Real Time Economics: Amazon Does the Splits | U.S. Midterms Are Here | Why Iran Sanctions Aren’t Raising Oil Prices

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    This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

    It’s Election Day! Today we look at Amazon’s decision to split its second headquarters between two cities, U.S. midterms, the “real” unemployment rate, and Iran sanctions.

    AMAZON SPLITS HQ2

    Amazon.com plans to split its second headquarters evenly between two locations rather than picking one city. The WSJ’s Laura Stevens and Shayndi Raice report that the surprise decision is to allow the company to recruit more of the best tech talent, and ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems. Under the new plan, Amazon would divide the workforce with about 25,000 employees in each place.

    Amazon is in advanced talks with multiple cities but hasn’t made a final decision on which two locations it will pick. An announcement could come as soon as this week.

    DEAL OF THE DAY

    Amazon.com’s decision to separate its new headquarters exposes a secret known to many companies: It’s tough to find top tech talent. Companies from auto makers to insurers to health-care providers are duking it out with West Coast tech firms to attract and retain people with expertise in fields like software development, machine learning and big data, Lauren Weber, Eric Morath and Melissa Korn report.

    Hourly wages in the tech-heavy information sector rose more than 30% since the labor market began its postrecession expansion in 2010. That is the best gain among a dozen broad sectors tracked by the Labor Department, and well outpaces the 20% wage growth for all private-sector workers. Adding to pressure: The labor market for tech talent has tightened since Amazon started its search a year ago.

    Would you want Amazon’s HQ2 in your home town? Write to Jeffrey Sparshott at realtimeeconomics@wsj.com, tweet to @WSJecon and visit wsj.com/economy for the latest news. (Responses may be quoted in this newsletter.)

    WHAT TO WATCH TODAY

    It’s Election Day in the U.S. Follow the WSJ’s coverage here.

    The job openings and labor turnover survey for September is out at 10 a.m. ET.

    TOP STORIES

    VOTE EARLY, VOTE OFTEN

    Americans turn out to vote in midterm elections Tuesday. The economy should be a big advantage for Republicans: A Wall Street Journal/NBC News poll shows economic satisfaction and personal economic expectations are the highest in almost two decades. People believe the Republican party is better able to handle the economy than Democrats by a 15-point margin, the biggest advantage for the GOP since the survey started asking the question in 1991.

    It’s rare to have a party make big gains in a midterm if they’re not seen as best on the economy. But Democrats hold a 7-percentage-point edge on the question of which party should control the next Congress. That’s not to say they’re guaranteed a blue wave—forecasters expect Democrats to take the House and Republicans keep the Senate. But there’s a chance Republicans hold both and a chance Dems sweep.

    SO WHAT?

    Politically, the midterm election is shaping up as a referendum on President Trump’s first two years in office. For investors and the economy, the election may not be a big deal in the short term if, as expected, it leads to legislative gridlock. Tax policy, for example, would only be likely to change around the margins. “For the most important questions of the day—trade, immigration, internet regulation—Congress will need to find a bipartisan solution or continue ceding authority to the executive branch until after the 2020 election,” says UBS’s Justin Waring. “So we’re not expecting any surprises…but when they do happen they’re more likely to be political, not legislative.”

    ELECTION CYCLES

    Remember the last election, when then-candidate Donald Trump called the headline unemployment rate misleading? In August 2015, he said: “Our real unemployment rate–in fact, I saw a chart the other day, our real unemployment–because you have ninety million people that aren’t working. Ninety-three million to be exact. If you start adding it up, our real unemployment rate is 42%.”

    By Mr. Trump’s measure, how is the labor market doing? Let’s answer like an economist: It depends. Instead of 93 million people out of the labor force–neither working nor looking for work–there are now almost 96 million.

    But that broad-based unemployment measure has improved ever so slightly, to 39.4% in October, down from a high of 41.8% in 2011. It remains way above prerecession levels.

    Of course, most of those people are out of the labor force because they’re  retired or students. That 96 million figure is likely to grow as more Baby Boomers retire.

    IRAN AND OIL PRICES

    The threat of U.S. sanctions on Iran drove the oil price to multiyear highs last month. Those penalties kicked in Monday with some notable exceptions: China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey received waivers that would allow them to continue temporary imports of Iranian crude without facing penalties. One big reason: “I could get the Iran oil down to zero immediately, but it would cause a shock to the market. I don’t want to lift oil prices,” President Trump said.

    Alongside slower global economic growth and solid production from OPEC, Russia and the U.S., that seems to be doing the trick. Crude prices have come down more than 15% since the start of last month, when Brent breached the $86-a-barrel threshold for the first time in four years.

    QUOTE OF THE DAY

    Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution. –Viral Acharya, deputy governor of the Reserve Bank of India, in a speech

    TWEET OF THE DAY

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    WHAT ELSE WE’RE READING

    Maybe President Trump should have picked a Clinton Treasury Secretary or Obama economic adviser to lead the Fed. Or someone who was both. “[I]t seems there is considerably more danger of the Fed raising rates too fast than too slowly over the next year,” Lawrence Summmers writes in a Washington Post op-ed. “Monetary policies affect the real economy with lags of a year or more. It is, therefore, easy for policy to tighten past the point at which the economy is thrown toward recession because of an absence of clear signals of slowing.”

    Cloud computing turns out to be a bit nebulous, at least when it comes to totting up its economic impact. Notably, the government may be missing some investment when companies build their own equipment. “Our calculation suggests that, if this own-account investment were included in business IT investment, then the growth rate of nominal investment in IT equipment during 2007-2015 would have averaged a little more than 2 percentage points higher, and real GDP average annual growth would have been a touch higher as well,” David Byrne, Carol Corrado and Daniel Sichel write in a National Bureau of Economic Research working paper.

    UP NEXT: WEDNESDAY

    U.S. consumer credit for September is out at 3 p.m. ET.

    The Federal Reserve begins its two-day policy meeting.

    Read more: blogs.wsj.com

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