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Good U.S. Economy, Bad News for Democrats

Democrats are not enjoying the good U.S. economic news.

Unemployment has hit a half-century low of 3.5%. According to Trading Economics, “The US unemployment rate decreased to 3.5 percent in November 2019 from 3.6 percent in the previous month while markets had expected it to be unchanged at 3.6 percent. The number matched the September figure which was the lowest since 1969. Over the month, the number of unemployed persons decreased by 44,000. The labor force participation rate edged down to 63.2 percent from 63.3 percent in October. Unemployment Rate in the United States averaged 5.74 percent from 1948 until 2019.”

Stephen Moore, writing for the Washington Times, notes that “median household incomes have risen by $5,000 under Mr. Trump, compared to $1,100 in seven years under President Obama.”

Adding to the Democrats’ misery is the reality that both minorities and workers at the lower end of the wage spectrum, central to the party’s electoral hopes, have benefited substantially during the Trump Administration. A Goldman Sachs report earlier this year obtained by CNBC  noted that “The recent jump in paychecks has come with an unusual characteristic, as workers at the lower end of the pay scale are getting the greater benefit.”   

Minority unemployment is at record lows.  In November, David Almasi, speaking for the African-American organization Project 21 noted that:

“Even during the economic boom of the 1990s, blacks still endured double-digit unemployment for most of the decade. Black unemployment dropped for a couple of years during the early 2000s, but it later found its way back into the double digits. The economic policies of our first black president exacerbated black unemployment during the recession, helping black unemployment to reach or exceed 16 percent on 11 occasions. Obama Administration officials told us that high national unemployment, high black unemployment and a depressed economic environment in which businesses hired fewer employees because people stopped looking for work was the “new normal.” But, since 2016, black unemployment has significantly and consistently declined. Under President Trump, black unemployment reached an all-time low on several occasions. Black unemployment dropped below six percent for the first time in May 2017. Twice this year – in August and September – black unemployment dropped and held steady at 5.5 The change in the functioning of male generico levitra on line reproductive organs due to diabetes or atherosclerosis is one of the worst misconceptions of people. When tadalafil free shipping became popular with men when it is judged that surgery or other treatments may cause more harm than good. Denslow and Chase’s pioneering work helped biomedical researchers understand how shortened prescription viagra prices limbs torsion the pelvis, creating painful lumbar compensations. Ajanta Pharma has manufactured the best medicine known worldwide and is very cheap and affordable for everyone and this is the reason why is very famous. you could try these out cialis prescription percent. In October, black unemployment [was at] 5.4 percent  – the lowest rate ever recorded.”

An elated White House reported that “Steady job growth, accompanied by 15 months of 3 percent or higher average year-over-year hourly wage increases, benefits Americans across the country, as 24 States achieved or matched their lowest-ever unemployment rates during the Trump Administration…35 States had unemployment rates below 4 percent, compared to 14 States when President Trump was elected.”

The U.S. economy could advance even further if the new USMCA (United States, Mexico, Canada) trade deal were passed by Congress, but the House of Representatives under Nancy Pelosi is currently concentrating on impeachment rather than economics. The three-nation deal was passed in 2018, but awaits approval by Congress and the other nations.

Electoral politics is, according to President Trump, is one of the reasons the much-needed trade deal with China remains undone. The Wall Street Journal reported in November that he “…accused House Speaker Nancy Pelosi of pressuring Democrats to support his impeachment before she would let them vote on his rewrite of the North American Free Trade Agreement…”

Looming even larger is President Trump’s move to rein in China’s extensive unfair trade practices, intellectual property theft, and espionage. Despite the unambiguous boost ending Beijing’s policies would bring, Democrats have been reluctant to back the White House.

Jen Kirby, , writing for VOX, reports “The 2020 Democratic candidates all hate President Donald Trump’s trade war with China. They also seem to have no real idea what they would do instead.” A June article in Bloomberg News noted that “Americans split along political party lines when it comes to President Donald Trump’s get-tough trade policy toward China, according to a…opinion poll. More than three-quarters of Trump’s fellow Republicans approved of his imposition of tariffs on China while 74% of Democrats disapproved, an in-depth survey from the University of Maryland found.”

