Trump's Washing Machine Tariff

This article depicts how Trump's tariffs on washing machines has raised the prices of both washers and dryers for US consumers. Even though the tariff has created more jobs for the US economy, the financial burden felt by consumers outweighs the benefits of the decision by increasing consumer prices by $1.5 billion dollars. It will be interesting to see what happens in this market in the near future and if the government will subsidize the cost of laundry equipment. Even though the tariff only affects washing machines, consumers typically purchase a washer and dryer as a bundle. therefore, manufactures raised the prices of dryers as a way to even out the cost of the two machines.

https://www.nytimes.com/2019/04/21/business/trump-tariffs-washing-machines.html

How Higher Minimum Wages Impact Employment

As the article points out at the very beginning, the debate about the effect that raising the minimum wage has on employment is currently not resolved, and research is still ongoing. Millsap does, however, review in this article a study (conducted by Paul Beaudry, David Green, and Ben Sand) that definitively concludes that minimum wage increases lead to lower employment in the long run. In numerical terms, the study found that a 1% increase in the wages leads to an employment decline of 0.3-1%; the range exists due to varying effects from wages being raised citywide or in only one industry.

The framework used by the authors is of three cities - Seattle, San Francisco, and Los Angeles - that recently raised their minimum wage to $15. San Francisco is a relatively higher-wage city so fewer workers and firms are affected in contrast to Los Angeles, which is a relatively lower-wage city. This makes sense since minimum wage workers in a higher-wage city would already be close to earning $15 per hour while someone in a lower-wage city earning a minimum wage of $10 will face a drastic change. Firms in the latter scenario will have much greater pressures applied to them and may even close down, a conclusion that another study mentioned in the article also reached. The last article I posted on this blog was about Target raising its minimum wage to $13 after increasing it to $12 the previous year, and now this article has me thinking about the long-term employment effects of doing that. Perhaps that might be the correct method going about it: gradual increases to the minimum wage to ensure that the long-term employment decline is not steep.

Article link: https://www.forbes.com/sites/adammillsap/2018/09/28/how-higher-minimum-wages-impact-employment/#1db280401e7d

A Trump reelection should boost stocks and delay a recession, Nobel Prize winner Robert Shiller says

If President Trump wins a seconds term, it could prolong the bull market and delay a recession. Optimists believe that pro-business policies would resonate with Wall Street for another four years. Since Trump won the presidency the Dow and S&P 500 have rallied 44% and 35% respectively.

It is interesting to see how people can change their minds on a daily basis. Trump has had a great stock market run while he has been president but it is hardly from the policies he has enacted. The market thinks something one day and immediately changes the next day to something to total opposite. One day Trump has no idea what he is doing and the next, if he get reelected there will not be a recession in the United States. The market seems to like what Trump has been doing for stocks and recently there has been revitalized. It seems ridiculous to say that if he gets reelected the United States can skip a recession.



https://www.cnbc.com/2019/04/16/trump-reelection-would-boost-stocks-delay-recession-robert-shiller.html

US trade deals were designed to serve corporations at the expense of workers

Globalization sits at the center of America's economic crisis. Critic say that globalization is the cause of the Americas suffering middle class. Mostly from signing bad trade deals that led to the loss of American industrial jobs. The advocates claims that America has benefited from globalization. They shift the blame for deindustrialization due to the improvement in technology.

The trade agreements were unfair to the benefit of the U.S. and Europe and to the detriment of developing countries. We secured strong intellectual property protection. We've succeeded in forcing countries to open up their markets to our financial firms.

We could have ensured globalization benefitted all, but corporate greed was too great. American workers are at a disadvantaged, low-skilled workers in particular.

Overall, we need fairer international rules. America needs better management of the changes being brought about both globalization and technology.

https://www.cnbc.com/2019/04/22/joseph-stiglitz-us-trade-deals-helped-corporations-and-hurt-workers.html

Judge Delivers Major Setback to Trump Policy to Increase Coal Mining on Federal Land

A judge on Friday ruled that the Interior Department acted illegally when it tried to roll back Obama era regulation on coal mining. This is an important set back to the Trumps Administration's goal to help coal mining make a comeback.  The regulation was a freeze on opening new coal mine leases on public lands. The policy was put into place in an attempt to slow climate change. The Judge stated that the Interior Department's policy to overturn the freeze failed to include adequate studies to justify the policy change. It is also expected that in the upcoming months, he will make a decision regarding whether the Obama freeze should be reinstated.

