Tag: trade deficit

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White House Responds to Tariff Critics

The White House has responded to the opposition to its tariff announcement concerning aluminum and steel imports, noting “Although the economics profession has converged toward a consensus on certain principles, the Administration’s trade agenda also stands poised to update existing trade relationships in order to maximize the benefits that America’s trade with the world generates for our citizens in the 21st century and beyond… The United States, for instance, faces higher barriers on its exports in markets abroad than producers abroad face on their exports to the U.S. Nothing about the principle of comparative advantage would lend itself to a defense of a status quo that imposes higher barriers to exports on America’s producers than on foreign producers. The global trade system has come under strain due to the influence of countries, like China, that violate market principles and distort the functioning of global markets. When America’s businesses and workers can compete in the global economy on a level playing field, however, our underlying dynamism will allow our economy to flourish. The Administration prioritizes its attempt to create the conditions that, according to the consensus principles in the economics literature, would maximize the benefits accruing to the United States—and produce gains for our trading partners as well.”

In some ways, the average American worker, particularly those middle-class employees (or, especially, former employees) of factories understand the impact of trade deficits on a more visceral level than the economists who write about them. Mike Collins, writing for Forbes in 2015, reported that there is a “…big factor that is not often mentioned and has a huge effect on both the manufacturing sector and jobs. That factor is the growing trade deficit which is really the ultimate determinant of job creation in the U.S… Trade deficits must be financed. A country simply cannot have a trade deficit unless private or government investors are willing to finance it. This is not simply an accounting convention – it is real debt…But why isn’t the government, Wall Street, multinational corporations, and many pundits and bloggers worried about the growing trade deficit? Why is the trade deficit largely ignored while everyone is more concerned about the federal deficit? Wall Street, the Multi-national corporations and the Obama Administration have adopted a policy of appeasement where foreign mercantilism seems to be irrelevant and attempts at balancing trade are ignored. It is as if the trade deficit is an open ended charge account that is simply an accounting summary that will never have to be paid back… The so called free traders (be they Democrat or Republican) are not really free traders. They are supporters of mercantile trade where countries like China and Japan get to manipulate their currencies and use VATs against us to increase their exports and reduce their imports from us. Even though there is a provision in the WTO agreement that prohibits currency manipulation we do nothing about it. As in most economic issues there are winners and losers. The business group that is the biggest winner are the multi-national corporations.”

Those corporations contribute heavily to politicians, and they particularly supported Barack Obama and Hillary Clinton, who did little to protect the U.S. workers who were the ultimate losers in the nation’s trade deficits.

Kevin Williamson, writing for National Review reports: “The largest Wall Street investment banks are Goldman Sachs, JPMorgan, Morgan Stanley, Bank of America, and Citigroup. Which presidential candidates did these firms and the people associated with them favor? According to OpenSecrets.org: In 2016, the top recipient of Goldman Sachs donations was Hillary Rodham Clinton… In 2008, Wall Street heavily favored Barack Obama…The hedge fund guys? They favored Mrs. Clinton by a factor of (check my English-major math) 2,450 to 1, according to the Wall Street Journal…”
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Is the U.S. being overly protective? Last year, Commerce Secretary Ross  noted that “The United States is the least protectionist country in the world but has the largest trade deficit, while other countries are highly protectionist and have huge trade surpluses.  This cannot continue. We can no longer afford to be ignorant or naive in the aggressive global marketplace, and there is no reason why we should be forced to singlehandedly absorb the $500 billion trade surplus of the rest of the world.”

Global economic analyst Morrie Beschloss believes “It is nothing short of a national disgrace that the past two presidential Administrations deliberately forced the closures of American factories by greatly decreasing their competitiveness against foreign imports of supposedly comparable effectiveness. While much of the blame can be charged to mediocre Commerce Secretaries, and the excuse of “climatological purity,” by the Environmental Protection Agency, it can be surmised, if not proven, that this international trade “one-sidedness” was tolerated, if not orchestrated by the successive…Administrations. …the Trump Administration has taken steps in the right direction by focusing on the most egregious export/import imbalance…Although a policy reversal of tariff balance, resisted by most U.S. conglomerates with foreign subsidiaries and divisions is being considered, it may take years before a partial reversal is set in motion.”

