Category Archives: Economy

President Invoking DPA to Step Up Swab Production

Economy, ,
Image by Ewa Urban from Pixabay

On Sunday US President Donald Trump announced he was going to once again call on companies to massively increase production of essential equipment which will allow testing for COVID-19 to be ramped-up substantially. Ubiquitous testing is an essential component of getting the economy back on track and people back to work, but at the moment testing is falling seriously short of need.

The President announced that he would call on one particular company to increase its production of test swabs to a staggering 20 million each month.

“We are calling in the Defense Production Act,” Mr. Trump said, adding “You’ll have so many swabs you won’t know what to do with them.”

Details about what company would be compelled to step up production, and when he would invoke the DPA were not stated.

“We already have millions coming in,” Trump said. “In all fairness, governors could get them themselves. But we are going to do it. We’ll work with the governors and if they can’t do it, we’ll do it.”

Public health experts have warned that testing will need to increase by double or triple from present rates to even open the economy slightly. Business leaders have in turn explained this to the President at a conference call they held with Trump last week.

As of mid- to late- April about 150,000 diagnostic tests for COVID-19 were done daily in the USA. Harvard researchers estimated that it will not be possible to ease social isolation restrictions and begin the economic recovery until the country can perform closer to 300,000—450,000 daily tests.

Economic Growth Passes Previous Record for Duration

Economy

The economy broke a record at the end of June when it surpassed the previous longest period of growth of 120 months, or ten uninterrupted years.


The previous record was set when the US economy didn’t stop growing from March 1991 until March 2001 during which time the average annual real GDP grew by 3.6%. The record-breaking growth we are in now began in June 2009, and is still expanding, although the average annual real GDP has only been 2.3%.


The previous expansion that ended in March 2001 came to its unhappy end when the dot-com bubble burst.


Compared to other expansions, which were far shorter, growth was faster. For instance, during the 45-month expansion from October 1949 until July 1953, the economy grew by 6.9%. Between April 1958 and April 1960, the economy expanded by 5.5%.


Studies have shown that the expansion has not benefited all Americans equally. Steven Pressman of Colorado State University, a professor of economics who is concerned with income inequality, says that 60% of economic gains have benefited the top one percent of the population.


One example Pressman cites are the salaries of schoolteachers. Adjust for inflation, their incomes declined in 2018, by about 0.3%. During the same time period the median pay for top CEOs in the US, including non-salary compensation, climbed by 65%, adjusted for inflation between 2009 and 2018.

Jobless Rate Lowest in Almost 50 Years

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The United States has not seen a lower jobless rate than what it is experiencing now since December 1969, according to the US Department of Labor. The rate fell in April from 3.8% in March down to 3.6%.


There is a caveat, the drastic reduction was fueled to a great extent by the number of people who left the labor force in April; almost half a million.


US Labor Department data showed that the economy added an above-expected 236,000 jobs to the market. In addition, average earnings rose by a yearly rate of 3.2%.


Experts said that the numbers show that the economy is still doing well, but not so well that the US Federal Reserve might consider changing interest rates.


The job gains were in the following sectors:


• Construction: Increased by 33,000 jobs
• Healthcare: Increased by 27,000 jobs
• Social assistance: Increased by 26,000
• Financial activities: Increased by 12,000

The number that did not change by much is how many people are working part-time who would prefer to work full-time, but there hours were reduced, or they could not find full-time employment. That number stayed at 4.7 million people.

Companies Backtracking on Trump Love

Economy,
Trade is a big issue today as it was throughout history.

The joy experienced by global and US business after US President Donald Trump’s 2017 corporate tax break has turned into fear due to his isolationist trade policies, at least according to Fidelity International analysts.


The new study shows that “almost half of all analysts globally say Trump’s policies will be a drag on their sector.” Compare this sentiment to just last year when the same Fidelity analysts reported broad optimism about US leadership and policies.


This year Fidelity says that “most significant is the shift among analysts covering North American companies, whose watchful optimism has entirely evaporated.”


Fidelity’s research is based on 16,000 interviews with chief executives and chief financial officers conducted by Fidelity International, the non-US affiliate of Fidelity Investments. Each year they ask 165 analysts what companies in the sector they cover are expecting for the up and coming year.


Most significant was the doubt Fidelity’s analysts had about Trump’s trade policies. Forty-five percent said the policies would be a burden on business, up from thirteen percent last year. Seventy percent of its China analysts predict that companies’ return on investment will go down in 2019. Only twenty-nine percent thought the same last year.


Global chief of research for fixed income for Fidelity said that “as expected, the impact of trade wars is a key issue amongst our analysts, which has brought a lot of uncertainty into the system.”

Economy Hot Says JOLT Data

Economy, ,

Unemployment by county in the United States 2017.

The numbers for August are in, and it seems they are telling a happy story right now about employment and the US economy. The positive findings appear in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Report (JOLT), which is an important report that does not get enough attention.

According to JOLT there were 7.14 million job openings in the USA in August, a record number. In July there were 7.10 jobs available, which was also an historic high. It seems right now is one of the best times in US history to be job hunting.

JOLT’s assessment is that the economy is running hot. August was the fifth consecutive month in which there were more jobs available than there were unemployed people to fill them. According to JOLT there were about 1.2 million more jobs than the 5.96 million unemployed. That has never happened before, at least not since series began in 2000. Also setting records is the number of new hires, which reached 5.78 million in August.

Workers are also feeling more confidence in the labor market in general. That story is told by what is known as the “quit-rate.” In August about 3.58 million workers left their jobs voluntarily, a sign, according to economists, that people feel they can take a chance and leave their old job in hopes of finding a new, better job. The number for August 2018 was up by 12.7% over last years “quit-rate” number.