US to Start Trade With Kenya to Counter China's Influence

Trump's administration announced that they would begin talking about a free trade deal with the purpose of countering China's influence in Africa. The deal would be the second pact with an African country since 2004 behind Morocco. The agreement won't have an major impact on the US economy overall since Kenya's is the US' 98th largest trading partner in goods. Kenya's major American imports include aircraft, machinery, and agricultural goods. The US buys apparel, tree nuts, and coffee. Trump and his administration believes that this would be a blueprint for other trade deals in Africa and a way to counter China's influence on the continent. Do you agree with this deal?

https://www.nytimes.com/2020/02/06/business/economy/trump-kenya-trade-talks.html

Europe's Economy Vulnerable to China Shock

An article published by CNN Business discusses the negative impact that the decline in China's economy due to the coronavirus could have on Europe's economy. At the end of 2019, Germany's economic growth came in at a worryingly low 0.6% due to struggles in the auto industry, a huge player in German GDP. This concern now widens as China is one of Germany's largest partners in this industry. There is also added stress because of the U.S.-China trade war and Brexit, that could also impact auto sales. Before the outbreak of the coronavirus, Germany was set to increase its economic growth in 2020. However, now that the extent of the virus is still unclear, it is unlikely for the economy to improve. Experts argue that a recession is possible in the coming years.

Do you believe that the impact of the coronavirus could influence recession in Germany or other countries as the article states?

https://www.cnn.com/2020/02/14/business/europe-gdp-germany/index.html

Fed Chief Issues Stark Warning to Congress on Deficits

Recently, the chairman of the Federal Reserve, Jerome Powell, testified to Congress that the federal budget deficit is reaching a point where it may become difficult for the central bank “to adequately respond to a financial crisis or recession.” During his testimony, Powell also argued for curbing federal spending (due to the current high levels of economic growth). Without this measure, as noted in the article, it will become more difficult for the government to use fiscal policies to stabilize the economy, but contractionary policies designed to combat the deficit could “support the economy’s growth over the long term.” Finally, even with the federal deficit concerns, Powell is confident in a sturdy America “that is likely to hold steady amid a series of global threats.”

https://thehill.com/policy/finance/482617-fed-chief-issues-stark-warning-to-congress-on-deficits

Wage gains for low earners have helped sustain America’s economic expansion

The US's economic expansion has been going on for 128 months, which is the longest on record. This has not come easily though. Last year, personal consumption kept us in economic expansion, while business and residential-construction investment decreased. Spending has been on the rise because low earners have been seeing an increase in wages. High earners are not seeing as significant of a wage increase as low earners. That being said, inflation has slowed down recently, which suggests demand is low. Economists are trying to figure out the reason for the weak demand, but it is hard to pinpoint the exact reasoning. One thought is that income inequality has played a role.

With the way the economy is expanded, do you believe the income equality will begin to decrease? How much longer do you think we will stay in an economic expansion?

https://www.economist.com/finance-and-economics/2020/02/13/wage-gains-for-low-earners-have-helped-sustain-americas-economic-expansion

Can Technology Solve Economic Disparity? 

There has been debate about how the technology could solve economic inequality. In Latin America, new technology tools are being used to improve economic mobility. A 22 year olds named Ignacio Martinez saw how recruiting process in Latin American is inefficient. He and two other associates created Alana, a Tinder-like app for job market in Mexico, where recruiters get access to filtered qualified workers who matched the required skills. Workers can also obtain what skills they need to develop and guidance through the app. There are already more than 60,000 users in Mexico. While this app was being used more in Mexico City, other experts has concerned that technology alone can't boost economies. Because technology also threaten job security and increasing the inequality worldwide. So, do you think technology could replace all jobs in the future or how could technology affect the job market in the future?

https://www.usnews.com/news/best-countries/articles/2020-02-14/technology-is-being-used-to-fight-economic-inequality-in-latin-america

Rents lift U.S. inflation; Slight rise in unemployment

Consumer prices in the U.S. picked up this past month. At the same time, the number of U.S. citizens filing for unemployment rose within the past week. According to the article, these two factors suggest that the economy is in stable condition. A condition so stable that the Federal Reserve could keep interest rates on hold this year. Jerome Powell had recently stated, "the economy is in a very good place, performing well. Over the next few months we expect inflation to move closer to 2%." Last week the government reported that 225,000 jobs were created last month. The unemployment rate rose to 3.6% as more people decided to enter the labor force. Despite the slight increase, the labor market has been on an 11 year expansion and consumer spending has been inclining right along with it. It was reported that rent had been rising about one-tenth of a percentage for the past few months which has had an impact on core inflation.https://www.reuters.com/article/us-usa-economy/rents-lift-us-core-inflation-weekly-jobless-claims-rise-slightly-idUSKBN2071XI