U.S. Commerce Dept. photo

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Trump Attacks Trade Deficit

When President Trump announced his executive orders regarding a 25% tariff on imports of  steel and 10%  on aluminum,, the reaction from Wall Street, major financial interests, the media, and many politicians was uniformly negative.  But support has come from main street, global trade analysts, and American workers.

The White House proclaimed last month that “The United States… faces higher barriers on its exports in markets abroad than producers abroad face on their exports to the U.S. Nothing about the principle of comparative advantage would lend itself to a defense of a status quo that imposes higher barriers to exports on America’s producers than on foreign producers. The global trade system has come under strain due to the influence of countries, like China, that violate market principles and distort the functioning of global markets… The Administration prioritizes its attempt to create the conditions that, according to the consensus principles in the economics literature, would maximize the benefits accruing to the United States—and produce gains for our trading partners as well.”

America’s 2017 trade deficit was $566 billion. That represents about 2.7 percent of GDP. Since 2000, it’s averaged that over $500 billion. In prior decades, the deficit was below 2% GDP.

Despite portrayals by some critics that the tariff move was abrupt, it has been considered since the start of the current White House.  The Department of Commerce  released a report last month revealing that it “found that the quantities and circumstances of steel and aluminum imports ‘threaten to impair the national security,’ as defined by Section 232…”

Key Findings of the Steel Report included:

  • The United States is the world’s largest importer of steel. [but] …imports are nearly four times our exports.
  • Six basic oxygen furnaces and four electric furnaces have closed since 2000 and employment has dropped by 35% since 1998.
  • World steelmaking capacity is 2.4 billion metric tons, up 127% from 2000, while steel demand grew at a slower rate.
  • The recent global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption. China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity alone exceeds the total U.S. steel-making capacity.
  • On an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
  • As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations.

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Commerce Secretary Wilbur Ross recommended to the President had previously recommended consideration of the following:

1.A global tariff of at least 24% on all steel imports from all countries, or 2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or 3.A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

The problem also should be seen in the overall light of the American trade deficit. In February, The U.S. Bureau of Economic Analysis  released its latest report on America’s trade status.

According to the analysis, “the goods and services deficit was $53.1 billion in December, up $2.7 billion from $50.4 billion in November, revised. December exports were $203.4 billion, $3.5 billion more than November exports. December imports were $256.5 billion, $6.2 billion more than November imports. The December increase in the goods and services deficit reflected an increase in the goods deficit of $2.6 billion to $73.3 billion and a decrease in the services surplus of $0.1 billion to $20.2 billion. For 2017, the goods and services deficit increased $61.2 billion, or 12.1 percent, from 2016. Exports increased $121.2 billion or 5.5 percent. Imports increased $182.5    billion or 6.7 percent.”

U.S. Commerce Dept. photo

The Report Concludes Monday.

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Manufacturing Employment is Vital to U.S. Economy

All the plans and proposals, whether from Democrats, Republicans, liberals or conservatives will do little to restore growth to the American economy unless they provide middle income employment.  To a significant extent, that means restoring the manufacturing sector to a semblance of strength. The “Little Blue Collar Fact Book”  notes that “the U.S. manufacturing sector…accounts for two-thirds of our country’s private-sector research and development;…accounts for more than 12 percent of U.S. GDP; and … employs about 12 million … Americans in good-paying jobs. A typical manufacturing job supports four or five jobs elsewhere in the economy. And manufacturing jobs pay better, especially for workers who may not possess a four-year college degree… Manufacturing in America means jobs, industrial innovation, and economic growth.”

Since President Clinton gave China unchecked access to trade with the U.S., 5.1 million jobs and 65,000 manufacturing plants have been lost. According to the Alliance for American Manufacturing, “a flood of cheap, heavily subsidized imports from China have put the American steel industry in jeopardy. China’s economy is slowing, but its government-funded industry isn’t slowing down. China has to do something with all that steel it doesn’t need, so it’s shipping it to the United States with a rock-bottom price tag. It’s not just steel. Industries like aluminum are facing the same problem…[The trade deficit with China amounted] a $365 billion…The U.S. trade relationship with China is one-sided. America’s growing trade deficits with countries around the world, not just in China, have had serious consequences for our manufacturing base and the jobs it supports…It’s not just jobs, mind you. There’s a lot of manufacturing innovation and know-how taking place overseas, making it less likely that the future’s big-ticket products and gizmos will be invented and made in America…

