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So how strong is the economy anyway....(edit: Hey, P*D)
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Has Achieved Nirvana
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quote:
President Donald Trump failed to achieve his much-ballyhooed 3% target for economic growth in 2018 after all.

Updated government figures show that gross domestic product expanded 2.5% on a fourth-quarter-over-fourth-quarter basis last year. That compares with a previous estimate of 3% and an upwardly revised 2.8% in 2017, the first year of Trump’s presidency.

Behind the 2018 markdown: Slower growth of business investment and exports, along with a greater output in the fourth quarter of 2017 that made the comparison less favorable.

Data for the second quarter of 2019, also released Friday, showed the economy expanded at a 2.1% annualized pace -- above the median projection -- following a 3.1% reading in the prior three months. GDP grew 2.3% in the second quarter from a year earlier, the slowest in two years.

The new data call into question Trump’s claim that he’s lifting growth to 3%-plus from 2% through a mixture of tax cuts, deregulation and a pro-America trade policy. GDP gains in the first two years of his presidency, though, did top the expansion’s 2.3% average.


https://www.bloomberg.com/news...nnual-data-revisions

More analysis from the WSJ.

https://www.wsj.com/articles/u...-quarter-11564144334

If you don't have a subscription you can get to the article via Google News.


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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A quarterly drop in GDP from 3.1 percent to 2.1 percent illustrates the growing toll that President Donald Trump’s trade policies are taking on American businesses, economists say.

American consumers proved themselves willing and able to spend in the second quarter, with a 4.3 percent increase in consumption offsetting a 5.5 percent slump in business investment.

“In the second quarter of 2019, we caught the first whiff of damage to the economy caused by Mr. Trump’s trade war,” said RSM chief economist Joseph Brusuelas, characterizing the issue as “an uncertainty tax” that has left corporate America guessing about the potential impact of tariffs on input costs and exports, supply chain disruption and market access.

According to July’s Business Conditions Survey conducted by the National Association for Business Economics, fewer than half of the respondents expect real GDP growth to increase by more than 2 percent over the next year, compared to two-thirds who expressed that view in January.

“On balance, panelists expect slower growth than they were expecting three months ago. After more than a year since the U.S. first imposed new tariffs on its trading partners in 2018, higher tariffs are disrupting business conditions,” Constance Hunter, NABE president and KPMG chief economist, said in the survey report.

In the second quarter, NABE survey respondents reported lower profit margins and, among goods-producing companies, higher input costs. More than three-quarters of respondents in that sectors said tariffs are having a negative impact on business.

In recent earnings calls, Brusuelas said, it was evident that executives are “growing increasingly concerned about the direction of trade,” which hurts investment in everything from factories to intellectual property.


https://www.nbcnews.com/busine...olding-back-n1035671


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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U.S. President Donald Trump said on Thursday he would impose an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1, as talks aimed at easing tensions between the world’s two largest economies continue.

“Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%,” Trump tweeted.

In a string of tweets, Trump also faulted China for not following through on promises to buy more American agricultural products and personally criticized Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl.

U.S. stock prices fell after Trump's announcement, with the Dow Jones Industrial Average .DJI falling into negative territory.


https://www.reuters.com/articl...tariff-idUSKCN1UR5CK


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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Stocks cratered, the dollar hit a more than two-year high and bond yields ripped higher after Fed Chairman Jerome Powell suggested that policymakers were not embarking on a new cycle of rate cutting, after it trimmed the fed funds rate by a quarter point Wednesday.

Markets have been on tenterhooks, once expecting three rate hikes this year, and then an easy Fed policy stance, even as the economy has been showing signs of improvement. But the Fed has been facing the unusual task of explaining why it was cutting rates in the face of stronger economic data.

Traders said there was disappointment with the Fed’s statement, which was perceived more as neutral than dovish, but when Powell later said during a press briefing that the Fed’s action was a “midcycle adjustment to policy” that sent markets reeling.

“I think by that it means he doesn’t necessarily mean more cuts are coming, maybe not necessarily one off but not indicative of more aggressive cuts,” said Ben Jeffery, a fixed income strategist at BMO.


https://www.cnbc.com/2019/07/3...nancial-markets.html


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
Pinta & the Santa Maria
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I would love to hear from our resident economist (or anyone, tbh) on his perception of the rate hikes and the bizarre economic indicators we're seeing. (Hint, hint)
 
Posts: 35367 | Location: West: North and South! | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

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I've gotta admit, I haven't been paying much attention to the national data.

The whole notion that the Great One would lift real GDP growth per capita into the 3% range was always regarded as eye rolling by probably 99.4% of the nation's Ph.D. economists.

