A very timely discussion about why the private sector cannot collect information in the same way as the government can. This ties nicely into our discussion of perfect markets where information is necessary for the efficient functioning of markets. Private firms can and do provide some statistics, but the article argues that many area are neglected by the private market. One can classify this as an example of positive externality where a social benefit of information is greater than the private benefit to a firm generating the information. Hence, we would expect that information would be undersupplied and overpriced compared to a situation where firms could capture the externality. Perhaps that is a justification for the government to provide information.
Monday, September 8, 2025
Sunday, September 7, 2025
The Myth of American Deindustrialization
Manufacturing in the United States has fluctuated in recent years, as US-based businesses moved labor-intensive manufacturing overseas. These are profit-driven changes to produce low-cost goods for low-income households. Recently, the POTUS has debated the security behind industrial supply chains and wants to "bring factories back" to the United States. Data released by the US Bureau of Economic Analysis (BEA) estimates that by 2024, stock in US direct investment in manufacturing abroad was $1.1 trillion. While China was estimated to run at $200 billion. This is because overseas industrial operations are not included in national accounts and could be the reason why US-based workers felt these consequences more than the US stock markets.
If we try to bring old manufacturing back to the US, it will only hurt the American people. It was a smart move for the US to abandon manufacturing when we did. As technology advanced, the employment per output shrank dramatically. During Germany's run as a top manufacturer, it only saw a rise in unemployment numbers. As higher-value goods were being produced by robots, fewer workers were needed for their skills. Will large American corporations continue production internationally, or will trade tensions bring labor-intensive manufacturing back to the United States? Who will be the most affected by these changes??
https://www.project-syndicate.org/commentary/us-manufacturing-globally-dominant-deindustrialization-a-myth-by-jorge-arbache-and-otaviano-canuto-2025-09
Wall Street sees September rate cut as sure thing — CPI inflation data will have much to say about what comes next
Markets are bracing for September to be the month that the Fed decides to cut the interest rates after the weakest jobs data in years was reported for August. There was just a 22,000 payroll rise, and traders see a 100% chance of at least a 25-basis point cut and even some odds of a 50-basis point move. This is a signal of how quickly the opinions have shifted to the thought that the labor market might be cooling down. Fed officials are still claiming that the upcoming CPI will be crucial in determining how to adjust the pace of the cuts. Investors feel that with soft labor data and sticky service inflation, the picture and indicate a drop in interest rates.
In the longer-term tariff, related price pressures pose a key risk. More analysts warn that if more of the tariff impact filters through to consumer prices, core inflation could remain above the Fed's 2% target. This would limit how far policymakers can go. Markets have penciled in multiple cuts into 2025-2026; however, these cuts may be overly optimistic. Gradual cutting should support the equity markets in the short term, given the weak labor data and persistent inflation that will define how aggressive the Fed can be.