Alphabet's Google fights against EU Anti-trust fines

In a recent article from Deutsche Welle (DW), they describe how the European Union has come with an antitrust case against Google to the amount of fines of $2.6 billion (USD conversion). The European Union General Court in Brussels alleges that Google is unfairly using their Google Adsense advertisements across the internet to promote buying from Google's own price comparison marketplace, while giving a disadvantage to other smaller producers advertising on the same platform.

This is not the first time Google has been scrutinized in terms of violating other European Union antitrust laws. In 2018 the company was forced to pay €4.3 billion for abusing their market dominance in the mobile services industry.

Recently, Google has been able to convince the General Court to overturn one of the three fines, and is still battling on the other two. This has started a conversation regarding what types of changes must be made in a modern marketplace which has become dominated by tech giants. Is it up to Google to portray all advertisements and products in a fair and just manner, or could they continue to control their own service as they see fit, forcing others to adapt in their own ways to market their products effectively?

A Weak Health-Care System Complicates China's Coronavirus Battle

While the Wuhan virus has spread across China in the past few months, one of the main facets of the economy that has been tested the most is the healthcare system. After the SARS outbreak in 2003, the Chinese government has begun issuing expanded state-funded insurance schemes. Now, more than 95% of Chinese are covered. Out-of-pocket payments have fallen around 60%, and general medical expenses have fallen 30%.

However, the issue remains with those at the lower ends of the socioeconomic class; the costs are crippling for the poorest of Chinese people. This was highlighted by a pregnant woman dying from the virus after her husband decided that her bill was no longer affordable.

On paper, the country's 2.6 doctors per 1,000 people is right in line with similar nations. Unfortunately, in between the numbers lies the problem; half of the country's doctors do not have a bachelor's degree. This issue hits smaller towns the worst, compounding the problem of not being close to major medical centers. The coronavirus is pushing Chinese healthcare to its limits, with some people avoiding hospitals because of all the sick patients and some clinics canceling appointments to treat lesser injuries.

The question remains, if this happened somewhere else, would it have been handled better? Is the system the problem, or is no developed or developing nation capable of containing this kind of threat?

https://www.economist.com/china/2020/02/06/a-weak-health-care-system-complicates-chinas-coronavirus-battle

‘Like Europe in Medieval Times’: Virus Slows China’s Economy

The title of this article serves as a perfect analogy for what is going on in China due to the corona virus outbreak. People are staying inside and not going out into the cities that drive the Chinese economy. It has been over two weeks now since China has shut down cities due to the deadly virus that is ravishing through China. As health officials suggest that this will continue to get worse is scary to think about when you take into account how terrible is has been. As everyone is still staying out of work for extra time as they were ordered to by the government, the economy is losing time they won't be able to just get back. Time will tell what the outcome of all this will be. But how do you think China would best recover from this and what could they be doing now to cushion the blow if anything? Also, what numbers should we be paying the most attention to as this outbreak continues to spread?

Stumped Growth in China

In the last few years, China's economic growth and growth expectations reached 6%. Due to the recent outbreak of the Coronavirus, China was afraid that the growth will fall and workers in China will suffer, along with even cities that do not have many cases of the outbreak. The article states that the cities that have been impacted the least by the virus should allow for migrant workers to come to those cities and resume operations. Despite the Coronavirus, economists in China predict that China will still be able to reach its long-term goals of doubling their GDP.

Economists predict that China will have a slow-down in growth by about 1%, some say it may hit 2%, but the outlook is positive in the long-run. With this being said, they are estimating this based on the hope that the Coronavirus will slow down and fade just like the SARS epidemic in 2003. Overall, it is difficult to say, for anyone, based on the current situation. It is impossible to predict a virus spread and if it will be contained or not.

Based on what the economists have stated, do you think the predictions are accurate in predicting the long-term effects? Why or why not?

https://www.aljazeera.com/ajimpact/china-meet-growth-targets-coronavirus-economist-200212080619230.html

Chairman Powell Extremely Confident in US Economy

In his latest testimony to the House Financial Services Committee, Federal Reserve Chairman Jerome Powell asserted his confidence in the US Economy stating that he doesn't have any reason to believe that markets are at any risk of a nearby recession. He went on to state that nothing about this continued expansion and growth seems unstable or unsustainable. He even believes that concerns over the trade war with China have "diminished".