“Whenever lawmakers consider legislation that will either promote U.S. manufacturing or put rules in place to go after trade cheats, the naysayers come out of the woodwork. And ‘we’re going to touch off a retaliatory trade war’ is one of their most common criticisms. They’re calling smoke when there’s no fire. Critics said a trade war was coming when Maryland passed a Buy America bill in 2013. They said one was coming when West Virginia considered a similar one in 2014. And they say the same thing whenever Washington, D.C. thinks about legislation to curb currency manipulation…But just look at our deficits and lost manufacturing jobs. We’re in a trade war right now, and we’re losing it. By offshoring a chunk of our manufacturing sector, we might have got a tiny markdown on the price tags at big box stores. But our trading partners – and especially China – need America’s big market to make their own economy work.”

The impact of the manufacturing sector is dramatic. The National Association of Manufacturers outlines its role in the overall economy:

  • In the most recent data, manufacturers contributed $2.17 trillion to the U.S. economy in 2015.
  • For every $1.00 spent in manufacturing, another $1.81 is added to the economy.
  • The vast majority of manufacturing firms in the United States are quite small; Almost two-thirds of manufacturers are organized as pass-through entities.
  • There are 12.3 million manufacturing workers in the United States, accounting for 9 percent of the workforce.
  • In 2015, the average manufacturing worker in the United States earned $81,289 annually, including pay and benefits.
  • Manufacturers have one of the highest percentages of workers who are eligible for health benefits provided by their employer.
  • Output per hour for all workers in the manufacturing sector has increased by more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, almost tripling its labor productivity over that time frame.
  • Exports support higher-paying jobs for an increasingly educated and diverse workforce.
  • Manufacturers in the United States perform more than three-quarters of all private-sector research and development (R&D) in the nation, driving more innovation than any other sector.
  • The cost of federal regulations fall disproportionately on manufacturers, particularly those that are smaller.

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Critics of attempts to promote domestic American manufacturing have said that cheaper overseas wages, and the overall impact of automation, will prevent any renaissance in the manufacturing job sector.  The facts, however, indicate otherwise. A Forbes study by Thomas Roemer notes: “It used to be cheaper to manufacture outside the U.S.; now the costs are now converging. In the manufacturing sector, the U.S. is still among the most productive economies in the world in terms of dollar output per worker. To be more specific, a worker in the U.S. is associated with 10 to 12 times the output of a Chinese worker. That’s not a statement about intrinsic abilities; it merely reflects the superior infrastructure of the United States, with its higher investments in automation, information technology, transportation networks, education, and so on. And even though this relative advantage is slowly shrinking thanks to Chinese investment in such infrastructure, the wage gap between Chinese and U.S. workers is shrinking at a much faster rate. The net effect is that overall manufacturing in the U.S. is becoming more attractive again, leading to domestic growth and reshoring.

“As productivity rises and automation increasingly replaces manual labor, the returning manufacturing jobs will require a higher degree of technological sophistication from the workforce, and this unfortunately may leave behind those who are unable to adapt…The second reason to manufacture in America involves lead times. Customers have come to expect short delivery windows. With services like Amazon Prime, consumers are accustomed to delivery within one or two days, if not the same day. Offshore manufacturers need to store disproportionally large amounts of inventory to accommodate these expectations. But keeping inventory is costly—it requires space, energy, and labor; it gets lost, stolen, spoiled, and damaged; and, in the case of technology or fashion, it may become obsolete within weeks. Right now, the U.S. stores about $1.7 trillion in inventory, which means annual inventory carrying costs of between $300 billion and $500 billion—roughly the gross domestic products of Denmark and Norway, respectively. Manufacturers with onshore facilities can cut those costs dramatically. However, these indirect costs of offshoring are much harder to quantify than direct manufacturing costs, and they were frequently ignored in the initial rush to offshore.”

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U.S. Economy Ends 2015 in Slump

The Institute for Supply Management (ISM) reports that economic activity in the manufacturing sector contracted in December for the second consecutive month. The Wall Street Journal notes that “U.S. factories are in their worst slump since 2009.” Manufacturing accounts for about 12% of the U.S. economy, but its impact on middle-class employment and the U.S. balance of trade is even greater.

