One Trump Victory: Companies Rethink China

The trade war between China and the U.S. is close to a resolution, but other countries are beginning to decrease their need for Chinese factory goods, due to tariffs and trade tensions, and in order to “diversify” their supply chains. Many see the dependence of the U.S. on Chinese products as something that could create vulnerability in the future, like the idea of decoupling. It mentioned that China may not oppose decoupling due to the inability to end “low-skilled, polluting manufacturing jobs and move higher up in the value chain.” The article also gave an overview of China’s rise in manufacturing development over the past two decades. China now seeks to focus on high-tech and innovative industries, but is aware that if their economy slows, it could lead to instability or job losses. A 2018 UBS survey of chief financial officers at export-oriented manufacturers in China found that about a third had at least shifted some production out of China and that this year another third has been predicted to do so again. Many companies outside of China are shifting their production to the United States. Even Hasbro, a large producer of toys, has a plan “to be 60 percent out of China” by next year and hopes to move much of its’ production to the U.S. Despite the U.S. and China on the verge of ending the trade war, these shifts have already begun, and it will be interesting to see the repercussions, if any, China will have to deal with.

https://www.nytimes.com/2019/04/05/business/china-trade-trump-jobs-decoupling.html

House Committee Passes Legislation to Improve Retirement Security

This week the House Ways and Means Committee UNANIMOUSLY passed the Secure Act which will make it easier for Small Employers to set-up 401(k)s for their employees.  The bill offers various incentives to firms to expand 401(k) access and to pay for part-time employee retirement benefits.  Congress is doing this to combat a retirement crisis in America.  "Americans currently face a retirement income crisis, with too many people in danger of not having enough in retirement to maintain their standard of living and avoid sliding into poverty" according to Richard Neal Democratic Representative from Massachusetts and Committee Chairman.  The bill would also repeal the maximum age that contributions could be made to IRAs.    The plan would also raise the age to mandatory withdrawals to 72 from its present 70 1/2.    The bill would also expand savings in 529 plans from just college related expenses to include home schooling expenses as well as to help pay for student loans.

https://www.cnbc.com/2019/04/02/house-committee-passes-secure-act-for-401k-plans-amid-retirement-income-crisis.html      

There are Plenty of Jobs, But No One to Fill Them

Throughout the start of 2019, many Economists were worried about a potential recession and predicted that a downturn was on the horizon. However as we have gotten farther into the year, the economy continues to push forward adding lots of jobs each month. In just March alone almost 200,000 nonfarming jobs were added to the market. The slow growth rates in the economy may not be from lower consumption but rather from firms not being able to get jobs filled as the labor market doesn't have the skill set yet to fill them.
Many Americans who are "qualified" to work somewhere have been struggling to find jobs in their field, as today it often requires additional education or training in order to stay relevant in a particular industry. The slow rate at which some new jobs are getting filled points to a skills gap in the labor force, particularly with the older generations. Now more than ever, firms are trying to incentivize workers to stay at their companies using things like wage increases, benefits packages, and more flexible work hours frequently rather than trying to search through the labor force with the hopes of finding someone who meets their very specific demands.
Moving forward, I am interested to see how the labor market looks throughout the rest of the year and what ties to has to the status of the economy.

SOURCE: https://www.cnbc.com/2019/04/05/americas-bustling-jobs-market-is-still-leaving-some-people-behind.html

Fed Officials Resist Rate-Cut Idea Pushed by Trump's Advisers

This Bloomberg article by Christopher Condon details the reactions of Federal Reserve officials to the president’s urging of cutting interest rates. While the Fed is currently holding the current rate given the global economic slowdown of the past few months, their patient approach has been under scrutiny by some. President Trump’s rationale of imposing an expansionary monetary policy is a response to the US’s recent slowing in growth and is meant to encourage consumer spending and business investments to prolong expansion for as long as possible. The Fed’s reasoning within this article is vague, but their overall intent for raising interest rates is related to our low inflation and trade deficit. By raising interest rates through open market operations, the Fed is looking to make US investments more appealing to foreign investors by offering better rates of return. Nevertheless, they intend to hold rates steady for the foreseeable future, as mentioned by several previous blog posts. Overall, Federal Reserve officials are content with what their current course of action is, despite presidential pushback.
    Personally, I think the Fed’s determination in keeping a patient approach is a somewhat comforting notion. Recent overall interest rates are historically still relatively low. In order for the Fed to maintain any effectiveness of monetary policy they implement, rates have to increase at some point in order to be decreased in the future for expansionary action. Further lowering of already modest interest rates appears to be a futile attempt at furthering US growth.

https://www.bloomberg.com/news/articles/2019-04-04/fed-s-mester-says-it-s-possible-rate-hiking-cycle-may-be-over?srnd=markets-vp

Brexit deadlocked again: British parliament fails to find an alternative

The Brexit deal has been rejected three times and there currently is no other deal agreed with the European Union. Parliament failed to find a majority against any separation deal. The direction of Brexit continues to be up in the air. In response to the rejection, the lawmakers tried to pass four last minute alternative Brexit options, all  of which were defeated. The only option that came close was keeping Britain in a Customs Union with the EU, however it was defeated by three votes.

Brexit minister Steven Barclay said that the default position was still that Britain would leave the EU on April 12^th without a deal. Barclay explained that Britain could try and put their deal up for a fourth vote and hope that it passes -- otherwise it will be a nightmare for many international businesses. Due to the stall in the Brexit the sterling fell almost 1 percent, which is already showing negative effects.

