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Showing posts with label GDP. Show all posts
Showing posts with label GDP. Show all posts

Friday, February 2, 2018

The Hits Just Keep Coming

Job growth up 200,000 in January, better than expectations, and wages up

  • Nonfarm payrolls rose by 200,000 in January, beating analyst estimates, while the unemployment rate held at 4.1 percent.
  • More importantly, average hourly earnings increased 2.9 percent on an annualized basis, the best gain since the early days of the recovery in 2009.
Nonfarm payrolls grew by 200,000 in January and the unemployment rate was 4.1 percent, while wages saw their biggest jump since the end of the Great Recession, the Bureau of Labor Statistics said in a closely watched report from Friday.
Economists surveyed by Reuters had been expecting jobs growth of 180,000 and an unemployment rate of 4.1 percent. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged higher to 8.2 percent, the highest level since September.
In addition to the solid payroll growth, average hourly earnings were up 0.3 percent for the month, matching estimates and reflecting an annualized gain of 2.9 percent. That was the best since mid-2009 as the two-year economic slump was coming to a close. However, the average work week fell two-tenths to 34.3 hours.
Markets were unimpressed with the report, with stock futures continuing to point to a sharply lower open on Wall Street and bond yields rising.
"Overall, it was really fabulous," said JJ Kinahan, chief market strategist at TD Ameritrade. "People are just looking for an excuse to sell."
The prospect of rising interest rates due to inflation pressures could be just that catalyst, he said.
"We've all talked for many years saying we're going to raise rates, that raising rates will be good for the economy," Kinahan added. "I find it quite odd that the narrative around the market has changed quite a bit."
The numbers come amid an expected acceleration in growth for the U.S. economy. The Atlanta Federal Reserve is expecting a GDP gain of 5.4 percent in the first quarter, which would be the best increase since the recovery began in mid-2009.
Within the jobs report, Wall Street and policymakers are watching wage numbers closely. While job gains have been solid and consistent, salary growth has been elusive. This report could change the narrative and might push the Fed to get more aggressive with interest rate hikes.
The report comes after a disappointing 160,000 in December (revised up from 148,000) and two days after ADP said private payrolls increased by 234,000. The November gain of 252,000 was cut from 252,000 to 216,000, making the net from the two revisions minus-24,000.
The household survey showed an even bigger gain in employment, with a gain of 409,000. The rolls of the unemployed grew by 108,000.
Construction reported by the biggest gain by sector with 36,000. Bars and restaurants added 31,000 and health care was up 21,000. Manufacturing also showed a gain of 15,000 and durable goods-related industries added 18,000.
"Perhaps the biggest positive surprise on hiring is the continued surge for the goods-producing sector with manufacturing and construction leading the way," said Mark Hamrick, Bankrate.com's senior economic analyst.
While the labor force participation rate held steady at 62.7 percent, those counted as not in the labor force popped, jumping 153,000 to 95.7 million.

Monday, January 15, 2018

Economists Agree--Trump Is Driving The Economy




ECONOMISTS Trump Is The Reason 

For Economic Growth, Not Obama

  • 01/15/2018 
  • Source: Town Hall
  •  
  • by: Matt Vespa
ECONOMISTS Trump Is The Reason For Economic Growth, Not Obama
CNBC’s economic survey released prior to Christmas showed that for the first time in over a decade a majority was optimistic about the economy, and there was a shift as to who should receive credit for the booming economy: Donald J. Trump. The economic growth for the fourth quarter was near four percent. Over 100 companies gave bonuses of at least $1,000 or more to over a million workers, even some part-timers got a piece of that action. The GOP tax bill, which the Left said was going to be a prelude to Armageddon, was exactly the opposite for the American worker, who the Democratic Party decided to bet against to try and undercut Trump. Over 90 of middle class Americans will be receiving a tax cut. The Democratic Party is going to have to explain that move, especially when this tax bill becomes more popular.

As for the economy, economists said we should expect to see unemployment continue to go down and the economy to grow in 2018. Economists credit two things: President Trump and his tax bill. For Obama, his polices received good grades for providing financial stability, though they led to anemic economic growth and job creation  (via WSJ:
A year ago, President Barack Obama got mixed grades as he prepared to leave office after eight years. Most economists surveyed by the Journal in January 2017 saw his policies as positive for financial stability, positive or neutral for job creation, negative or neutral for GDP growth and negative for long-term potential growth.

Democrats are confident about the 2018 midterms. With the current numbers now, they should be—but we’re 10 months away from the midterms elections. Anything can happen.  

Tuesday, December 19, 2017

Do You Agree With This List Of Trump's Accomplishments/Fails?

