Ford spends $1 Billion and adds jobs to the U.S

Ford plans to spend $1 billion on the expansion of the redesigned Ford Explorer and Lincoln Navigator. The company is shifting their focus to sport utility vehicles (SUV's) and because of this, is cutting jobs overseas, and adding some back to Chicago. This addition of jobs brings the total employee number to 5,800 employees in the Chicago plant.
Ford is also building a new body shop and paint shop at the assembly plants, there are also plans to make major changes to the final assembly area. The company also plans to install some new manufacturing technology, including 3D-printing tools and robots.

Throughout this expansion, Ford has struggled to remain in good standing in Europe and is therefore cutting their jobs there. The reason I thought this article was important and tied to our class is mainly because of how Ford transcends over different economic systems. Expansion in the US comes at a price for European workers, but its obvious that the disparity in systems and inability to compete overseas is causing Ford to make this decision. Having been to Europe multiple times, you can see the extreme competition is causing Ford to make crucial decisions.

Attached is the link to the article. This also could indicate future economic concerns about US companies overseas, or maybe this is solely industry related.


https://www.cnbc.com/2019/02/07/ford-investing-1-billion-into-chicago-factories.html

The divide on Venezuela: Who’s supporting Maduro, and who’s following the U.S. lead in recognizing Guaidó

Nations including The United States, Isreal, Canada and numerous South American countries are backing president Juan Guaido in Venezuela. Pressure is mounting as the current president Maduro will not step down or allow for a legitimate vote. Maduro gave the U.S an ultimatum for U.S. diplomats to leave the country as soon as possible. President Trump has not ruled out using military force to swing the presidency in Venezuela to a more favorable side for the United States. One potential problem with this is that Russia and China both back the current president Maduro. Many nations including Syria, Iran and Turkey have also voiced  objections to the U.S.-led campaign to recognize Guaido. To Russia, Venezuela has so far been a key cornerstone in its strategy to win over countries in proximity to the United States, both for military and economic reasons. Russia is willing to deploy aircraft over Venezuela if they feel like it is necessary.

These developments could potentially be very problematic for the United States in many ways. Getting involved with another country's overthrow of a government has not been super successful over the past 50 years and has consistently increased government spending on the military. If conflict truly does arise it will add more to the overall deficit and impact relations with world super powers. China and Russia seem stand pretty firmly with the current president and it would be silly to engage in a "must win" war over Venezuela and anger China and Russia. There are times for countries to flex their muscles but to me this seems like just another reason for world super powers to get angry at each other just so they can threaten war to try and scare the opponent. Venezuela is in pretty bad shape and is in dire need of an overhaul. But if history repeats itself, the Untied States will win and set up an unstable leader that the people do not back and will be overthrown in 10 years. Venezuela will then be worse off than they originally started.




https://www.washingtonpost.com/world/2019/01/28/divide-venezuela-whos-supporting-maduro-whos-following-us-lead-recognizing-guaid/?noredirect=on&utm_term=.24cd2f5a3a89

Recent economic news

The strong hiring shown in the ADP National Employment Report on Wednesday suggested there had been minimal impact on the labor market from the just-ended 35-day partial shutdown of the federal government.

Data showed contracts to buy existing homes tumbled to a more than 4-1/2-year low in December.

Amid growing uncertainty over the economy’s outlook, the Federal Reserve on Wednesday kept benchmark U.S. interest rates steady and said it would be patient in lifting borrowing costs further this year.

Article: https://www.reuters.com/article/us-usa-economy/u-s-private-payrolls-rise-strongly-housing-market-struggling-idUSKCN1PO2AG

Nissan cites Brexit 'uncertainty' as it scraps plans to build model in Britain

It is no secret to anyone that the uncertainty surrounding Britain's impending departure from the European Union has many companies on edge regarding future business deals in the country. With no departure deal in sight, one large corporation has decided not to make an investment in Britain. Japanese car manufacturer Nissan has stated it is scrapping plans to build a new model in the city of Sunderland. In its decision the company cited uncertainty over Brexit as the reason to not pursue a plant in Sunderland. The decision further highlighted employers' fears of a no-deal departure by the UK from the European Union.

The automotive industry of the UK has been hit extremely hard since the vote to leave the European Union. Investment has decreased dramatically and the Society of Motor Manufacturers and Traders stated in June that investment in models, equipment and facilities in Britain was half of what it was the year prior. Clearly an indictment of how car manufacturers feel regarding the aftermath of the Brexit vote. The head of Britain's top business lobby group has also warned that the country's car industry could be wiped out by Brexit.

