Private payrolls soar in January, the best monthly gain in nearly 5 years

Payrolls rose by 291,000 in the month of January 2020 making it the best month for jobs since May 2015 and exceeding predictions. Unemployment is at its lowest in more than 50 years right now. Also, the new jobs are spread out over many types of industries like leisure and hospitality, education, health services, professional and business services, construction, and manufacturing. One of the reasons why this might be happening is the good weather this winter, so more people are out looking for jobs while companies like construction and transportation are hiring more. Do you think there is a risk for unemployment being this low, or do you think there is a possibility for unemployment to lower even more in the upcoming months?

https://www.cnbc.com/2020/02/05/adp-moodys-private-payrolls-january-2019.html

Why Brexit is a chance to fix the UK economy's long-term problems

https://www.theguardian.com/politics/2020/jan/31/why-brexit-is-chance-to-fix-uk-economy-long-term-problems

With the arrival of Brexit day, there has been a stir of emotions with the nation’s decision to leave the European Union. Many view this as the beginning of economic mediocrity and geopolitical relevance for Britain, but there is still a lingering question amongst the minds of most - What if Brexit works? Brexit has been stated to be a moment of national renewal, supported by the fact that disruptive change can sometimes be good for a country. 

Many believed that Britain can perform much better independent of the European Union, since its growth rate was much slower when it joined as compared to the preceding years. Growth has been concentrated in London and South-East England, so there is opportunity for further economic progression. Borris Johnson has stated that the U.K will be leaving the single market, and working to set up its own regulations and trade deals. Brexit supporters are optimistic that leaving the EU creates space for new and improved policies, and quite possibly establishing a comparative advantage in the realms of artificial intelligence. Brexiter’s believe that this is the best chance to fix Britain’s long term problems like large trade deficits, weak investments from the outside and lack of competitiveness. Do you believe that Brexit has more positive or negative outcomes involved for Britain’s economy in the years to follow?

OPEC Scrambles to React to Falling Oil Demand From China

https://www.nytimes.com/2020/02/03/business/energy-environment/china-oil-opec.html

With the outbreak of Coronavirus, Chinese oil demand has fallen to 20% or 3 million barrels per day. This has hit oil markets really hard and fast. We are seeing the impact as Brent crude reduced its price to $56 per barrel, a fifteen percent drop in one month. This market event has concerned the officials of Organisation of the Petroleum Exporting Countries and Russia. Henceforth they will be meeting in Vienna, headquarters of OPEC on Tuesday and Wednesday. The officials want to cut back on oil production to stabilize the oil prices, especially, Saudi Arabia whose main oil exporting country is China. By reducing the crude production, these countries will see a reduction in their revenues. Although, it is too early to predict, but still, what do you think would be a likely economic outcome by implementing this economic policy?

Not Enough Homes for Sale

Currently, low unemployment and mortgage rates are to the advantage of the homebuyers. The amount of homes purchased in 2019 skyrocketed in comparison to the past three years. As a result, there is excess demand for houses and not enough supply. In fact, the inventory of existing homes are at the lowest point since 1982. Therefore, many individuals who want to take advantage of the favorable housing market have decided to build their homes from the ground up, which has hit a 13-year high.

Certain economists argue that there are positive external benefits for building homes for scratch, particularly in low-income communities where gentrification is on a rise. Three economists have determined that building one large new apartment complex in a low-income community actually reduces rent costs within 800 feet of that property. While this result is not consistent with the theory behind gentrification, the justification for this result is that the newer buildings attract relocating workers, which prevents current landlords from pricing out existing residences.

There are two very important questions that can be gathered from this. One, does an individual's right to own property justify building new homes even in areas where building more residential homes can be problematic for the local environment? Does the problem of gentrification interfere with individuals property rights (as discussed in class)? A link to the relevant article is below: \

https://blogs.wsj.com/economics/2020/01/23/newsletter-the-number-of-homes-for-sale-is-at-a-record-low/

Brexit is happening : What happens next

 In the hours before the United Kingdom’s formal departure from the European Union, hundreds of politically-minded Britons flocked to the streets and public spaces of London’s Westminster district, the centuries-old home of the country’s legislature.