The Fed isn't helping matters by being seen as wishy-washy and malleable. The case for lowering interest rates at this juncture is very weak, IMO, and leaves us with even less of a monetary policy option when the next recession does actually occur (maybe in 2020).

We already have no fiscal option, given the already astronomical budget deficits. Running deficits this large at the tail end of a nine year expansion is ludicrous.

I have been much more focussed on higher ed stuff than the macroeconomy. I will start feeling the hate shortly, when a USA Today op-ed challenging "Free Tuition" comes out.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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Is I-1 getting nervous?

https://www.salon.com/2019/08/...nspiracy-of-weenies/


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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Enjoyed this article interviewing Harvard economist, Jeffrey Frankel, member of a special committee charged with declaring recessions. Kind of threw me for a loop to note this interjection:

quote:
Economists can’t really predict recessions.


(So, what IS his job?)

His strong prediction, though, that the next recession will be a powerful one, sent a chill down my spine.

quote:
But when a recession comes, I bet that it’s going to be worse than the average U.S. recession. The reason is that in 2017, 2018, macroeconomic policy was pro-cyclical. By macroeconomic policy, I mean fiscal policy, monetary policy, and also financial regulation. And by pro-cyclical, I mean loosening up at the peak of the business cycle, when unemployment is below 4 percent (it’s the lowest it’s been in 50 years), and output is above potential (the economy was growing relatively strongly last year). But that’s not the time to be running trillion-dollar budget deficits or have interest rates close to zero or to be dismantling financial regulation and protections we put in place after the last financial crisis. And in 2017-2018, we did all three of those things.

...The reason why I draw the connection between pro-cyclical policy and a prediction that, when the next recession comes it’ll be worse than the average, is the government is now out of ammunition. In the past, the Federal Reserve has had room to cut interest rates, fiscal policy has had room to cut taxes and raise spending to stimulate the economy, and financial regulation has had room to have a little forbearance. But if we’re already having all those instruments at full throttle, it leaves very little space to respond to a recession if and when it comes.


Anybody care to help me distinguish between "monetary"" and "fiscal" policy (which he stresses)?

Harvard economist's view on what lies ahead

*Another query about the mysteries of economic policy: could somebody please explain to me why any rational Japanese is willing to put their money in a negative interest-bearing account?


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The most dangerous word in the language is "obvious"

 
Posts: 14392 | Location: PA | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

Mitt Romney
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(So, what IS his job?)


Forecasting is only a small part of what people in the profession actually do. Predicting the future is fraught because so much of what happens in the future depends on contingent events that are inherently unpredictable (Iran sinks an American destroyer in the Gulf), or that are at best probabilistic.

Monetary policy is what the Fed does. They can manipulate some short term interest rates directly and they can increase or decrease liquidity in the banking system, which affects how much banks want to lend. If the Fed is nudging the federal funds rate downward (the rate banks pay to borrow reserves from the Fed), or conducting open market purchases of bonds, they are trying to add liquidity to the market to stimulate borrowing and business investment.

Fiscal policy is what Congress and the President do with their tax/spend decisions. The tax cuts were an expansionary fiscal policy that pumped up demand for goods and services. As Frankel noted -- and as I noted, you'll see, in a post just above -- engaging in that kind of fiscal expansion this late in an overall expansion was dumb as a stick. It gave the already growing economy a sugar high just when it didn't need one, and ballooned the budget deficit so much that when next we enter a real recession, the Congressional appetite to borrow 6-10 % of GDP per year will be very low. Yet that kind of borrowing would be needed to combat the recession. We will be sort of like ... Greece. That's why he thinks the recession will be nasty, brutish, and possibly longer than anyone would like to endure.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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Originally posted by Piano*Dad:
...We will be sort of like ... Greece. That's why he thinks the recession will be nasty, brutish, and possibly longer than anyone would like to endure.


Right away I googled about the Greek economy. I'd known the Greek people had had it really rough but without studying just what had happened. Your remark made it hit home.

Having read more now, it's even more frightening as I read (vague recollections returning) that Greece itself had been bailed out to salvage the Eurozone and there's certainly nobody around to bail out the US if we "do a Greece", least of all with all the enemies Trump has made for us - including our former friends.

Besides which, they're not doing so hot now themselves - as helped by him (as witness Germany - whose leader Trump didn't even deign to shake the hand of).

quote:
Greece Crisis Explained. In 2009, Greece's budget deficit exceeded 15 percent of its gross domestic product. Fear of default widened the 10-year bond spread and ultimately led to the collapse of Greece's bond market. This would shut down Greece's ability to finance further debt repayments.


Speaking as an investment ignoramus, of an age which has led me to plan to put what limited assets remain to sustain me largely in bonds (safe, no?), I am beyond horrified to hear about a nation's very bond market collapsing!

