Newsletter: Sex, Drugs and GDP

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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 jobs day! We’ll have a special edition of our newsletter following the November jobs report. First, here’s a quick dive into key developments across the global economy.
Gross, Domestic Product
When the U.S. calculates its gross domestic product, it only includes things that are legal. But if the wares of drug dealers, pimps, bookies and other black-market denizens were included, GDP would expand measurably, Jo Craven McGinty writes.

Canada has found that accounting for illicit sales of cannabis alone would add around 0.4% to its GDP. The U.K. has estimated that prostitution and illegal drugs represent around 0.4% of its GDP. And in the U.S., Rachel Soloveichik, a research economist with the Bureau of Economic Analysis, has estimated that in 2017, illegal activities would have added more than 1% to GDP.
As a percentage, the amount would represent a larger portion of U.S. GDP than agriculture, forestry, fishing and hunting.

WHAT TO WATCH TODAY
U.S. nonfarm payrolls for November are expected to increase by 187,000 from the prior month and the unemployment rate is expected to hold steady at 3.6%. (8:30 a.m. ET)
The University of Michigan’s preliminary consumer sentiment index for December is expected to tick down to 96.5 from 96.8 at the end of November. (10 a.m. ET)
U.S. wholesale inventories for October are expected to rise by 0.2% from the prior month. (10 a.m. ET)
The Philadelphia Fed’s Patrick Harker gives opening remarks at a forum on the evolving credit economy at 10:15 a.m. ET.
The Baker Hughes rig count is out at 1 p.m. ET.
U.S. consumer credit is out at 3 p.m. ET.
TOP STORIES
Work It
The Labor Department releases the November jobs report at 8:30 a.m. ET, offering a view of the U.S. economy’s health as the year winds down. Economists surveyed by The Wall Street Journal expect employers added 187,000 jobs and a 3.6% unemployment rate—signs of a steady-to-strong labor market. What to watch: Look to see if manufacturing employment bounces back after striking General Motors employees returned to work. And follow wages, participation and the employment-to-population ratio to see how tight the labor market is getting. Labor-force participation among those in their prime working years—between the ages of 25 and 54—reached a 10-year high in October. How many more will come off the sidelines? A large pool of people ready to work may be one factor holding down wage gains.

Trade Deadline
American firms bought fewer Chinese-made consumer goods in October in the wake of new U.S. import tariffs. That helped narrow the overall trade deficit: The foreign-trade gap in October goods and services contracted 7.6% from the prior month to a seasonally adjusted $47.20 billion, the Commerce Department said. The U.S. on Sept. 1 imposed new tariffs on about $111 billion in Chinese products, including for the first time some consumer goods. U.S. firms ramped up imports ahead of the tariffs, followed by a big dropoff in October. In total, the U.S. now has tariffs on about $360 billion of Chinese imports and is scheduled to add 15% tariffs on another $165 billion or so of goods on Dec. 15, unless the two sides strike a deal, Harriet Torry and Joshua Zumbrun report.

Sign of progress? China’s State Council has started the process to exempt some U.S.-imported soybeans and pork from punitive tariffs, the state-run Xinhua News Agency said on Friday. The waiver comes amid increased tension between the world’s two largest economies over human-rights issues in China. On Thursday, Beijing said trade talks remain on track, though during the past few days U.S. officials have become less optimistic about a deal. One hangup: the value of U.S. farm goods Beijing would buy.

Healthy Spending
More Americans are going without health coverage and the pace of spending on health care nationally is rising. A federal report from actuaries at the Centers for Medicare and Medicaid Services showed national health-care spending rose to $3.65 trillion in 2018, up 4.6% from 2017. While the overall acceleration in national health-care spending wasn’t that large relative to other years, an Affordable Care Act tax accounts for most of the increase, according to the report. The tax, an annual fee on all health insurers, is among several imposed under the law to cover its estimated 10-year cost of more than $1 trillion, Stephanie Armour reports.

Germany Shifts into Reverse, France Grinds to a Halt
German industrial production fell more than expected in October. The Federal Statistics Office said Friday that total industrial output—across manufacturing, energy and construction—fell 1.7% in October from September. Year over year, industrial production was down by 5.3%. “Today’s data suggests that the German economy is continuing to flirt with stagnation and contraction in the final quarter of the year,” said ING economist Carsten Brzeski.
Cities across France were paralyzed by a massive public transport strike against a planned overhaul of France’s pensions system, in a test of President Emmanuel Macron’s resolve to modernize the economy. Trains, subways and buses were severely curtailed, hundreds of flights were canceled, many schools closed, and several museums said parts of their collections might not open. About 806,000 protesters hit the streets across the country, according to the French interior ministry. Unions warned the strike could last days and become one of the biggest in France in over two decades, Noemie Bisserbe reports.
WHAT ELSE WE’RE READING
Administrative assistant jobs helped propel many women into the middle class. Now they are disappearing. “The U.S. unemployment rate is 3.6%, a half-century low, and there are more job openings than unemployed Americans. Technology has created more positions than it has destroyed, economists say. But although the nation is likely to have many jobs for years to come, it’s less clear whether they will be well-paid jobs. On the presidential campaign trail, the conversation has focused mainly on the plight of workers losing manufacturing jobs (and potentially truck driving jobs) to automation or trade. Most of those workers are male. Almost no attention has been paid to the upheaval that women in administrative positions are facing,” Heather Long writes in the Washington Post.
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