tv Nightly Business Report PBS November 18, 2016 1:00am-1:31am PST
>> announcer: this is "nightly business report" with tyler mathisen and sue herera. gaining strength. jobless claims fall. housing starts climb. inflation finds its footing. the numbers say the economy is looking up. but not everyone is feeling it. attention walmart investors. the world's largest retailer is entering the crucial holiday season on a slightly disappointing note. what's old may be new again. remember the bridge no nowhere? some lawmakers want to spend again on specific pet projects. those stories and more tonight on "nightly business report" for thursday, november 17th. good evening, everyone, welcome. i'm sue herera. tyler mathisen is off tonight. the economy is revving. today the government released
some of the best economic data on jobs, housing, and inflation in years. in some cases decades. here's what we learned. the labor market is strengthening. jobless claims tumbled to a level not seen since richard nixon was in office. home construction is ramping up, rising at its fastest pace since 2007. inflation, something the federal reserve has been searching for, is showing signs of firming. but across america, as we know, there is an economic divide with many feeling uncertain about their economic future. and the upbeat picture we got today may not tell the whole story. >> reporter: call it the data disconnect. consumer price numbers, up. housing starts, up. jobless claims down. now at 43-year lows. they're among the most positive economic reports in decades. those numbers do explain why federal reserve chair janet yellen says an interest rate
hike may be imminent. what they don't explain is the unrest president-elect trump successfully mind in last week's election. take consumer prices. up in october by nearly half of 1% from a month earlier, driven by higher gas and electricity costs. housing prices are up too. but food and medical costs are relatively flat. year to year prices are up 1 1/2 percent, the biggest gain in two years, not far from the if he had's 2% target, a number we haven't seen in four years. the fed benchmarks 2% as a sign of growth with a relatively low risk of sudden price spikes. the labor department's consumer price index isn't the only price measure used by the fed. it also uses the commerce department's personal consumption index, and that's been up as well. in september it was up more than %, the biggest jump in almost two years. october's number is due later this month. despite the higher prices,
consumers are buying. wages rose in october, the most since mid-2009. and retail spending is up in each of the past two months. housing construction is up as well. today we learned housing starts jumped in october more than 25%, the most in nine years. fueled by a boom in multifamily starts. up almost 75%. housing permits, a measure of future construction, were up 2, although not nearly as much. and finally, jobless claims dropped last week, down to their lowest levels since 1973, well below expectations. so why then, with jobs safe, wages up, and housing construction going strong, is the mood of the country so foul? the cry for change so loud? the numbers reflect a recovery. but it's an uneven recovery. not mirrored in places where jobs remain scarce and opportunity is lacking.
>> and we have picked up on some of those fault lines dividing the country from geography to education to ethnicity. and it gives us some insight as to where the recover is being felt and where it is not. noah beerman from "the los angeles times" and janet yazny who writes about economics. both of them during the campaign were across the country talking to people in various walks of life. welcome to both of you, appreciate it. >> our pleasure. >> there was a line in one of your stories that really struck me. it says, this divide was as wide as any in recent history between those who believe donald trump will destroy everything america stands for and those who are certain it's already so destroyed, that trump is the only one who can fix it. and that really crystallizes the huge divide that we have between maybe the two coasts and middle america. >> yeah, i think just from speaking to people, obviously
they didn't always put it quite in those terms, but you really had a sharp division about how people felt about the country, how people thought that their friends were -- you know, people at trump rallies didn't know a single person who voted for clinton. clinton supporters didn't know a single person who voted for trump. you really had sharp divisions. and that would be in their facebook groups, also their neighborhoods and all these places where we congregate now. and, you know, you definitely see and i found your report really interesting on the data, because you're right, it didn't necessarily -- it wasn't necessarily just people in lower income categories that voted for trump, right? but gallup had some interesting polling about a month ago that said it was a measure of those who felt economically insecure were more likely to vote for trump across income levels. so a lot of this division was really just in your personal feeling of security. >> and janet, that goes to some of the demographics that you discovered when you were in
wisconsin at arcadia, wisconsin. that economy is actually above average. but people there felt that they still couldn't get a leg up. and average wasn't so great anyway. >> that's right, sue. i think one thing that you can't discount in all this is the role that rapid demographic change has played, particularly in the upper midwest. we did an analysis of census data where we found that the places that had diversified the fastest in the u.s. over the last 15 years are small towns, a core part of the midwest. wisconsin, iowa, indiana. what we found was that, surprisingly, wage growth in these areas was slightly above average. unemployment was a little lower. these are towns where they have the manufacturing jobs, immigrants have been moving in. and so while people in those towns, the job market was fairly robust, there was a lot of -- people felt very unsettled about how quickly their towns had changed. i think to us it was a sign that immigration really struck a