The European Union provided exceptional trading terms for companies to do business across borders throughout Europe. With the confusion and uncertainty of Brexit companies are weary of what foreign trading will look like without the ease of the EU's trade agreements. Many questions remain. Will Britain reach a satisfactory agreement with the EU? What other industries are most at risk of leaving the country? What effect will this have on the economies of the other nations in Europe?

Australian regulators target banking 'oligopoly'

The chief executive of the Australian Competition and Consumer Commission, Rod Sims, announced on Monday that more competition is needed in the banking industry in Australia. Currently, 75% of the domestic market is controlled by the four biggest banks -- ANZ Bank, Westpac, National Australia Bank, and Commonwealth Bank of Australia.

Sims believes that the issue stems from the lower funding costs that these banks receive due to a government guarantee to save the banks if they get into trouble as well as some bank mergers that were approved prior to him serving as Chief. Another issue is the "cartel-like" attitude of these four banks. They copy each other, don't compete on price and don't chase market share.

The ACCC will release a final report later in the year where they are expected to make recommendations to decrease regulatory barriers on smaller banks and promote new banking rules that would enable consumers to more easily switch banks.

Article: https://www.ft.com/content/d940092a-25f2-11e9-8ce6-5db4543da632

The state of a minimum-wage worker's housing situation in the US

The rich-poor gap in the US has statistically been shown to be growing over the past few decades, and this article helps to provide a picture of this situation in the house renting context. Talking specifically about the minimum-wage workers, Hoffower and Kiersz set out to show that a minimum-wage worker in the US has to work 2.5 jobs to afford a one-bedroom apartment. Even more problematic, they would have to work 3 full-time jobs to afford a two-bedroom rental apartment in most of the US. The national housing wage to rent a two-bedroom apartment is shockingly high at $22.10, which is three times the federal minimum wage of $7.25. Certainly most states may have a higher minimum wage, but the research results in this article maintain that no minimum-wage worker in any state can afford a two-bedroom rental apartment by working the standard 40 hours per week.

While the article itself does not outright propagate any discussion regarding the economic outcomes of economic systems, it may be have provided helpful statistics to the arsenal of those who would prefer the economic system in the US to prioritize equity over, for example, economic growth or efficiency.

Article link: A minimum-wage worker needs 1.5 jobs just to afford half the rent for a 2-bedroom apartment in most of the US

Italy Slides into Recession as Europe Stalls

Italy Slides Into Recession as Europe Stalls, Stoking Global Fears

Italy's economy is experiencing a significant slowdown as GDP decreased for the second quarter in a row. The government carries one of the highest debt loads in the world and is at risk of default. China's woes are hurting their economy and Italy has now entered a recession for the third time since 2008. Consumer spending is the leading factor for the economy's slowdown. The populist government in Italy has come under criticism for their economic policies at home. The government increased spending on boarder welfare and pension programs and assured much higher growth. In addition to struggling with growth, Italy's economic system is having issues with stability. The economy has entered into recessions three times since 2008 and major political divides are having a negative impact on Italy's economic outcomes.

https://www.nytimes.com/2019/01/31/business/italy-recession-europe-slowdown.html

White House Adviser Larry Kudlow says taxing rich never works

The White House advisor implied that the Democratic proposals to increase taxes on the wealthiest Americans could lead to economic troubles. He compared the proposal to Venezuela and stated that the country is an absolute catastrophe. They taxed rich people, they taxed everybody and they have equality of sorts - everybody's poor.

Freshman N.Y Rep. Alexandrea Ocasio-Cortez- proposed a 70 percent marginal on rate with incomes above $10 million. Senator Elizabeth Warren also joined in on the proposal for a "wealth tax" on some of the richest Americans. Warrens Proposal is expected to apply to less than 0.1 percent of U.S Households and would raise 2.75 trillion over 10 years.

Kudlow stated that taxing the wealthy never works and would depress the nations gross domestic product. He continues to explain that the most successful are not only paying their fair share, they're paying the most, by far. 

https://www.cnbc.com/2019/02/01/white-house-advisor-kudlow-compares-democratic-wealth-tax-to-venezuela.html?recirc=taboolainternal

United States Economy

                                                                   
Despite the uncertainty of the economy at the end of 2018, with the markets dropping and consumer
confidence taking a hit it does not seem as we are heading into a recession. Around the world we
have seen a decline in growth. For example China equity market had a tough 2018, as well as continuous decline in growth over the past couple of years. Its not  just china, throughout Europe the macroeconomic indicators have weaken which is a sign of a slower economy. With a slowing global economy it will most likely have an effect on our own economy. While slower growth might be on the table our macroeconomic indicators still look okay and an immediate recession does not seem to be on the table.


Article : https://www.cnbc.com/2019/01/31/michelle-meyer-on-economy-risks-are-higher-including-china.html