While U.S. manufacturing had declined before 2000, the precipitous drop, and its dire impact on the U.S. balance of trade and middle-class employment, had its origins in President Clinton’s allowing China to enter the World Trade Organization (WTO).

The Manufacturing News notes that “Since 2000, the trade deficit with China has surged by 173 percent, from $83 billion in 2000 to $227 billion in 2009. The United States has lost more than one-third of all its manufacturing jobs — 5.6 million; U.S. wages have declined; the country has suffered a financial meltdown; it has spent $14 trillion on economic stimulus, only to experience the highest unemployment rates in generations and annual federal budget deficits of more than $1 trillion.”

Speaking about the manufacturing sector, ISM’s chair Bradley J. Holcomb reported that “The December PMI® registered 48.2 percent, a decrease of 0.4 percentage point from the November reading of 48.6 percent. …The Employment Index registered 48.1 percent, 3.2 percentage points below the November reading of 51.3 percent. The Prices Index registered 33.5 percent, a decrease of 2 percentage points from the November reading of 35.5 percent, indicating lower raw materials prices for the 14th consecutive month. The New Export Orders Index registered 51 percent, up 3.5 percentage points from the November reading of 47.5 percent and the Imports Index registered 45.5 percent, down 3.5 percentage points from the November reading of 49 percent. As was the case in November, 10 out of 18 manufacturing industries reported contraction in December. Contraction in new orders, production, employment and raw materials inventories accounted for the overall softness in December.”

ISM reports that of the 18 manufacturing industries, six are reporting growth in December in the following order: Printing & Related Support Activities; Textile Mills; Paper Products; Miscellaneous Manufacturing; Chemical Products; and Food, Beverage & Tobacco Products. The 10 industries reporting contraction in December — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Primary Metals; Fabricated Metal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Wood Products; and Nonmetallic Mineral Products.

 

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“But there is another big factor that is not often mentioned and has a huge effect on both the manufacturing sector and jobs. That factor is the growing trade deficit which is really the ultimate determinant of job creation in the U.S.

“Dan Dimicco, chairman emeritus of Nucor Corporation…says in 2013, net trade subtracted about 3% from our economy (because imports exceeded exports). This shrinkage is cumulative, compounding year after year.” In the case of America we have had trade deficits for 39 years and it is now more than an $8 trillion debt. But why isn’t the government, Wall Street, multinational corporations, and many pundits and bloggers worried about the growing trade deficit? Why is the trade deficit largely ignored while everyone is more concerned about the federal deficit? Wall Street, the Multi-national corporations and the Obama Administration have adopted a policy of appeasement where foreign mercantilism seems to be irrelevant and attempts at balancing trade are ignored. It is as if the trade deficit is an open ended charge account that is simply an accounting summary that will never have to be paid back. All of our trading partners (competitors) understand trade deficits and they do something about them.”

The Federal Reserve Bank of Atlanta  also issued disappointing news, noting that “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 0.7 percent on January 4, down from 1.3 percent on December 23. The forecast for the contribution of net exports to fourth-quarter real GDP growth fell 0.1 percentage points to -0.4 percentage points on December 29 after the U.S. Census Bureau’s advance report on international trade in goods. “

Overall, according to the December report from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis :

“The goods and services deficit for the whole U.S. economy was $43.9 billion in October, up $1.4 billion from $42.5 billion in September, revised. October exports were $184.1 billion, $2.7 billion less than September exports. October imports were $228.0 billion, $1.3 billion less than September imports. The October increase in the goods and services deficit reflected an increase in the goods deficit of $2.1 billion to $63.1 billion and an increase in the services surplus of $0.6 billion to $19.2 billion. Year-to-date, the goods and services deficit increased $22.2 billion, or 5.3 percent, from the same period in 2014. Exports decreased $84.7 billion or 4.3 percent. Imports decreased $62.5 billion or 2.6 percent.”

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U.S. economy faces employment, trade, & national security crises

The just released report from the Bureau of Labor Statistics (BLS) features a very slight improvement in the “U-3,” the generally used unemployment statistic. However, an objective analysis points to an American economy that is deeply troubled, and not improving.

According to the BLS. “Total nonfarm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1 percent. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in August at 6.5 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.”