Illustration: Pixabay

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U.S. Economy Gains Spread Wide

The U.S. economic revival is broad, apparently durable, and significant, particularly in that its success covers almost all segments of society.

The aftermath of the Great Recession of 2007 and the stagnation of the Obama era presented key challenges. However, reducing both taxes and the excess regulations allowed the inherent strength of the American economy to reassert itself. The current upswing is particularly notable for several reasons.

First, it has an extensive reach throughout all segments of the population. Blacks, Hispanics, young people, and the middle class, several segments that had been particularly hard pressed, are gaining. Second, blue collar workers, who have been harshly affected by the poor economic decisions of prior administrations, are benefiting. Third, Main Street is gaining, as well as Wall Street.

Despite political claims to the contrary, wages are growing. According to the Bureau of Labor Statisics (BLS) average hourly earnings for all employees in August increased by 10 cents to $27.16. For 2018 so far, average hourly earnings gained by 2.9 percent, or 77 cents. Job growth has been notable. Total nonfarm payroll employment increased by 201,000 in August, in line with the average monthly gain of 196,000 over the prior 12 months.

The details are important.  At 6.3%, the unemployment rate for blacks is the second-lowest in history. Steve Cortes, writing in Real Clear Politics, noted in April: “Among Latinos, the jobless rate has only registered below 5 percent for seven months total, in the history of this country. Six of those months have occurred with Donald Trump in the White House…The jobs data was terrific news for Americans of all ethnicities. For the first time since the year 2000, the overall unemployment rate dipped below 4 percent. Just as significant, almost 1 million Americans who had previously given up on finding a job have rejoined the workforce since Trump was elected.”

The Wall Street Journal  reports that youth unemployment, formerly a similarly bleak statistic, also has seen remarkable improvement. Andrew Duehran notes that “…the unemployment rate among young Americans fell to its lowest level in more than 50 years this summer…Of Americans between 16 and 24 years old actively looking for work this summer, 9.2% were unemployed in July, the Labor Department said Thursday, a drop from the 9.6% youth unemployment rate in July 2017. It was the lowest midsummer joblessness rate for youth since July 1966.”
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The other end of the age spectrum is gaining, as well.  Claudia Dreifus, in The New York Times writes that “In a tight labor market, retirees fill gaps their previous employers can’t…At a moment when the unemployment rate is low, hovering around 3.9 percent, some employers are turning to their pool of retirees to fill holes in their staff. ‘In a tight labor market, firms find recent retirees increasingly attractive,’ said Kathleen Christensen, who funds research on aging and the American labor market at the Alfred P. Sloan Foundation. ‘Their skills are up-to-date, they possess critical institutional knowledge, and they can mentor younger workers. Hiring back recent retirees appears more common than at any other time since the Great Recession,’ she added.”

Blue collar workers, long overlooked, are prospering. The BLS notes that there are 243,000 open blue collar jobs.  Mining employment increased by 6,000 in August,  Since a recent trough in October 2016, the industry has added 104,000 jobs. Employment in construction continued to trend up in August (+23,000) and has increased by 297,000 over the year. Manufacturing employment was up by 254,000, with more than three-fourths of the gain in the durable goods component.

The Miami Herald reported this month that “Miami is a city with an ever changing skyline. And those who make it happen — the plumbers, electricians, brick masons and carpenters — earn far above the local median: $55,000-75,000 a year with full benefits and a pension. But as the economy barrels toward full employment, local contractors are struggling to find enough skilled workers to fuel the construction boom. ‘We’re seeing it across the board. There are shortages in every trade,’ said Peter Dyga, president of the South Florida-based Florida East Coast Chapter of Associated Builders and Contractors, a non-profit trade organization comprised of several construction firms and contractors.”

While paychecks are improving as well becoming more available, additional dollars are being freed up to consume goods.  According to Americans for Tax Reform  “Thanks to the tax cuts passed by the Republican House and Senate and signed by President Donald Trump, at least 120 utilities across the country are lowering rates for customers, according to a report from Americans for Tax Reform. This means lower electric bills, lower gas bills, and lower water bills for Americans. The Tax Cuts and Jobs Act cut the corporate rate from 35% to 21%. Utility companies are passing on the tax savings in the form of lower rates for customers.”

