by 236,000 and labor force participation dipped to 62.8 percent.” — Douglas Holtz-Eakin, former director of the Congressional Budget Office.

 

ON TAP NEXT WEEK

Monday:

• North American Free Trade Agreement (NAFTA) re-negotiation meetings resume.

• The Federal Deposit Insurance Corporation (FDIC) hosts a forum on the use of technology in the business of banking, 9 a.m.

• House Rules Committee: Meeting on three bills including the Senate resolution to repeal the Consumer Financial Protection Bureau’s 2013 guidance on auto-lending, 5 p.m.

 

Tuesday:

• Brookings Institution hosts an event on the future of the middle class featuring a speech from former Vice President Joe Biden, 9 a.m.

• The Heritage Foundation hosts an event on “the case for reforming farm subsidies,” 12 p.m.

 

Wednesday:

• American Enterprise Institute hosts an event on threats to U.S. community banks featuring Rep. Blaine Luetkemeyer (R-Mo.), 8:30 a.m.

• House Education and the Workforce Committee: Hearing entitled “Closing the Skills Gap: Private sector solutions for America’s workforce,” 10 a.m.

• House Oversight and Government Reform Committee: Hearing entitled “Program Integrity for the Supplemental Nutrition Assistance Program,” 10 a.m.

• House Ways and Means Committee: Hearing entitled “Jobs and Opportunity: Legislative Options to Address the Jobs Gap,” 10 a.m.

 

Thursday:

• Brookings Institution hosts an event on economic mobility across generations around the world, 10:30 a.m.

 

NEXT WEEK’S NEWS, NOW

 

• House to vote on repeal of Consumer Financial Protection Bureau auto lending guidance: The House is likely to vote this week to repeal the CFPB’s controversial 2013 guidance on auto loans. A measure to repeal the CFPB’s attempt to weed out “dealer markups,” the additional interest added by an auto-dealer to a third-party loan as extra compensation, passed the Senate on April 18. The House vote to repeal, as we reported in April, will likely pass along party lines. Trump is expected to sign the measure and strike a precedent-setting blow to informal federal legal guidance. I’ve got more here on why that’s important.

 

• NAFTA talks resume: U.S. Trade Representative Robert Lighthizer is scheduled Monday to meet his counterparts in the North American Free Trade Agreement (NAFTA) on Monday, with the administration hoping to complete talks on a revised deal this month. Lighthizer is scheduled to meet with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo. “If we can get a good agreement, I’d like to get it done a week or two after that. If not, then you start having a problem,” Lighthizer told the U.S. Chamber of Commerce on Tuesday.

 

GOOD TO KNOW

• President Trump’s trade representatives presented Chinese officials with a document Friday asking China’s government to reduce its trade deficit with the U.S. by $200 billion by the end of 2020.

• The Washington Post explores why Trump’s trade requests to China amount to changing “just about everything” in its economy.

• More than half of the combined net-income growth reported by 200 large public companies for the first quarter stemmed from a decline in the companies’ effective tax rates, according to a Wall Street Journal analysis.

• Bloomberg explores the backlash Citigroup and Bank of America is facing from Washington Republicans over their gun policies.

• Speaking of which, Sen. Ted Cruz (R-Texas) fired off a letter to both of the banks excoriating them for their decisions and demanding answers about the new policies.

• The government of Qatar bought a $6.5 million apartment in one of Trump’s New York towers soon after the dismissal of a lawsuit that tried to stop the president benefiting from such deals, according to The Guardian.

• New Jersey Gov. Phil Murphy (D) on Friday signed legislation providing a workaround to a controversial provision in the new federal tax law Trump signed late last year.

ODDS AND ENDS

• Kevin Warsh, a former Federal Reserve governor once considered by Trump to lead the Fed, said the central bank should consider getting involved in cryptocurrency.

• White House adviser Jared Kushner has made additional mistakes on his financial ethics disclosure forms, this time regarding two loans for properties in Brooklyn.

 

Recapping the week with Overnight Finance:

• Monday:  Banks close in on Dodd-Frank relief | Inflation reaches threshold for Fed rate hikes | Rubio undercuts GOP tax message | Closing arguments in AT&T trial
  

• Tuesday: Trump delays tariffs for key trading partners | Dems want investigation into Mulvaney lobbyist remarks | Trump lawyer Cohen hit with $282K tax bill | Apple plans $100B stock buyback

• Wednesday: Fed holds rates steady but sees inflation rise | Crucial month ahead for Trump on trade | US businesses added 204K jobs in April | Lawmakers eye new powers for panel on foreign investment 

• Thursday: Trump trade agenda at crossroads | White House to request $11B in spending cuts | SEC subpoenas Jay-Z | Company drops legal challenge to consumer bureau