It has been an often contentious and occasionally fraught three-and-a-half years since a slim majority of voters opted for a future outside the world’s largest political bloc. And on a night when that nation-altering 2016 referendum vote would become a reality, there were far more supporters of Brexit out in public than there were opponents.It has been almost half a century since the United Kingdom signed up to join other major European nations in a precursor to the EU, and the decision to begin unpicking the political, legal and constitutional threads that have bound this island nation to the European continent for so many years has proved painful for many on both sides of the English Channel. 

Boris Johnson, the prime minister who effectively surfed to power on a wave of populist resentment about British membership of the EU, broadcast a message late Friday calling the formal act of separation “an astonishing moment of hope.”He acknowledged that there would be those who felt “a sense of anxiety and loss,” but insisted that Britain’s exit from Europe was “not an end but a beginning.”

In one sense this precise moment of parting occurs only on paper, since the U.K. will continue to abide by the EU’s rules and regulations for the next 11 months during an implementation period agreed with the EU to give businesses and citizens time to adjust to as-yet uncertain new circumstances. 

What could this mean for businesses in the UK and EU and what could this mean for United Kingdom's trading activities? 

https://www.cnbc.com/2020/01/31/brexit-is-happening-what-happens-next.html

U.S. Growth at Slowest Since 2016

https://www.nytimes.com/2020/01/30/business/economy/gdp-numbers.html

While GDP continues to grow at a steady rate, that rate is frustratingly slow for many. Hovering around 2%, growth through 2019 was weaker than it was through 2017 and 2018. Even though GDP growth remains steady, it seems to be masking some weak spots in the economy. Both consumer spending and business investment slowed, while much of the growth was attributed to a temporary decline in imports. This could, in part, be due to an aging population. This is despite the White House's promises of a growth rate of 3-4%. Though there have been some instances of a growth rate of over 3% through the past couple of years due to various stimulus packages, those rates have quickly died off back down to ~2%. Of course, this raises the question of how voters will view this growth during the upcoming presidential election. Some will view the steady growth as a sign of a healthy economy, while others will say that it hasn't lived up to promise or expectation.

Many other factors could be at play, chiefly among them Boeing's struggles and the ongoing trade war with China. While President Trump's promises of a smaller trade deficit have come to fruition, many economist warn that it can fall for many reasons, not all of them being good ones. Due to a slowing American economy and shrinking demand of foreign goods due to tariffs, imports have fallen. This does not necessarily mean U.S. production has increased, only that imports have decreased relative to exports. Many businesses are hesitant to invest because they are unsure of what the future holds. This could exacerbate the sluggish economy down the road.

UK Rates Held as Brexit Clarity Shores Up Economic Surveys

The Bank of England decided to maintain interest rates amid signs of potential improvement in the British Economy because of Brexit. Although the Bank indicated it might be in a position to reduce interest rates they choose to not do so. The bank said in a statement that its Monetary Policy Committee voted 7-2 to keep the key U.K. interest rate unchanged at 0.75%. This was surprising because people expected interest rates to go down. Due to Prime Minister Boris Johnson's win during the general elections seems to have smoothed over uncertainties that prevailed prior. Johnson's majority in Parliament allowed for the success of the Brexit withdrawal bill, which has caused significant improvement in some survey data. According to the New York Times, the decision to maintain interest rates helped support the pound, which was trading 0.6% higher at $1.3093. However, it is still early to be able to determine the impact that Brexit will continue to have on the economy. In part it is due to the lack of clarity concerning the economic relationship between the EU and Britain.

I think that we can expect in the future are many negotiations during the 11 month transition period. Since Britain has a time frame to be able to deliver on a new trade agreement with the EU they will hopefully be more flexible. I believe that the results of these negotiations will influence further surveys and public opinion. Having to adapt to new immigration rules as well as big infrastructure change will only add to the pressure Britain will have to endure.
https://www.nytimes.com/aponline/2020/01/30/business/bc-eu-britain-economy.html