Tag: U.S. economy
The United States Is Not Ready for a Recession, But It Can Be
The United States is currently experiencing one of the longest periods of economic expansion in its history.1 However, the expansion has not reached all households and many are struggling to cover the costs of basic emergencies.2 At the same time, economic growth appears to be slowing, and there are warning signs that a recession is possible in the near future. While downturns are difficult to predict, policymakers have a responsibility both to assess whether the country is prepared for the next recession and to implement approaches to protect Americans from the worst outcomes.
Fortunately, the Federal Reserve and the U.S. government has a variety of tools available to help pull the national economy out of a recession. These tools generally fit into two categories. First, there is monetary policy, which is conducted by the Fed, the independent central bank responsible for setting interest rates, among other things. Second, there is fiscal policy, which is conducted by the executive and legislative branches of the U.S. government. However, these tools may prove less effective in the next recession, in part because the Fed has less room to cut interest rates, its traditional tool to tackle downturns.3 And fiscal policy, while still potentially effective, relies on politicians’ willingness to use it in the right way, which has not always been the case. For example, during the Great Recession, Congress engaged in austerity measures, reducing spending well before the economy fully recovered.4 Continue reading “The United States Is Not Ready for a Recession, But It Can Be”
CEO confidence sinks to lowest level since 2016
Confidence among the nation’s top CEOs saw the biggest quarter-over-quarter drop in 7 years and hit a level not seen since the 4th quarter of 2016, according to a closely-watched survey by the Business Roundtable.
Why it matters: Corporate America’s level of optimism has dramatically receded from the levels when President Trump took office. Amid heightened trade war uncertainty, CEOs have downgraded expectations for hiring, capital spending and sales growth — potentially exacerbating fears that the record economic expansion could be coming to an end.
View the complete September 18 article by Courtenay Brown on the Axios website here.
To G.M. Workers, U.A.W. Strike Is Chance for Overdue Reward
DETROIT — A decade ago, when General Motors was on the brink of collapse and was ushered into bankruptcy by the federal government, the company’s unionized workers bore a significant portion of the pain to bring the automaker back to financial health.
The United Auto Workers agreed to allow General Motors to hire substantial numbers of new workers at roughly half the hourly wage of those already on the payroll and with reduced retirement benefits. In the following years, G.M. was also able to bring in temporary workers with even slimmer wage-and-benefit packages and little job security.
The bitter medicine helped reinvigorate the automaker, and for the last several years it has been reaping record profits. Along the way, it has pared its United States payrolls, closed several plants and moved more work to Mexico.
View the complete September 16 article by Neal E. Boudette on The New York Times website here.
‘There’s more uncertainty, not less’: Recession fears are already gripping parts of the US — and jeopardizing Trump’s reelection
President Donald Trump, during a recent speech in New Hampshire, told a crowd that no matter how much they might dislike him, they “have no choice” but to reelect him in 2020 in order to save the U.S. economy and keep their 401(k) plans from tanking. Some pundits have argued that whatever happens with Trump on immigration, abortion or foreign policy, the economy could save his presidency in the end. But a report by Shawn Donnan for Bloomberg News explains that with more and more evidence that the U.S. economy is slowing down, the economy might not be Trump’s strong point in the 2020 election.
“The surge in industrial jobs seen in the first two years of the Trump presidency has also gone into reverse in some parts of the country,” Donnan reports. “Nationally, the U.S. has added 44,000 manufacturing jobs so far this year, according to data released on Friday. But that’s way down from the 170,000 added in the same period last year.”
Donnan reports that “for all the debate on whether the U.S. is headed for a recession, there’s plenty of evidence that corners of the economy….. may already have tumbled into one.” And Donnan points to the area of Wisconsin where Kuhn North America is located as an example: at Kuhn North America, which has about 600 employees in its factory and manufactures farm equipment, roughly 250 workers were suffering a two-week furlough around Labor Day Weekend.
View the complete September 16 article by Alex Henderson on the AlterNet website here.