However, Powell stated he is watching the potential risks of the coronavirus outbreak to the US Economy carefully and believes that it is very likely that the slowdown caused by the virus on the Chinese economy could have some carryover to the US. With that being said, Powell still wants to hold back from taking any action until the coronavirus impact is persistent.

Do you think Powell and the Fed are right being so confident in the economy right now? Should he be proactive in fighting the impact of the coronavirus on the US economy?

https://finance.yahoo.com/news/powell-testimony-february-2020-us-economic-expansion-not-unstable-or-unsustainable-165916522.html

U.S. Farmers Need to Wait a While for China’s Buying Spree

Even though China signed Phase 1 of the trade deal between them and the United States, there is skepticism about China's ability to buy as much as $50 billion in U.S. goods. And while China promises to stick their vows of buying $200 billion U.S. goods in 2020-21, many expect for a part of those purchases to be bought in the later half of the year. Not surprising that China is expecting that the U.S. will agree to some flexibility on their promises in the face of the spreading coronavirus that threatens to slow down domestic growth.

The virus and loss of domestic growth will delay any purchases that could've boosted the U.S. agriculture sector from the decline of Chinese demand for U.S. agriculture in recent years.
But until actual purchases begin, there will not be enough confidence in the marketplace to see any significant value improvement. The delay in purchases may even affect the next elections due to the agriculture sector being a huge voting bloc for the current administration. It is probably unlikely that the delay would change voting decisions much, but it is a small possibility that it may occur. 

https://www.bloomberg.com/news/articles/2020-02-03/it-ll-be-a-while-before-china-spends-billions-on-u-s-farm-goods

Fed Chairman To Talk About The Economic Uncertainties Eminating From China

On Tuesday, Feb. 11th, chairman Jerome Powell is going to Chapel Hill to face questions from the House Financial Services Committee regarding how the central bank will respond to new economic uncertainties resulting from the recent coronavirus outbreak in China. This has rekindled doubts about the global economy's prospects in 2020 as stock markets have paused after racing to records last month, and bond yields have slid, reflecting uncertainty about whether the Fed might adjust rates if the epidemic isn’t quickly contained. This will also give Powell the opportunity to update lawmakers on why the Fed is now considering changes to its inflation targeting framework. The target rate was set eight years ago at 2%, but recently, inflation has mostly undershot that goal.

Do you believe this virus outbreak will intensify the problems of the trade war with China? What industry is suffering the most from this epidemic? 

The Economic Impact of The Coronavirus

As the Coronavirus continues to spread, we are not only seeing an increase in the loss of life but also an increase in the economic impacts of the virus. The lock down of Wuhan, which has now extended to the Hubei province prevents movement of any kind. From transportation of goods and workers to business and other kinds of travel. Due to a fear of the virus many people in these areas have stopped travelling to places where they may get easily infected like: movie theaters, restaurants, shops, and restaurants. The lack of activity has impacted the owners of these businesses heavily, especially since they have to continue to pay bills and employee's salaries. The fact that the health crisis hit during the Lunar New Year break has also negatively impacted the economy due to commercial losses, since people on a break usually go out more and spend.

Some big companies like Starbucks and IKEA have already closed their operations in China.
Several international airlines have stopped offering flights to China and international hotels have been offering people refunds. In essence, there is a growing concern of the devastation that the Coronavirus might continue to have in China. Further, the stock market has dropped about 15% for the past few weeks. It is still early to be able to accurately discern whether the Coronavirus will have devastating effects on the international community. What type economic effects do you think the Coronavirus will continue to have?

https://www.bbc.com/news/business-51386575

Limited Liability Is Causing Unlimited Harm

Here is an interesting article that addresses a feature of the market economy that may be causing more harm than good for the economy overall. The idea that the author presents is that limited liability is an institution of the market economy that was created to: "encourage investment in – and risk-taking by – corporations, whose resulting innovations would benefit society." The issue with limited liability is that it creates a market failure by distorting the complete feature of the market economy.
Recognize that there is a tradeoff here: limited liability laws encourage investment and risk taking and thereby resulting in increased level of innovation (than it would be otherwise), but it comes at the expense of externalities not being internalized by corporations that are shielded by limited liability. Capitalism as an economic system has been remarkable in its ability to evolve and reform or change policies that ultimately make the system serve its citizens. This is perhaps a starting point for a discussion about the institution of limited liability and how it could potentially change and improve the economic system overall.