Trade War With China

The ongoing trade war with China has not been easy to fix. It is as well, difficult to be able to tell what president Trump plans to do, and what he will do. According to the article, Mr. Trump said his plan was to take all American companies out of China, but looking from an economic perspective, this would not be the best idea. One of our biggest trade partners is China, and with the planned rising tariffs, the domestic prices of goods will increase significantly. On top of that, China is beginning to trade more with other countries in order to replace what we are costing them. This will have a negative downturn on the U.S. economy in the long run. As proven in economics before, trade allows us to reach a potential of efficiency and production much higher than we would on our own without trade. Trump shortly after his statement took it back by saying he only wishes he imposed even higher tariffs sooner. The article states "..American leverage in the trade war is weakened by the president's failure to work with allies in a concerted approach to change China's course." Going off of this, they are right by saying this has had a negative impact because this trade dispute has impacted U.S. allies like Germany.

It appears that president Trump keeps changing his mind and/or perspective on his decisions and his thinking. This has been shown through numerous Twitter posts he has had about what he may or may not do in order to end or win this trade war. With the confusion back-and-forth, it is difficult to tell what will happen in the future regarding this trade war with China. It will be interesting to see how this will also affect prices and other allies of the U.S. as well as China. What do you think the best step forward would be?

https://www.nytimes.com/2019/08/25/world/europe/trump-offers-contradictory-signals-on-china-trade-war.html

Policymakers fret over risk to global growth from China virus outbreak

Many policymakers have spoken out about how China's virus outbreak could effect the global economy. Jerome Powell, the U.S. Fed Reserve Chair, held a conference on Wednesday, highlighting keys facts about he virus. He explained that if China's economy slows down, it will affect the U.S. economy as well as many other countries that are in connections with China.

Even though many policymakers have spoken out about the outbreak, The International Monetary Fund is being more cautious about the matter, and has explained that it is too early to tell the effects it will have on the economy. 

I think that the slow down of the U.S. economy, along with the global economy, will all depend on how quickly the outbreak is contained.

People are also comparing this outbreak to the 2002-2003 SARS (Severe Acute Respiratory Syndrome) which ended up leading to around 800 deaths. 

Many people are saying that the global economy will be hit harder this time around seeing as China accounts for a larger share of the world economy? Would you agree with this statement? Why or why not?

https://www.reuters.com/article/us-china-health-global-economy/coronavirus-outbreak-poses-risk-to-u-s-feds-economic-outlook-idUSKBN1ZS38E

Despite a Truce, US-EU Trade Relations are Still Tense

Recently, there was a tense meeting at the World Economic forum in Davos, Switzerland, and at center stage was a potential dispute between France and the United States. The US (specifically President Trump) expressed their displeasure over France's recent tax on digital services, affecting mainly US companies like Amazon, Facebook, and Google. The United States planned a response with $2.4 billion in potential taxes on French champagne and other luxuries.

This was all resolved on January 19th, with a truce of sorts between the two countries cancelling any taxes or tariffs between each other. But this did not stop any further issues. The US pressured the British government that any similar digital tax that was proposed similar to the French would not go unpunished. Britain then announced they would negotiate trade talks with the European Union before the States. With deals to formalize with China, and then Canada and Mexico, it is interesting to wonder how free these trade deals are with the leverage the American government has been attempting to use for their own benefit.

 https://www.economist.com/finance-and-economics/2020/01/25/despite-a-truce-us-eu-trade-relations-are-still-tense

U.S. 2019 GDP was Slowest Growth in 3 Years

Reporter, Jeff Cox, analyzed the percentages of growth of the the past three years and the main contributors that have caused these fluctuations between them. In 2019,the U.S. fourth quarter GDP only rose 2.1%. Overall, 2019 had only 2.3% of growth which is the slowest it has been since 2016. It has been reported that this is directly due to lack of business investments and is a consequence of the major trade war with China. Due to the trade war, imports fell 8.7%. Not only has the trade war impacted imports but it has severely impacted private domestic investment. Investments fell 6.1% this past quarter which is a huge difference from the 1% it dropped the previous quarter. To think things couldn't get any worse, the national debt is now past $23 trillion. Trump has been pushing for Jerome Powell to cut interest rates in order to help pacify the debt but can that really help in the long run? 