chord in some of these places. >> which of course mr. trump ran very heavily on. noah, let me go back to you. you say that some of the people you talked to gave you the indication that there were two americas, and as a result of that they were willing to take a bet on voting perhaps for mr. trump because mrs. clinton had been in the establishment for so long. they were looking for change. >> yeah, i think that's right. i think trump, the persona also, we can't discount that, if you look at mitt romney from four years ago, these feelings were still there. a lot of them quite strongly. but democrats were much more successful at portraying mitt romney as much more disconnected than the democrats. they pointed to his lack of support for the auto bailout, and that was clearly a big area you know, where the auto bailout was more popular is where trump did well. they highlighted his 47%. trump, even though he had certainly wealth like romney
did, wasn't able to be portrayed that way. i think that was a big deal, because i don't know that all these things necessarily have to do with short term cyclical economic indicators. i think they're long term fundamental changes in the economy and the demographics that people are rebelling against. >> janet, does the long term view that noah just outlined gel with what you were seeing when you criss-crossed the country and talked to people undergoing large demographic changes in their communities? >> one thing i actually heard a lot about was the idea of playing by the rules, that particularly whites in these areas who had seen a lot of latinos move in, they felt like they had -- and some of these communities in arcadia, there was a significant number of illegal immigrants. they felt like they were, you know -- they had been there a long time, they were working hard. and yet they saw latinos coming in who were crowding the schools. they talked about how latinos
qualified for assistance at the food pantry, they qualified for heating assistance. there was a lot of resentment among people who, you know, who had jobs, they were working, yet they didn't feel like maybe they had the financial success that they wanted, that they had in their words kind of done what you were supposed to do in america and yet there were other people who were coming in and they were getting help. i heard a lot about fairness when i talked to people in arcadia, wisconsin. >> complicated issues all the way around. noah beerman with "the los angeles times," janet with "the wall street journal," thanks, we appreciate your perspective. federal reserve chair janet yellen told congress's joint economic committee today that the economy is making very good progress and that a rise in interest rates could come relatively soon. steve liesman has more. >> reporter: fed chair janet yellen cast aside doubts she could possibly resign under the new president, saying in no
uncertain terms she would complete her term. >> i was confirmed by the senate to a four-year term, which ends at the end of january of 2018. and it is fully my intention to serve out that serve. >> reporter: yellen's comments before the joint economic committee were her first since the election, following a campaign in which president-elect donald trump harshly criticized her and the fed for being political and inflating bubbles. but yellen warned against political interference with the central bank. she said such interference had led to terrible outcomes in other countries. she also spoke out against the president-elect's plans to scrap dodd-frank, the financial regulatory reform bill, saying she did not want the clock turned back on improvements to the banking system. yellen cautioned against plans by trump to enact a package of massive tax cuts and huge spending programs that could ramp up the deficit. >> such a package could have
inflationary consequences that the fed would be -- have to take into account in devising policy. >> reporter: that could potentially mean faster rate hikes from the fed because yellen believes the economy is already near full employment and doesn't require stimulus like it was near a recession. the fed could be headed for a confrontation with the new president if he slams on the gas pedal with fiscal policy. and the fed thinks it has to simultaneously hit the brakes. as it is, yellen gave her strongest comments yet that the fed was set to hike in december. she said a rate hike could be appropriate soon and warned of the dangers of not hiking fast enough, saying that would undermine financial stability. for "nightly business report," i'm steve liesman. >> that testimony from the fed chair helped push stocks within striking distance of all time highs. those comments sent bond yields higher, which rise when investors expect higher interest rates. that in turn helped lift the financial sector. the dow jones industrial average
added 35 points to 18,903. nasdaq was up 39. the s&p 500 rose ten. shares of walmart weighed on the blue chip index. the world's largest retailer reported better than expected earnings. but its sales fell short of what some on wall street had projected. that sent shares of the dow component down more than 3%. courtney reagan breaks down walmart's quarter. >> reporter: the good news is walmart's comparable sales are positive for the ninth straight quarter. online sales also grew at the fastest rate in seven quarters. the not so good news, persistent deflationary pressure hurts walmart's sales. grocery is more than 50% of walmart's business. while in-store flow traffic improved over last year, it was at a slower rate last quarter. walmart's guidance is below analysts's expectations and the holiday quarter is the most important of the year. while it's still early to evaluate the full potential of
