Archives For Economic

Who is Paying the Tariffs?

October 14, 2019

“The tariffs are a tax on American consumers!”  “The tariffs will drive up the prices of everything!”  Those were the cries of the critics of President Trump’s tariffs on Chinese goods.  But it seems that prices at the consumer level are flat and prices at the wholesale level actually declined in the most recent reports.  Perhaps there is some truth to the assertion by the Administration that Chinese producers are absorbing the tariffs themselves in order to maintain their competitiveness.  The chart below, by Marketwatch.com using Federal Reserve data, shows the decline in year-over-year producer price change to go along with decline in prices in the most recent month.

Recessions & Decades

July 11, 2019

An interesting piece of research from Crestmont Research reveals that if a recession does not occur before the end of the year, it will be the first decade without a US recession in 170 years. As you will see in the graphic below, it is common to have 3 or 4 recessions per decade. What has caused this? A probable main reason is the Federal Reserve’s Quantitive Easing program where trillions of dollars were pumped into the economy which kept both the economy and the market on positive footing.

Take a look at the numbers below to get an idea of how badly China needs the US market and how significant is the trade imbalance. There is no other market to which China can turn to sell the amount of goods they sell to the US.

US States Equivalent GDP’s

November 12, 2018

It is well-known that the United States economy is the largest in the world, but by how much?  Mark Perry at the American Enterprise Institute created a very interesting infographic that shows each of the individual states in the U.S., labeled with the name of a country of comparable GDP.  For example, the GDP of Colorado is equivalent to the GDP of Ireland, Texas is equivalent to Canada, etc.




Record Low Jobless Claims

September 24, 2018

The number of new jobless claims just reached its lowest level since November of 1969.  That alone is impressive, but to truly get an understanding of the tightness of today’s labor market it has to be compared to the size of the U.S. labor force.  Indeed, the U.S. labor force has more than doubled over the last 49 years from 81,106,000 people to 161,776,000 last month.  Jobless claims adjusted for the size of the U.S. labor force, are now at the lowest level since the Department of Labor started reporting monthly jobless claims in 1967.

 




For the first time ever, there’s now a job opening available for each and every unemployed worker.  According to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), there were 6.6 million job openings in March, compared to 6.59 million unemployed workers.




The government collected $515 billion and spent $297 billion, for a total monthly surplus of $218 billion. That swamped the previous monthly record of $190 billion, set in 2001.

https://www.washingtontimes.com/news/2018/may/7/cbo-says-april-was-best-month-history-us-budget/




How much income do you need to afford the average home in your state?  The answer may surprise you.  Most of the nation’s housing markets have now almost completely recovered back to pre-housing-bubble levels, with many markets far surpassing those peaks.  Howmuch.net collected average home prices for every state from Zillow, and then plugged the numbers into a typical mortgage calculator.

The states needing the highest salaries to afford the average home start with Hawaii at $153,520, followed by Washington D.C., California, Massachusetts, and Colorado.  The states with lowest salaries needed to afford the average home include West Virginia at just $38,320 followed by Ohio, Michigan, Arkansas, and Missouri.




Here is some interesting economic news…

 

The Port of Los Angeles moved more cargo in 2017 than in any time in the Port’s 110-year history, racking up 9,343,192 Twenty-Foot Equivalent Units (TEUs), a 5.5 percent increase over 2016’s record-breaking year. It’s the most cargo moved annually by a Western Hemisphere port.

“We are powering Los Angeles’ economy to new heights every year, because we know that lasting prosperity means investing boldly in jobs, opportunity, and growth,” said Los Angeles Mayor Eric Garcetti. “The success of our Port tells the story of a city whose moment has arrived — and we will continue pushing forward as we expand our role in the global economy.”

https://www.portoflosangeles.org/newsroom/2018_releases/news_011218_2017_TEUs.asp

 

U.S. oil production is expected this year to surpass Saudi Arabia’s output, upending a global pecking order that has been a basis for U.S.-Middle Eastern policy for decades.

Crude output in the U.S. will likely climb above 10 million barrels a day in 2018, which would top the high set in 1970, the International Energy Agency said Friday.

The IEA, a Paris-based organization that advises governments and companies, raised its outlook for U.S. crude supply this year by 260,000 barrels a day, to a record 10.4 million barrels a day, largely a result of the recent rally in crude prices.

Saudi Arabia produces just under 10 million barrels a day, under an agreement with the Organization of the Petroleum Exporting Countries. The kingdom said it has the capacity to produce 12 million barrels a day. But it has never pumped more than 10.5 million daily and has pledged to limit output this year.

https://www.wsj.com/articles/u-s-crude-production-expected-to-surpass-saudi-arabia-in-2018-1516352405

 




The market has had a very good year – in my opinion it is partly due to the expectation that we will see tax cuts this year. But what happens to those expectations if tax cuts are not passed?

This, from Treasury Secretary Steven Mnuchin…

“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,” Mnuchin said in the interview. “To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains.”

http://www.politico.com/story/2017/10/18/mnuchin-tax-bill-markets-tank-243890

Yet another reason why having a plan for dealing with the downside of the market is so important.

 

This is not investment advice. You should consult a qualified investment advisor before making investment decisions. Past performance does not indicate future results.