YEAR ONE: The Complete Good Trump/Bad Trump List

 President Donald Trump speaks before a swearing in ceremony for the new Secretary of Homeland Security Kirstjen Nielsen, in the Roosevelt Room of the White House in Washington, DC on Friday, Dec. 08, 2017.
Jabin Botsford/The Washington Post via Getty Images
As we reach the end of President Trump’s first year in office, it’s time to take stock: how well has he done? The emerging popular view among people on the right is that Trump has had a wildly successful first year, but that his successes have been ignored by a recalcitrant Leftist media seeking his destruction. There’s certainly some truth to that. But it’s also true that Trump has undercut himself repeatedly, and that his policy legacy may well be reversed by a Democratic swell at least partially of his own making.
So, here are the pros and cons of Trump’s first year – the first year Good Trump/Bad Trump.
Good Trump:
1. Justice Gorsuch. Despite recent reports that Trump nearly pulled Neil Gorsuch’s nomination thanks to Gorsuch’s comments on Trump’s behavior as president, he didn’t – so who cares what he said behind closed doors? Gorsuch is a major victory for the president, and was for the first ten months of his administration, the only major win the president could point to.
2. The Defeat Of ISIS. Trump hasn’t gotten the credit he deserves for this, but ISIS’ territorial holdings are now non-existent. As Ross Douthat, no Trump acolyte, wrote at The New York Times, “If you had told me in late 2016 that almost a year into the Trump era the caliphate would be all-but-beaten without something far worse happening in the Middle East, I would have been surprised and gratified.” ISIS has carried out terrorist attacks abroad, but their star is obviously on the wane, and Trump’s strengthening of the Obama strategy is largely to credit.
3. The Soaring Stock Market. The stock market has been breaking records all year. It’s difficult to credit Trump with that, unless you also want to credit President Obama for a stock market that increased 250% over his term, but there’s little doubt that a positive business climate has been unleashed under President Trump and a Republican Congress, and that shows in the market.
4. The Excellent Growth And Unemployment Statistics. Similarly, unemployment and growth statistics have been terrific since Trump’s presidency began – we’re at nearly full employment, and last quarter, the GDP grew at nearly 4 percent. That has a lot to do with Trump’s decisionmaking with regard to cutting regulations and pursuing policies that would put more money into business’ pockets to spend and invest.
5. Cutting Regulations. Trump brags that he’s cut 22 regulations for each new one created. That is indeed a massive achievement. The only problem here is that regulatory cuts can be undone if Trump were to lose in 2020 – so Trump is doing the right thing, but executive policy is also the easiest policy to reverse.
6. Curbing The Iran Deal. Trump hasn’t ended the Iran deal, but he has decertified it. This is a first step toward reinstalling sanctions, though why Trump hasn’t pursued new sanction remains a mystery. In the meantime, Trump has ardently pursued the creation of a new anti-Iranian alliance, led by Saudi Arabia, Egypt, Jordan and Israel. Obama’s Iran-led Middle East has, ironically, created serious compatibility between Israel and many of her former adversaries.
7. Announcing Jerusalem As Israel’s Capital. Trump sees that Jerusalem is Israel’s capital, both morally and historically. He fulfilled a campaign promise made by every president since Clinton. He also recognized, correctly, that most of the Arab world doesn’t care that much about Israel – they’re more concerned about the rise of Iran, and Israel is part of the alliance necessary to combat Iran’s rise. Trump’s administration has been stalwart on this issue despite media and international pressure, and Nikki Haley’s performance at the anti-Semitic UN has been heroic.
8. Opening Public Lands. Under President Trump, the government is moving to open up public lands, particularly in the West – which makes a good deal of sense considering that the federal government controls a vast majority of all land in states like Utah and Nevada. Trump has also finally opened the Arctic National Wildlife Refuge to drilling, which makes economic and practical sense – talk of environmental catastrophe in that area has been wildly overstated for nearly two decades.
9. Passing New North Korean Sanctions. Trump doesn’t have a lot of options on North Korea, but he has leveraged American power to achieve new, unprecedented sanctions at the United Nations.
10. Repeal Of The Individual Mandate. The new tax reform package contains the repeal of the individual mandate. That’s a big win for Trump politically, since he’ll be able to say he presided over the death of the most unpopular aspect of Obamacare, but it’s likely to bear mixed results in terms of policy: individual policies will become more expensive as young people aren’t forced to buy them to subsidize older people, and Republicans will have to fill the gap with government funding.
11. Tax Reform. The much-maligned tax bill will lower corporate taxes dramatically, which is necessary. It doesn’t do much on the individual side, but it wasn’t meant to – and while the media lie about the bill incessantly, Americans will feel it in their pocketbook, and businesses will feel it in their bottom line. This is Trump’s only major legislative accomplishment this year.
12. Record Number Of Appellate Court Appointments. Trump has nominated 12 appellate court judges, more than any other president historically. That’s a big win for the administration, which pledged to remake the judiciary along Constitutionalist lines.