https://www.cnbc.com/2020/01/30/us-gdp-q4-2019-first-reading.html

Stocks Fall As Global Fears Of Coronavirus

Officials have confirmed nearly 2,890 cases of the deadly virus around the world, including five in the U.S Stocks fell Monday as concerns surrounding spread of the deadly coronavirus triggered fear around the globe. The Dow Jones Industrial Average fell 384 points, 1.32%. Monday and the S&P 500 dropped 43 points or 1.3%. The Nasdaq composite also slid, falling 145 points, or 1.56%, as deaths from the coronavirus climbed to at least 80. 

Health officials have confirmed nearly 2,890 cases of the virus around the world, including five in the U.S. across four states. At its lowest level since October, the yield on the 10-year U.S. Treasury fell as much as 1.61% on Monday.As fears rise, tourism is taking a hit and airline stocks United and Delta tumbled nearly 4%, while American slid 5.3%. Travel stocks Expedia and Marriott International dropped 2.3% and 1.6% respectively.Consumer stocks with exposure in China, including Apple and Nike dipped 2.35% and 1.5%, respectively.

As the virus throws global stocks into a state of fluctuation, Will this have a further shock in the stock market due to the scale of the problem? 

https://www.usnews.com/news/economy/articles/2020-01-27/stocks-fall-as-global-fears-of-coronavirus-rise 

China’s Slowing Growth Underlines Stress Facing Its Economy in 2020 

According to the article posted by the Wall Street Journal on January 17, 2020, 

the authors James T. Areddy and Chao Deng try to prove China’s economy has lost 

business confidence because China’s GDP growth decreased from 6.6% in 2018 to 6. 

1% in 2019. Additionally, some private-sector economists warn that China’s economy 

could slip even further this year to GDP growth below 6%. It is the lowest level in nearly 

three decades. Even China’s government policy for this year includes finalizing a 

decade-long push to double income levels and the size of the economy from 2010, 

while lifting living standards for a remaining five million people still considered severely 

impoverished. 

The two authors try to analyze and predict the whole of China’s economy based 

on the situation of the Shenzhen market. Shenzhen’s electronics makers were hurt by 

tariffs on their goods in the US, but also by the more cautious business appetite in other 

countries. Because of the trade war between the US and China, many investors and 

companies are more careful to make investments in China. There are a number of non- 

trade factors, too, including mass protests that roiled next-door Hong Kong for more 

than half a year, which drew attention to the risk of social unrest. Shenzhen’s celebrated 

technology companies like telecommunications-equipment maker Huawei Technology 

Co. and drone maker SZ DJI Technology Co. are facing new security from the US and 

other countries. 

In order to keep the headline growth figures up, China’s government has 

invested more in construction, which carries the risk of undoing the effort to limit debt. 

In Shenzhen, policymakers are pushing construction of a new district called Qianhai, 

pitching it as an experimental financial hub in the shadow of China’s increasingly 

unreliable financial hub, Hong Kong. At the same time, Shenzhen’s exports and 

consumption weakened, dragging down the city’s growth from a pace of 6.6% by the 

third quarter compared with 7.4% in the first half of 2019. The authors cite someone’s 

opinion: “if Shenzhen’s economy can’t survive, then forget about China’s,” to guess the 

whole country’s economic problem just based on one city. 

The authors overemphasize the decrease in the growth rate of GDP in China. 

Even as the growth rate of China’s GDP decreases, it still grows. There are lots of 

internal and external factors for the decrease in the growth rate of GDP. If China has a 

good deal with other countries, such as signing a deal marking a pause in the trade war 

with the US., the trade will recover. As technology keeps developing, 5G technology 

might recover some growth rate of GDP in China. The authors are very biased to 

conclude that China’s economy is slowing, just based on the situation of Shenzhen, 

which is just a single city in China. Even in China, there remain five million people who 

are still considered severely impoverished. China has 1.435 billion of people. Five 

million is only 0.35% of the whole population. By comparison, in the US, the rate is 11.8 

percent. The authors still want to use this evidence to prove China’s economy is 

weakening. 