Job gains occurred in health care, social assistance and financial activities. Manufacturing and mining lost jobs. While the gains in health care, social assistance and financial activities  were, although very minimal, welcome, the reality is that a deeper examination of the statistics and the implications for the economy present a picture of a troubled economy. The more inclusive “U-6” number, which includes a more comprehensive look at unemployment, remains in double digits at 10.3%. This reflects the fact that persons employed only part time because they couldn’t find full time jobs increased by 158,000.

The divide between those engaged in productive labor and those out of the workforce is worse than last year at this time. The job participation rate is at extremely low 62.6%, down from 63% a year ago. The number of those not in the labor force edged up from 94,031, a worrisome increase from August 2014’s 91,794.

One of the most important portions of the economy continued to decline. The crucial manufacturing sector saw a jobs drop of 17,000. Mining employment also was reduced by 9,000. According to the National Association of Manufacturers, about one in six private sector jobs is in the manufacturing sector.

The challenges of the American manufacturing sector are reflected in a poor trade balance.  According to the Bureau of Economic Analysis the U.S. goods and services deficit in July increased $10.6 billion, or 3.6 percent, from the same period in 2014. Exports decreased $47.0 billion or 3.5 percent. Imports decreased by a smaller amount, $36.4 billion or 2.2 percent. In 2006, according to Trading Economics, the U.S. had set a record low trade gap, and with increased domestic production of energy it was not unreasonable to assume that trade deficits would continue to be lowered.  However, the impact of American manufacturing decline, in part due to concessions made to China by the Clinton Administration and the fact that the U.S. maintains the developed world’s highest corporate tax levels has dashed that optimism.
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The loss of vitality in the manufacturing sector is more than just an economic problem. The Alliance for American Manufacturing  notes national security concerns as well:

“America’s military communications systems increasingly rely on network equipment from China, putting our entire defense at risk. A 2012 House intelligence committee investigation, for example, found that the Chinese telecommunications company Huawei, which had been working to expand in the United States, posed a major threat to the U.S. because its equipment could be used to spy on Americans — as well as U.S. defense systems and companies.

“New America Foundation senior fellow Peter Singer warned military leaders in 2015 that ‘America’s most advanced fighter jets might be blown from the sky by their Chinese-made microchips and Chinese hackers easily could worm their way into the military’s secretive intelligence service.’ …

“But it isn’t just on the cyberfront where America is giving its defense away. The United States increasingly relies on foreign nations to provide the materials needed for our defense supply chain.

“Not a single high-tech magnet — crucial to military hardware — is Made in America. Roughly 91 percent of the rare earth element needed for night-vision googles is from China. The United States produces just 2 percent of Lithium ion batteries, used in everything from unmanned aerial drones to bomb disposal robots and other gear.”

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U.S. economy, unemployment rate continues to underperform

While the media and the Bureau of Labor Statistics  continue to cite the “U-3” statistic to indicate the unemployment rate (currently 5.3%) the more accurate and realistic number is the BLS’s U-6 number, currently at 10.4%.

Of that percentage, an increasingly worrisome subset—those who have been unemployed for 27 weeks or more—increased from 2,121,000 in June to 2,180,000 in July. A seriously troubling indicator of an economy that continues to be in ill health is the record 93,770,000 Americans not participating in the workforce, a 38 year low point.

There is little indication that the situation is improving, since the U.S. economy continues to grow below levels necessary to improve the jobs picture. The Bureau of Economic Analysis (BEA)  reports that “Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis.  In the first quarter, real GDP increased 0.6 percent (revised).

The BEA also announced on August 5  bad news in U.S. export numbers:

“[The] goods and services deficit was $43.8 billion in June, up $2.9 billion from $40.9 billion in May, revised. June exports were $188.6 billion, $0.1 billion less than May exports. June imports were $232.4 billion, $2.8 billion more than May imports.

“The June increase in the goods and services deficit reflected an increase in the goods deficit of $2.9 billion to $63.5 billion and a decrease in the services surplus of less than $0.1 billion to $19.7 billion.

“Year-to-date, the goods and services deficit increased $1.6 billion, or 0.6 percent, from the same period in 2014. Exports decreased $33.4 billion or 2.9 percent. Imports decreased $31.8 billion or 2.2 percent.

“Goods and Services Three-Month Moving Averages:

“The average goods and services deficit decreased $2.2 billion to $41.8 billion for the three months ending in June.

* Average exports of goods and services increased $0.2 billion to $189.1 billion in June.

* Average imports of goods and services decreased $2.1 billion to $230.9 billion in June.