Photo: Pixabay

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U.S. Economy Spirals Downward

A significant trinity of bad economic news  has come to light as April winds to a close. GDP growth is grinding to a halt, gross job gains have decreased, and the rate of homeownership has fallen again, hitting a 48 year low. Add to those numbers the news from early April that the American balance of trade worsened by $47.1 billion, and there can be little doubt that the U.S. economy is in a serious downward spiral.

The Bureau of Economic Analysis  announced that growth in the already depressed real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes, came to a near halt at a 0.5% annual rate of increase in the first quarter of 2016.This follows the dismal rate of 1.4% in the final quarter of 2015.

The employment picture presented its own bad news. According to the Bureau of Labor Statistics  latest release, “From June 2015 to September 2015, gross job gains from opening and expanding private sector establishments were 7.3 million, a decrease of 262,000 jobs from the previous quarter…Over this period, gross job losses from closing and contracting private sector establishments were 6.9 million, an increase of 149,000 jobs from the previous quarter.”

Although the White House readily discusses the unemployment statistic known as the U-3, which has been reduced, the more accurate indicator, known as the U-6, is far higher at 9.8%. Even this number doesn’t present a thorough picture, since there are factors it excludes, as well.

The labor force participation rate has fallen from 65.7% in January, 2009 when President Obama took office, to the latest figure of 63%.  Of the comparatively few jobs created, far too many are in low-paying occupations.  Many White House policies will make that problem even worse. President Obama’s scientifically unsound environmental policies to sharply reduce the use of some forms of energy directly impact a source of well-paying jobs.  The Bureau of Labor Statistics  notes that “Manufacturing industries with the highest wages for production occupations included petroleum and coal products manufacturing ($62,140) and basic chemical manufacturing ($55,230).”

The patient may also talk with their doctor so that they can get the best medicine for all those people who lost their canadian generic cialis browse around for source interest in their work. viagra on line purchase The medical experts ensure that smoking can do only bad for you smoking volume and if you are not able to have pleasure with your wife, then you can resort to Kamagra. Chiropractic therapy will also help in reducing the labor and delivery time. check for more cheapest tadalafil online Acute Gastritis: Acute gastritis is a sudden inflammation cost of viagra pill of the lining of the stomach. What else has caused the poor employment picture? Corporations are leaving the U.S., and taking jobs with them. The reason for the downward spiral is neither the aftermath of the recession nor the results of cyclical economic period.  It is the specific result of both existing policies that literally drive employers offshore, as well as a hostile regulatory environment.

The U.S. has the highest corporate tax rate in the developed world. Bloomberg  notes that “The U.S. corporate income tax rate, 35 percent, is the highest in the developed world. The U.S. is also one of the few countries that makes its companies pay that rate on all their worldwide income…More than 50 U.S. companies have reincorporated in low-tax countries since 1982, including more than 20 since 2012.”

Ed Rogers, writing in the Washington Post, notes: “I don’t think there has been a president in my lifetime who has been more hostile to business than Obama. I could be corrected, but I don’t think anyone in the president’s Cabinet has ever started a business, and I would doubt that many of his senior staffers have either. At the end of the day, Obama doesn’t seem to have much respect for what it takes to start a business. And this cratering in the number of start-ups under his administration reminds us of the gratuitous smackdown he gave business owners everywhere during the 2012 campaign when he pointedly said, “If you’ve got a business, you didn’t build that.”

The U.S. has declined in the Index of Economic Freedom  which notes: Americans continue to lose economic freedom. Following declines in seven of the past eight years, the United States this year has equaled its worst score ever in the Index of Economic Freedom. Ratings for labor freedom, business freedom, and fiscal freedom have flagged notably, and the regulatory burden is increasingly costly… America’s historically vibrant entrepreneurial growth is significantly hampered by intrusive, expensive, and often ineffective government policies in areas ranging from health care to energy to education. Government favoritism toward entrenched interests has hurt innovation and contributed to a lackluster recovery and stagnant income growth… The regulatory burden continues to increase. Over 180 new major federal regulations have been imposed on business operations since early 2009 with estimated annual costs of nearly $80 billion.”

Finally, The Census Bureau reports that home ownership rates have dropped to a 48 year low. In 2009, when President Obama took office, home ownership stood at 67.3%.  The latest figure is 63.5%.

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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.”