Every adviser and fiduciary with whom I speak speaks of bond investing as THE conservative fallback in case of recession, of whatever degree.
They all point me to historical charts showing how bond investments fared in the worst of times including the Great Depression and the Great Recession of 2008. Some have commented, "not everyone lost in 2008" by which they meant not just prescient shorters or whatever, but specifically bond investors.

Well, what then? Meaning for retirees with pitiful post-retirement income (don't get me started) while I still have what the media tells me is well over average in assets for my age.

But if I can't put them into bonds, what CAN I do?
If timing is anathema, what is the, well, least terrible, hedge against the Armaggedon that seems to be coming soon. Worst of all, one that promises to be extra long-lasting when I myself am NOT apt to be?

Guess almost nobody will be REALLY comfortable no matter what, except the most gilded of our new Gilded Age (suddenly picturing Trump's and the Emirate's golden toilets), though the upper 10% at least, will not have much to fear in terms of total disaster. Suspecting they're even now a decade into the building of underground cities, far more than gated.

And what's more (speaking from my miniscule financial background), another hedge for some, anyhow, would have seemed to be municipal bonds thinking of them as another fairly safe investment. The great risk they face is reputedly over-generous pensions, and per the Greek analogy, they are apt to pull down the safety of those bonds too! (Should I rescind my strong urging today of my Silicon Valley son, to invest in CA Municipal Bonds?)

Wishing at least, I were healthy enough to grow and preserve a large garden like Susan!

It's sounding like we're in for a very rough ride - and for a long time. That's not even counting worsening Climate change and all that's apt to bring on (poorer countries still more than us). Especially, since we've killed all our golden geese (or had them killed for us), it sounds a lot more like a Depression than a Recession however a major one. Wondering how such a scenario will play out in coming decades with all the built in spend-outs, and man-made ecological catastrophes coming to fruition.

Everytime I read about some danger of climate change alone, I'm struck by the enormous pricetags attached - whether to move endangered cities, or to deal with the results of overheating (droughts, fires, mudslides and catastrophic weather, and fish kill offs).

Still can't figure how even a wicked imbecile like our president could promote what appears to be a clearcut stageset for utter calamity. "Après moi le déluge", might well be his last Tweet - and in a furrin' lingo too.


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The most dangerous word in the language is "obvious"

 
Posts: 14392 | Location: PA | Registered: 20 April 2005Reply With QuoteReport This Post
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Negative mortgage rates. Who knew?

quote:
The world’s headlong dash to zero or negative interest rates just passed another milestone: A bank in Denmark is paying homebuyers to take out mortgages.

Jyske Bank A/S, Denmark’s third-largest lender, announced in early August a mortgage rate of -0.5%, before fees. Nordea Bank Abp, meanwhile, is offering 30-year mortgages at annual interest of just 0.5%.

Years of easing by central banks hacked away at interest rates around the world, distorting the traditional economics of lending and borrowing. This is most pronounced in Europe, where a composite home-loan rate across the euro area fell to 1.65% in June, the lowest since records began in 2000.




https://www.bloomberg.com/news...e-in-a-no-rate-world


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
"I've got morons on my team."

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That would certainly stimulate a lot of refinancing! And all of that extra disposable income would support consumer spending.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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I didn't realize their stock value had dropped so much.

quote:
United States Steel will temporarily lay off workers at its Great Lakes facility in Michigan in coming weeks, according to a filing the steelmaker made with the State of Michigan.

In a Worker Adjustment and Retraining Notification filed on August 5, the Pittsburgh-based company said it expects to let go fewer than 200 workers following its decision to halt production at the Michigan facility.

In mid-June, the company said it would idle two blast furnaces at its Great lakes and Gary ...

The lay-offs call into question claims President Donald Trump has made about the resurgence of the domestic steel industry. Last week in Pennsylvania, Trump said his 25% tariff on foreign imports has turned a “dead” business into a “thriving” enterprise.

Domestic steel prices did rise in the immediate aftermath of Trump’s tariffs. But they have fallen dramatically amid improved supplies and weakening demand from the auto and farm machinery sectors.

Prices of hot-rolled coil are down nearly 37% from their 2018 peak.

U.S. Steel’s stock price has plunged 73% since March 1, 2018, when Trump announced his decision to crack down on foreign imports.


https://www.cnbc.com/2019/08/1...ers-in-michigan.html


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
Pinta & the Santa Maria
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So much winning!
 
Posts: 35367 | Location: West: North and South! | Registered: 20 April 2005Reply With QuoteReport This Post
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The Trump vs Obama economies in 15 charts.

Requires a WaPo subscription, or you can do a search for the headline via Google News.

https://www.washingtonpost.com...harts/?noredirect=on


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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