Source: https://www.cnbc.com/2019/04/01/alternatives-to-mays-brexit-deal-fail-to-find-majority-in-parliament.html

Trump says Fed should Cut Rates and Lift Economy

President Trump has called on the fed to cut interest rates to stimulate the economic growth and because there is not inflation. He has stated several times that this has slowed down the economy.He also stated that they should get rid of quantitative tightening. He has now put his efforts to try to build allies and at the Fed. Trump blames the Feds for economic growth falling short of the 4 percent annual rate last year. Despite that, the labor department reported employers adding 196,000 jobs last month. The trade war has begun to hurt some American Industries, and growth in China.

https://www.nytimes.com/2019/04/05/business/economy/trump-fed-interest-rates.html

World trade

World trade shrunk by 0.3% in the fourth quarter of 2018 , the forecast for 2019 is much lower than what was expected. World trade  has been weighed down by new tariffs and retaliatory measures, weaker economic growth, volatility in financial markets and tighter monetary conditions in developed countries. It will be interesting to see what effect the trade war between the united states and china will have on global trade as well if the UK decides to leave the EU could have significant impact on world trade. All in all it seems like the global economy is slowing down and i'm curious what impact this will have here at home.




https://www.cnbc.com/2019/04/02/wto-lowers-its-forecasts-after-global-trade-slowed-in-the-fourth-quarter.html

US weekly jobless claims drop to the lowest level since 1969

Article: https://www.cnbc.com/2019/04/04/weekly-jobless-claims.html

Despite predicted economic slowdowns for the US, as well as the rest of the world, the number of US citizens filing for unemployment benefits has dropped to an almost 50 year low. This seems to demonstrate a strong, sustained labor market. According to the Labor Department, state unemployment benefits "declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969".

Possibly due to this drop in unemployment benefits, companies are experiencing a labor shortage which has attributed to a slow down in job growth. However, the pace that jobs are growing is sufficient to accommodate the increase in the working age population which has been able to keep the unemployment rate down.

It will be intriguing to see how unemployment benefits and job growth will be affected as the world continues toward an economic slowdown. And if, however, we have already reached, or even passed, the peak of our growth, how will we continue to grow without first going backward?

Gender pay gap in the UK, USA, and at OWU

Manufacturing Activity Rebounds in March

According to CNBC, the manufacturing activity, specifically through the ISM manufacturing index has rebounded more than expected in the month of March. In February, the index changed from 55.3 to 54.2. This was marked the lowest that the manufacturing index has seen since the low point of 2016. The readings that are indicated below 50 represent a contraction within the ISM index. This month in March, the index has ticked back up to 55.8, which has increases a lot more than a lot of analysts could have predicted.

In addition to the manufacturing index increasing through the month of March, the construction industry has also hit a 9-month high in spending. The strong gains even with the sluggish housing market and expensive building materials are a good sign for the economy. Hopefully, they can continue to find work within the construction industry and help the housing market get out of this drought that we are currently in. It will be interesting to see what happens in the next coming months to see if this continues.


Source: https://www.cnbc.com/2019/04/01/ism-.html

Trump Turns U.S. Policy in Central America on Its Head

President Trump announced recently that he plans to cut off aid to Guatemala, Honduras, and El Salvador. This will be 450 million in aid that these countries will no longer be receiving from the US. Trump’s reasoning behind this act was that these countries are not doing anything to stop the immigration flood into the United States. His reasoning is also backed by the theory that the best way to halt migration is to go to the root causes; however, many say that cutting off aid will actually make the issue worse. What should be happening in these countries are efforts to reduce violence, corruption, and help economic development. These positive changes will help stop immigration into the US and result in people wanting to stay in their home countries. But with these aid cuts, many US-backed programs that help fight against gangs and violence will be halted. Although legislation has a chance to fight this policy, there is a high chance that their aid will be cut completely for now and be reduced in the future. 

Personally, I don’t believe completely cutting aid is the right response to this situation. I think we do need to do our research and be sure that our aid is not funding a corrupt government, but to cut aid completely seems like an overreaction. It makes sense that helping to support more economic development and peace within these countries would lead to fewer people trying to leave and I think that is something we should strive for when looking to help these countries and reduce immigration. It will be interesting to see what the actual result of this policy is. 

Link: https://www.nytimes.com/2019/03/30/world/americas/trump-turns-us-policy-in-central-america-on-its-head.html

The new minimum wage is killing NYC’s once-thriving restaurant scene

According to the article, New York City restaurants are reducing jobs and raising prices due to the new hourly wage of $15 per hour. The executive director of the trade group also said there has been a loss of job of 1.6%. The restaurants said they have been reducing jobs and the hours of employees in 2018 and may make more adjustments in 2019 as well, which is naturally what they are assumed to do. This may get workers earn more money, but if the restaurants are raising the price, their cost of living would rise anyway. I think this will lead to reduced demands on restaurants and increase jobs and work hour loss more.

However the article seems to overstate the impact by using the word "killing", because it might not lead to major issues. But what I think of this $15 wage increase is it might not really benefit the people that work. Initially it might, but the reduced hours might negatively affect them. That depends on how the employer would adjust the times, but it will definitely reduce potential income.


https://nypost.com/2019/03/30/the-new-minimum-wage-is-killing-nycs-once-thriving-restaurant-scene/