Economy adds 130K jobs in August, falling below expectations
The U.S. added 130,000 jobs in August, the Labor Department reported Friday, falling below expectations amid an escalating trade war with China and a slowing global economy.
The August jobs report missed expectations after economists broadly projected employment growth closer to the 164,000 workers the U.S. added in July. The unemployment rate held steady at 3.7 percent, while the labor force participation rate rose to 63.2 percent, according to the release from the U.S. Bureau of Labor Statistics.
While the U.S. economy has added jobs at a slower rate in 2019 than last year, it has remained largely resilient as European and Asian powers face sharper downturns amid rising trade tensions.
View the complete September 6 article by Sylvan Lane on The Hill website here.
Trump might like Brexit less when he sees what it does to the economy
President Trump’s support for Britain’s exit from the European Union may be about to collide with his election-year hopes of presiding over a strong economy.
The president has long seen “Brexit” as reflecting the same sort of nationalist impulse that drove his White House upset in 2016. He has hailed British Prime Minister Boris Johnson, who vows to sever ties with Europe on Oct. 31 no matter what, as a kindred populist spirit.
But as British Parliament this week dealt Johnson a stunning four consecutive defeats, the prospect of further delay in leaving the E.U. or a chaotic no-deal divorce spiked.
Continuing instability in the world’s fifth-largest economy — coupled with anti-government protests in Hong Kong, a U.S.-China trade war, and financial problems in major developing countries such as Argentina and Turkey — threatens to become a drag on an already troubled global economy.
View the complete September 5 article by David Lynch on The Washington Post website here.
Trump Says China Will Suffer as Data Shows Trade War Hurting U.S.
WASHINGTON — President Trump said on Tuesday that Chinese manufacturing would “crumble” if the country did not agree to the United States’ trade terms, as newly released data showed his trade war was washing back to American shores and hurting the factories that the president has aimed to protect.
Days after new tariffs went into effect on both sides of the Pacific, a closely watched index of American manufacturing activity fell to 49.1 from 51.2, signaling a contraction in United States factory activity for the first time since 2016. The companies responding to the Institute for Supply Management survey, which the index is based on, cited shrinking export orders as a result of the trade dispute, as well as the challenge of moving supply chains out of China to avoid the tariffs.
The manufacturing sector’s struggles are likely to increase as the world’s two largest economies continue to escalate their trade fight. On Sunday, Mr. Trump placed a new 15 percent tariff on a range of consumer goods, including clothing, lawn mowers, sewing machines, food and jewelry, and Beijing retaliated by increasing tariffs on $75 billion worth of American products. China also said on Monday that it was filing a complaint at the World Trade Organization over Mr. Trump’s new tariffs.
View the complete September 3 article by Ana Swanson on The New York Times website here.
Recession Hits US Manufacturing Sector In Trade War
U.S. factories are struggling so badly that the manufacturing sector is officially in a recession, according to a Bloomberg report. It’s thanks in large part to Trump’s trade war with China.
New data released Tuesday shows shrinking orders, production, and hiring in the manufacturing industry, hitting a three-year low. The news follows worrisome data from August showing new manufacturing orders and exports hit a 10-year low.
Factories are struggling so much that the manufacturing industry is “technically already in a recession in the U.S.,” Bloomberg wrote. A recession is defined as when the Federal Reserve observes two straight quarters, or six months, of declining output.
View the complete September 3 article by Dan Desai Martin on the National Memo website here.
Trump’s Trade War Raised Taxes By $30 Billion
Trump’s trade war is going to cost American taxpayers an additional $30 billion taxes a year, according to a new analysis released Thursday by the nonpartisan Congressional Budget Office (CBO).
“CBO estimates that all tariffs enacted under Trump are raising taxes by about $30 billion annually ($315B 2020-2029),” noted Zach Moller, deputy director of Third Way’s Economic Program. “This would rise to about $45 billion a year if announced tariffs go into effect.”
The trade war tax hike would add to Trump’s already weak record on taxes.
View the complete August 31 article by Oliver Willis on the National Memo website here.