Do you think China’s slowing GDP growth rate in recent years will have significant 

effects on China’s economy in the future? 

https://www.wsj.com/articles/chinas-economic-growth-slows-to-6-1-as-trade-and- 

business-confidence-suffer-11579236022?mod=searchresults&page=1&pos=2 

https://www.statista.com/statistics/200463/us-poverty-rate-since-1990/

The U.S. economy still isn’t firing on all cylinders. Here’s what needs to change

https://www.marketwatch.com/story/the-us-economy-still-isnt-firing-on-all-cylinders-heres-what-needs-to-change-2020-01-18

In the past few quarters the U.S economy has been slowing down, while also the consumer side has been the reason that GDP hasn't gone off a cliff. There has been an incredible amount of turmoil due to the trade war, and because of that other factors of GDP have slowed down, most notably investment. The recent trade deals may be helpful with investment but that is unlikely to actually help enough to get the economy "firing on all cylinders". Economists are still hopeful that with time that the economy will get back to what they think it can be at. What do you believe businesses will be doing in the upcoming quarters in terms of investment? And along with that, what do you think will be happening to consumer confidence if investment does increase/decrease?

China Poised to Buy More From U.S., at the Expense of U.S. Allies

As the United States and China have reached a temporary truce in their costly trade war, Beijing has agreed to buy $200 billion of American-made goods in over two years. Critics wonder how China can continue with its commitment to purchase a large quantity of goods from the United States over a short period of time. Simple, by reallocating orders that have gone to American allies (agriculture for Latin America and manufactured goods from Europe and East Asia) to American exporters and the Chinese government's ability to tell state-run companies to purchase more American goods.

But with the signing of Phase 1 deal between the two countries, American allies will soon face a loss of a substantial amount of business that they have enjoyed the past few years with China when they decreased imports of American goods and found other substitutes in Europe and Latin America. Other than the loss of China's giant consumer economy with the trade deal, American allies also dislike the continuation of the 25% tariffs the United States has on a wide range of Chinese-made goods subsidized by the government. The tariffs could divert the Chinese-made goods to Europe and other places when the allies would rather export their own goods instead of being flooded by Chinese alternatives.

Is the beginning of the U.S.-China trade agreement alleviating the battered global economy or is it undermining the international trading system?

https://www.nytimes.com/2020/01/23/business/economy/china-us-trade-deal-allies.html

World financial markets rocked by China coronavirus

https://www.theguardian.com/business/2020/jan/23/financial-markets-china-coronavirus-outbreak-economy


There is a new virus outbreak that started in one of China's booming car manufacturing city. With the growing concern over the spread of the virus, China is trying to contain the virus and shut down four other cities, and also banned travel during the Lunar New Year, where people are expected to travel across the country to celebrate with their friends and families. With this travel ban, people are now fearing that this virus would affect economic growth and slow down the economy. But, China has dealt with a similar situation before in the 2003 Sars virus outbreak, which caused an estimated decline in China's GDP growth between one and two percentage points. But, it's a different time now and China is a booming economic giant for countries worldwide. There was a strong recovery following the Sars outbreak and this gives hope to people that the coronavirus may also have little impact if it can be contained. According to some of the economists, if this virus is not contained, tourism, retail sales, and travel would be hit in the next few months.
Do you think this coronavirus could be contained and how big of an impact would this virus had on the world's economy?

Brexit Leading Firms to Set Up Shop in Germany

According to an article put out by Reuters , with impending Brexit deals to be made over the next year, Germany has also reported around two dozen British-based firms opening offices in Germany, which could lead to offering at least 680 new jobs. For Britain, this could be signaling a disdain for the upcoming Brexit, while for Germany it will be a great way to capitalize on their close trade partner leaving the European Union. Most of these companies were in the Finance and Business Services industry, a little under a third being IT Services, and the other 40% being a mix of other industries.

It is important to note that these moves were likely in response to potential new tariffs and taxes to be paid through the exportation of good to Germany and the EU. In addition to this, Germany is the UK's second largest partner to whom they export goods. Do you believe that this could signal economic trouble lying ahead for the UK, or will their "business as usual" promises come to fruition?