I think this will be interesting to follow especially with the upcoming 2020 election. Will environmental concerns be a larger aspect of the debates?

https://www.nytimes.com/2019/04/19/climate/court-trump-coal-mining-setback.html





THANKS, OBAMA

Scholz rules out new debt to stimulate Germany's slowing economy

Olaf Scholz, Germany’s Finance Minister decided that taking more debt would not be the best method for helping Germany’s economy as it continues to slow. Scholz believes that Germany already has too much debt and he does not want to increase public debt, as well. He also believes that it is due to Brexit and other trade disagreements. Structural issues like weak investment were not stated as the problem, but Brexit, and the US trade discussions with the EU and China were viewed as potential factors. He believes that in order to be a globalized economy, it is expected to be affected by other countries in the world, and as the world economy slows, it is only natural Germany’s does as well. Mr. Scholz also thinks that despite the slow growth, Germany will not fall into recession, saying that they “just have softer growth, which is far away from a recession.” The article stated that in order to help the economy Scholz agreed to more investments in different sectors, increased spending on pensions and social welfare, and he approved tax relief for families totaling 11 billion dollars a year. This article shows the effects of living in a connected and globalized world. Brexit is still a huge decision from which many nations are feeling its rippling effects, along with issues from the US’s trade negotiations with China and the EU.

https://www.reuters.com/article/us-germany-economy-scholz/scholz-rules-out-new-debt-to-stimulate-germanys-slowing-economy-idUSKCN1RV0P1

How Do the Major Streaming Services Compare Against Each Other?

Consumers have slowly started to shift away from paying for cable and satellite bills, due to the rising prices and alternatives. More and more people have opted for streaming services such as Netflix, Hulu, HBO, Amazon Prime, etc. Disney recently announced that they will be debuting their own streaming services, Disney+. 

"Disney+ will debut Nov. 12 and is hoping to rapidly gain a significant audience, undercutting Netflix’s pricing, and offering a slew of exclusive shows alongside a formidable Disney library of catalog shows and films. And Apple has its own service set to launch this fall... Exclusive offerings: Disney’s leaning into its deep catalog of films and TV shows to support Disney+. If you want to watch any film in the Marvel superhero universe, any Pixar release, or any Disney classic, this will be the only place to do so. (Disney is pulling its films from Netflix, which will cut its operating income by about $150 million.)". 

With Disney launching their own streaming platform, how do you think this will impact the current streaming industry? Netflix makes up ~75% of the current market share for streaming services. Will Disney be able to gain a portion of Netflix's current market share? Will people keep their Netflix account and open up an account with Netflix, or do you think people will have multiple accounts? 

http://fortune.com/2019/04/19/how-do-major-streaming-services-compare-against-each-other-netflix-hulu-disney/

The Fed is in worse shape than the economy as post-crisis expansion reaches a decade

Within the month the economy will have officially been in expansion for 10 years. The last time the economy hit the 10 year mark was in march 2001 and a rescission followed shortly after. The unemployment rate back then was very similar to where it is currently.

However, Currently the Fed has been under a lot of pressure. With the Fed rates hikes on pause if a recession does come it will not be able to combat it how it normally would. Typically the Fed drops rates by about 3% during a recession, with rates below 3% they will not be able to do that. Also, with the president heavily criticizing the Fed and markets dropping when rates are raised the Fed will have a hard time raising rates further.

The economy is doing well right now. We have had decent growth and Q1 looks to be better than expected. Inflation has also remained under control and unemployment has remained low. Furthermore, economic data from around the world appears to be improving. It appears the economy is in no pressing danger. however if something does happen the Fed may have trouble reacting to it.


https://www.cnbc.com/2019/04/18/fed-is-in-worse-shape-than-economy-as-economic-expansion-hits-a-decade.html

Trump’s Nafta Revisions Offer Modest Economic Benefits, Report Finds

A government report has concluded that the Trump administration’s revised North American trade agreement would offer modest benefits to the economy. The report found that the agreement would increase gross domestic product by 0.35 percent after inflation, or $68.2 billion, and create 175,700 jobs. Some of the largest economic benefits of the pact, according to the trade commission, would come from the parts of the deal that codify the free flow of data across borders — measures that have been  supported by technology companies. Since negotiations began in August 2017, the administration has secured some substantive changes to Nafta, including modernizing protections on digital trade, adding labor and environmental protections, opening up the Canadian dairy market and adding rules to restrict governments from manipulating their currency.

https://www.nytimes.com/2019/04/18/business/economy/trump-nafta-trade.html