its recent acquisition of jet.com, guggenheim analyst robert derbil is optimistic the right moves are being made. >> they're very proactive with the jet acquisition, a lot of the investments they're making, with jd.com in china. they're trying to approach the business from two sides. one is, keep the store operations humming along, and they're doing a solid job with that. and the second is to really stay focused on the e-commerce opportunity the company has in front of them. >> reporter: investments will constrain near term profit growth. but the ceo says he classifies the quarter as strong across the board, pointing to walmart's continuing story of transforming the business from a position of strength. they say there was no material impact on spending patterns as a result of the election. in general, economic data continues to set up a landscape for healthy consumer spending. and analysts send to agree. >> i think that the consumer has
had the ability to spend, has a healthy -- you know, there's an income statement, if you will. and i think that we've been waiting for them to make the trip to the store and start to spend. and of course christmas will always come. so i sense a bit of cautious optimistic here across the retail landscape. >> reporter: with thanksgiving and black friday weekends looming, what more could walmart ask for? for show slow"nightly business, i'm courtney reagan. new account openings at wells fargo fell 40% over a year ago. credit card applications plunged 50% last month following a decline in december. wells fargo attributed the plunge to backlash over the fake account scandal and the bank's new head of community banking said, quote, we have work to do. jpmorgan has agreed to pay more than $260 million to resolve allegations it improperly hired unqualified
children of china's ruling elite. it is alleged the bank did this to win lucrative business from those in power. regulators say jpmorgan used its hiring tactics to corruptly influence government officials. still ahead, the economic ties that bind the world's first and third largest economy. federal prosecutors filed charges in a kickback scheme against valeant. the charges allege that the ex-ceo of specialty pharmacy philidor paid a valeant executive $10 million to steer valeant's business and potentially acquire philidor.
the manhattan district attorney said the two were partners in crime. >> tanner worked with dav enport to build up philidor, sometimes at the expense of valeant. for example, although tanner was directed to diversify valeant's relationships with multiple specialty pharmacies, he instead pushed hundreds of millions of dollars of valeant business exclusively to philidor. and as we intend to approve, he did it for the eventually $10 million kickback. >> tanner's attorney said he was charged with a crime for doing his job. shares of valeant finished the day with slight gains. online ordering powering the results at best buy, that's where we begin tonight's market focus. the online retailer said online sales jumped 24%, contributing to profit and revenue. se same-store sales also came in above estimates.
the company expects to take a $200 million hit due to galaxy note 7 recalls. revenue at smucker's fell. slower sales of pet foods and peanut butter and folger's coffee hurt their results. smucker's shares were off 4%. oil refiner tesoro said it would buy rival western refining for $4 billion in a deal that would give tesoro a wide array of new assets in several states. that merger is set to close in the first half of 2017. western refining soared 23% while tesoro was also higher by nearly a percent at $86.56. guggenheim cut chipotle to sell from neutral, citing potentially unrealistic expectations set for growth at the burrito chain. the firm sees downside risk
ahead for the company and also expects new domestic store openings to slow. guggenheim lowered its price target on the stock to $315. chipotle shares were unchanged on the day at $402.90. there are reports tonight that apple has asked some of its manufacturing partners to look into ways to bring the iphone assembly chain into the u.s. right now all iphones are manufactured in china. president-elect donald trump says he will force apple to build its products in the u.s. but the report also says that domestic production of iphones means the cost could more than double. president-elect trump is meeting and hosting his first foreign leader in a high stakes meeting. japanese prime minister shinzo abe arrived in trump tower this evening in new york. one topic, trade, specifically the trans-pacific partnership that trump campaigned against. the meeting highlights the importance of the relationship
between the world's first and third largest economy. susan li reports. >> reporter: japanese prime minister shinzo abe became the first head of state to have a face-to-face with president-elect donald trump, in a hastily arranged meeting. abe was eager to revisit ties with its strongest ally, the u.s., and its soon to be new leader in an alliance of trust, as he has called it. japan is the world's third largest economy and america's fourth largest trading partner, with close to $200 billion worth of goods exchanged between the two countries last year. the asian nation was also central to the trans-pacific partnership. the tpp trade deal which now looks to be shelved under a trump administration. and that would deal a blow to japan's efforts to counter a rising chinese economy and military power. security is another key issue between the two, with japan and the u.s. allies since the signing of a treaty in 1960.