Washington and Brussels put pressure on Brexit Britain

As Great Britain plans on exiting European Union on January 31st 2020, it hopes to improve trade relations with United States. In order to achieve this goal, Great Britain will have to comply with United States standard of trading which includes no digital tax on American companies operating in United Kingdom, abort its plan on letting Chinese company Huawei plant 5G cellular networks in U.K. and finally put maximum pressure on Iran so that it proves its loyalty to Washington. These trade terms aren't favorable and so Chancellor Sajid Javid hopes to improve trade with European Union bloc according to his recent talk at World Economic forum.However, EU is giving a tough time to U.K as European commission is planning to block U.K. from securing same rights as other European countries for, they fear that U.K will gain competitive advantage over European bloc and eventually move away from trading with her European counterparts. With the current scenario laid out, it is fascinating to see IMF being optimistic of Brexit Britain performing well above than France and Germany. Do you think IMF prediction of Brexit Britain would turn out true with all constraints imposed by Washington and Brussels? https://www.ft.com/content/6a9800c2-3d16-11ea-b232-000f4477fbca

Following the trade war with China, Trump mentions that he is interested in possibly posing automotive tariffs on European countries. The UK and Italy have discussed tax delays to prevent this from happening; however, Treasury Secretary Steven Mnuchin said that that will cause Trump to implicate the tariffs sooner. Trump is also discussing making some tax cuts again, while Jerome Powell has raised Federal Fund Rates. Trump said if they didn't GDP would have been higher. What positive or negative effects do you think economic tariffs on exports to Europe would have on our economy?

China's birth rate hits lowest level in modern history

According to Chao Deng of Marketwatch.com, China's birht rate fell by 4% in 2019, marking the third consecutive year of birth rate decline. While the Chinese government is putting in efforts to reverse this trend, it is already having consequences: nearly one fifth of China's population is age 60 or older, the population is swiftly aging, and the workforce is shrinking as more Chinese citizens retire. This may have negative impacts on the economy due to the price of labor increasing, not to mention healthcare as a larger portion of the population is elderly. Japan and South Korea apparently face similar problems, but on a much smaller scale than China is facing. They do, however, have a story to tell; other Asian countries who have experienced this phenomenon have shown that once declining, it is extremely difficult to get birth rate back up. This will likely bog down development in China to some extent, and experts at Capital Economics predict that China's growth rate will decrease by half a percentage point each year until 2030.

What do you think the Chinese government can do, if anything, to manage the impacts of this trend? What other consequences can you see arising from it that are not discussed in this article?

https://www.marketwatch.com/story/red-flag-for-economic-growth-as-chinas-birth-rate-hits-lowest-level-in-modern-history-2020-01-21

U.S. Union Membership Hits Another Record Low

Union membership has been declining for the past couple of decades, however, the number of union members fell by 170,000 in 2019 which was a year when US employers added more than 2.1 million jobs. This reduction in the share of the workforce in labor unions now amounts to 10.3%, the lowest portion recorded since 1983. Marick Masters, a business professor at Wayne State University, said, "The big picture presents the now familiar story of a gradual decline in unions across most industries". 

Considering that we are still experiencing the largest economic growth period in history, more and more people are entering the labor market which in context should lower working wages. Do you expect there to be a resurgence in unions in the near future? Is the decline in union membership responsible for stagnating wages?

China’s Improving Economic Data Masks Deeper Problems

https://www.nytimes.com/2020/01/16/business/economy/china-economy-gdp.html

Despite the increase in consumer spending, favorable trade deal with the U.S and standing as the second-largest economy, China is still facing a battle with its slowing economic growth figures. Since China opened up to the world about four decades ago, it has been facing some major challenges, and the largest one being their tendency to borrow. The country is loaded with trillions of dollars of debt, and this resulted in an annual growth rate of 6.1 percent reported last Friday. This is the slowest pace it has faced in the past 29 years, and careless borrowing has harmed the economy in the short run. As a result, China's corporate sector has been struggling to pay their bills as they are strapped for cash. The auto and property industry, two key drivers of growth, have been struggling with their sales alongside. Chinese companies will find it expensive to borrow in the future if their current debts are not curbed. Certain companies did not improve their sales, despite having borrowed large sums of money, and Larry Hu, chief economist at the Macquarie Group said these red flags indicate that the economy's recovery Is not likely in the next four quarters. 