Year-over-year, the average goods and services deficit decreased $1.1 billion from the three months ending in June 2014.

* Average exports of goods and services decreased $6.8 billion from June 2014.

* Average imports of goods and services decreased $7.9 billion from June 2014.”

The jobs crisis is particularly acute for recent graduates, reports the Economic Policy Institute , even using the Bureau of Labor Statistics’ less accurate U3:

  • “For young college graduates, the unemployment rate is currently 7.2 percent (compared with 5.5 percent in 2007), and the underemployment rate is 14.9 percent (compared with 9.6 percent in 2007).
  • “For young high school graduates, the unemployment rate is 19.5 percent (compared with 15.9 percent in 2007), and the underemployment rate is 37.0 percent (compared with 26.8 percent in 2007).

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  • “The high share of unemployed and underemployed young college graduates and the share of employed young college graduates working in jobs that do not require a college degree underscore that the current unemployment crisis among young workers did notarise because today’s young adults lack the right education or skills. Rather, it stems from weak demand for goods and services, which makes it unnecessary for employers to significantly ramp up hiring.

EPI also reports:

  • “Wages of young college and high school graduates are performing poorly—and are substantially lower today than in 2000. The real (inflation-adjusted) wages of young high school graduates are 5.5 percent lower today than in 2000, and the wages of young college graduates are 2.5 percent lower.
  • “The cost of higher education has grown far more rapidly than median family income, leaving students with little choice but to take out loans which, upon graduating into a labor market with limited job opportunities, they may not have the funds to repay.
    • “From the 1983–1984 enrollment year to the 2013–2014 enrollment year, the inflation-adjusted cost of a four-year education, including tuition, fees, and room and board, increased 125.7 percent for private school and 129.0 percent for public school (according to the College Board).
    • “Between 2004 and 2014, there was a 92 percent increase in the number of student loan borrowers and a 74 percent increase in average student loan balances (according to the Federal Reserve Bank of New York).
  • “Due to young college graduates’ limited job opportunities, stagnating wages, and the rising cost of higher education, college is becoming an increasingly difficult investment.”

The burden of severe levels of tuition-related debt makes the unemployment problem for college grads particularly troubling.

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U.S. economy not adequately recovering

There are a number of key indicators revealing that the U.S. economy continues to languish, and will continue to do so in the new year, despite attempts to portray it as improving.

1.Employment remains in a crisis state.

The Century Fund  outlines three reasons why the job market is actually worse than federal statistics indicate:

“The ratio of workers to non-workers is nearing an all-time low. Part of the drop in headline unemployment numbers is explained by the fact that many have just given up on looking for work entirely…

“The share of long-term unemployed is up. People who are out of work for more than twenty-six weeks can sometimes end up permanently unemployable…

“Many who are working are underemployed. The unemployment rate is silent on those who have part-time jobs but would prefer full-time jobs…

According to Economic Outlook 2015,  “Wages remain stagnant. Even those who do have jobs are facing flat or even declining wages.” “For those who have jobs, they’re making less than they did before the Great Recession. Wages for workers at every pay level, save for the bottom 10%, declined from the second half of 2013 through to the second half of 2014. And there’s no indication wages will increase….For 70% of the workforce, inflation-adjusted hourly wages are still lower than they were in 2007. Over the same period, inflation (CPI) has risen 15%.”
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  1. The U.S. Balance of Trade remains weak.

America’s balance of trade picture is far from favorable. According to the U.S. Bureau of Economic Analysis, the latest export numbers show that September exports of $195.6 billion and imports of $238.6 billion resulted in a goods and services deficit of $43.0 billion, up from $40.0 billion in August. September exports were $3.0 billion less than August exports of $198.6 billion. September imports were $0.1 billion more than August imports of $238.6 billion.

  1. There are too few First Time Home buyers

Another key component of economic recovery, first time home buyers, remains weak, accounting for  only 33% of purchases, down from last year’s 38%, according to the National Association of Realtors.   First time buyers spark the economy with an entire range of purchases, from electronics to furniture, various services, and more.

  1. The student loan bubble lurks.

As reported by USAtoday, “Total student loan debt was $240 billion in 2003, but has nearly quintupled to $1.2 trillion today. This affects students and non-students alike, as new graduates’ purchasing power is sapped by their student loan repayments.”