however, in a threat to ongoing security relations, the president-elect has warned that he might pull u.s. forces out of japan unless japan pays for its presence. there are an estimated 54,000 troops currently stationed in the country, costing $5 billion annually, according to one measure. japan argues it pays a substantial portion of this cost. trump has suggested japan pursue its own nuclear arsenal in order to defend itself against rising tensions in the pacific. with questions surrounding the u.s. and japan's security relationship, prime minister shinzo abe has already moved to try to repeal some of the country's pacifist constitution. this meeting is seen as a harbinger of the future of u.s./japan relations. it's also being watched by others across asia pacific, looking for clues on how the
president-elect will handle asian relations. susan li for "nightly business report." a ban on ear marking has been in effect for six years. as hampton pearson reports, some on capitol hill would like to bring it back. >> reporter: when vice president-elect mike pence met with house republicans today, the focus was on a legislative strategy to jump-start the trump agenda. likely to include massive infrastructure spending and tax cuts. house speaker paul ryan says that toolkit might include a return of earmarks, the old washington practice of allowing lawmakers to target spending on specific pet projects. >> our members are worried that the executive branch, unelected bureaucrats, have been given far too much power and we've seen violence done to the separation of powers. restoring the power of the purse truly to the legislative branch
so elected officials can hold the unelected branch of government more accountable is the genesis of that concern. >> reporter: ten years ago, earmarks were viewed as a symptom of out of control spending, including a million-dollar woodstock museum in new york championed by then senator hillary clinton and senator chuck schumer, and former alaska senator ted stevens fighting for years for $223 million to build what became known as the bridge to nowhere. ironically, it was six years ago this week that former house speaker john boehner pushed through a moratorium. >> today republicans adopted an earmark ban. >> reporter: now outside conservative groups are sounding the alarm, worried lawmakers are missing the call for change from voters who just elected donald trump. >> it's troubling that after an election on tuesday when the voters clearly said they wanted to change washington, that republicans might be moving back towards one of the most
egregious examples of how washington was broken, through earmarking. >> reporter: the biggest x factor going forward is right now we really don't know what president-elect donald trump will have to say about the possible return of congressional earmarks. for "nightly business report," i'm hampton pearson on capitol hi hill. coming up, small business matters. will a trump administration rev up this engine of economic growth? and job creation. complicated rules. onerous regulations. high tax rates.
those are just some of the things small business owners say are holding them back from expanding or hiring. with promises of deregulation, all right. be changes under a trump white house? kate rogers has the story. >> obamacare has to be replaced. and we will do it. and we will do it very quickly. >> reporter: donald trump campaigned hard on the notion of easing government regulations like the affordable care act. now the president-elect's message of deregulation is striking a hopeful chord on main street. government regulations consistently rank as a top issue for america's small companies, second only to health insurance. >> the number of regulations coming out of washington over the past decade has caused a lot of uncertainty, created new costs, and has hurt small businesses in terms of their competitiveness. the surge in regulation is something that washington really needs to address and the new
administration needs to address. >> reporter: working on obamacare is a priority for trump and small business advocates. >> we're very much advocates of getting rid of the employer mandate. data has shown that all it really does is increase costs and regulatory burdens on employers. >> reporter: another burden, the department of labor's new overtime regulation when enables an additional 4 million salaried workers across the country to be eligible for overtime. the rule was put in place by the obama administration in the face of a stagnant federal minimum wage. >> doubling the threshold from just over 23,000 to $46,000 is going to really impact many of our members, particularly in low cost areas of the country. so we would like this to be fixed. >> reporter: finally, main street is closely watching the wage debate with 29 states and
washington, dc currently requiring wages above the federal floor. on election night, higher wages were approved in four more states by 2020. president-elect trump had spoken out in support of a $10 federal minimum wage while on the campaign trail. but small business is advocates are hopeful that raising the wage won't be a priority for the new administration. for "nightly business report," i'm kate rogers. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. have a great evening. we'll see you here tomorrow.