What measures do you think China might take to alleviate the economic pressure from their debts?

US Economic Growth to top 3% in 2020?

The White House's top economic advisor, Larry Kudlow, believes that the US economy has a very realistic chance of topping 3% in 2020. This would be a very significant achievement, as we saw slower than normal growth in 2019 that caused many to believe a recession was looming. However, after a strong Q4 in 2019, partly due to holiday sales, the stage has been set for a promising 2020 economy. A major contributor in that assumption would be the manufacturing industry, which has seen an unexpected rise in output numbers early in 2020.

Do you see his as a sign of the threat of a nearby recession disappearing?

Why Iran's Economy Has Not Collapsed Amid U.S. Sanctions And 'Maximum Pressure'

https://www.npr.org/2020/01/16/796781021/why-irans-economy-has-not-collapsed-amid-u-s-sanctions-and-maximum-pressure

The U.S. has imposed many sanctions on Iran which has put Iran's economy in jeopardy. Perhaps, the U.S. was too optimistic that these sanctions would crash Iran's economy and end the regime. This is partly due to the fact that Iran has been under sanctions since the 80's, so they know how to find ways to operate even with harsh U.S. sanctions. This year Iran's GDP is on track to decrease 9%. But during the hostage crisis they're GDP decreased 50% and the economy still didn't crash. Part of the reason they have been able to stand these harsh sanctions is because they have good relations with some regional partners that help keep them afloat. Do you see Iran's economy failing in the near future or do you think they'll be able to hold of for the long run?

Tour Operators say it's too soon to gauge Notre Dame Fire Impact

While an earlier post in the blog assessed how much it would cost to repair the Notre Dame Cathedral, I think it would be interesting to view its effect on the economy in other ways such as tourism. Notre Dame is the most popular destination for tourists in Paris with 30 thousand visitors each day and 13 million each year. While the cathedral is free to visit you can enter the crypt and tower for $6 and $9 respectfully. If 10% of visitors were to visit both this would yield around $16 million dollars in revenue. While it is unclear how long the cathedral will be closed it is easy to see the revenue that will be lost in the meantime.

In an article by Jeri Clausing takes a look at analyzing this impact on tourism. According to a tour director in the article it is too early to tell if the fire will affect the tourism of Paris at large. This is coming a year after Paris cultural attractions saw a 5.9% increase in visitors. The article mainly concluded that Paris has much to offer and it is unclear what effect the fire will have on tourism as a whole. Do you think Notre Dame will have a significant impact on tourism in the region or will Paris not see much of a change while the cathedral is being repaired?

https://www.travelweekly.com/Travel-News/Tour-Operators/Tour-operators-too-soon-to-gauge-Notre-Dame-fire-impact

US economy grows by 3.2% in the first quarter, topping expectations

The U.S economy grew at faster rate than expected. First quarter gap expanded by 3.2%. It was the first time since 2015 that first-quarter GDP topped 3%.

Exports rose 3.7% while import decreased by 3.7% in the first quarter. There was also a strong lift in investments in intellectual property products. Disposable personal income increased by 3%, while prices increased by 1.3% when excluding food and energy.

The data was being compared to how the economy was during the longest gov't shutdown. The report helped offset fears of slowing global growth said Alec Young.

https://www.cnbc.com/2019/04/26/gdp-q1-2019-first-read.html

Is Iraq's oil boom in Trouble?

Oil output has doubled over the past decade, putting Iraq to become the world's fourth-largest producer by 2030. They would trail only The US, Saudi Arabia and Russia. However, they are having a hard time finding water sources to produce their oil. This means that their production rates will struggle and continue to struggle if they can't find something to do about it. Iraq would need to produce an additional 3 million barrels a day of water in order to reach their goals.
They already use 5 million barrels of water a day to ensure there's enough pressure in the underground reservoirs to extract the oil and it needs as much as 1.5 barrels of water for every barrel of oil.
However, and more interestingly, they rely on imports from neighboring countries for 70% of the water it consumes and even more frightening, the River levels have fallen by up to 40% in the last 20 years.
What do you think Iraq should do and what can they do? Is there a solution? https://www.cnn.com/2019/04/25/business/iraq-oil-water-shortage/index.html

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