13. Pullout From The Paris Accords. Trump pulled out of the Paris Accords, which doesn’t mean much practically, but obviously set a new course for the government internationally – we’ll no longer be signing onto pie-in-the-sky initiatives designed to eventually boil down to restrictions on American growth.
14. Travel Ban. The originally-botched travel ban didn’t help Trump in his opening days, but it eventually passed Constitutional muster, and will now be implemented in full. The ban is overbroad and underbroad, but it is better than nothing, and it’s useful for the president’s power to be restated by the judiciary in this area.
15. Unshackling The Military And Supporting Police. Trump has changed the rules of engagement for the military, changed their strategic timeline in Afghanistan, and made clear that he wants the military fully funded. That’s a major shift from Obama, and a positive one. Unlike President Obama, Trump doesn’t respond with antipathy to police departments the country over.
Bad Trump:
1. Charlottesville. Trump’s response to Charlottesville was inexcusable, both morally and politically. It helped cripple his administration practically by allowing Democrats the opportunity to shift away from him at the first available opportunity. Plus, dude, come on.
2. Trans-Pacific Partnership Pullout. While some on the right love the TPP withdrawal, Trump should have simply renegotiated it. Pulling out of TPP opened the door to China, which has rushed through – TPP was originally conceived as an anti-Chinese trade alliance, and sinking it has made nations in the South China Sea more subject to Chinese power.
3. Obamacare Repeal Failure. While the individual mandate will be gone, federal regulations on insurance companies will not be. That means a spiral in the individual insurance market barring federal subsidies. Obamacare needed to be destroyed wholesale; instead, it still stands, and in some ways, has actually been strengthened by government subsidies rather than mandates.
4. Picking Mike Flynn And Steve Bannon. Trump never should have chosen Mike Flynn for his national security advisor, and that decision has echoed down throughout the administration, thanks to Flynn lying to the FBI. He never should have chosen Steve Bannon as part of his team – Bannon is toxic, useless, and polarizing, a self-aggrandizing leech on Trump.
5. Firing James Comey. Trump shouldn’t have fired Comey – or if he should have, he should have done it immediately. Firing Comey in the dumbest possible way, then announcing to the Russians that it had to do with Russia, then announcing it had to do with Russia on national television – all of it turned out to be rather stupid.
6. Overall Russian Investigation Botchery. Overall, Trump should shut up about the Russia investigation – and he seems to have figured that out now, too late. If he’d just let the thing progress, let the media investigate the investigation, and let his allies point out discrepancies, he’d be in good shape. As it is, Americans have largely polarized along political lines about the usefulness of the investigation.
7. No Border Wall. Ann Coulter’s fighting mad over this one, and she has a right to be. This is nowhere in sight.
8. Push For New DACA. Trump struck down Obama’s unconstitutional executive order on DACA, but pledged to replace it through Congress, or reinstate it later. This isn’t exactly the tough-on-immigration policy Republicans voted for. With that said, Trump has seen a marked decline in illegal immigration thanks to increased deportations.
9. Constant Barrage Of Nonsense. From shouting “fake news” at real news to jabbering about crowd size to asking why there was a civil war to telling myths about General Pershing to a weeks-long crusade against the NFL to a fight with Lavar Ball, President Trump can’t seem to stop himself from following every rabbit down every hole. It eats up energy, it allows the press to misdirect from his accomplishments, and it tires the American people. If somebody unplugged the president’s phone, his approval ratings would jump 10 percent within two weeks.
10. Kissing Up To Putin. Trump is still making nice with Putin on a personal level, although his new national security strategy admits that Putin is a strategic enemy. Trump’s decision to downplay Russian election meddling may be self-serving, but it also may be a sop to Putin, who is in fact a rogue dictator.
11. Treating Duterte With Kid Gloves. Similarly, Trump has been rather overkind to Rodrigo Duterte, the mad leader of the Philippines, who has engaged in massive human rights abuses in his war on drugs.
12. Roy Moore Endorsement. Trump should have stayed out of this race. Instead, he jumped in just long enough to be linked with a credibly accused child molester with other serious political baggage. And Trump won’t just be linked with Moore’s loss – he’ll be linked with losses in Virginia and across the country.
13. Attacking His Own Staffers. Trump has attacked a huge number of his own employees: Attorney General Jeff Sessions, Deputy Attorney General Rod Rosenstein, former Health and Human Services Secretary Tom Price, and Secretary of State Rex Tillerson, among others. This isn’t smart. It gives the impression of an administration in chaos, even as things get done.
14. Not Staffing The Federal Government. Trump has done well nominating judges, but he’s done terribly at filling career posts at various agencies. That’s left a lot of Obama appointees in place, which puts Trump in bad position.
As you’ll notice, Trump’s accomplishments aren’t minimal – and a huge number of his setbacks are self-made and rhetorical. All of which demonstrates why Trump is beloved by his base but carries an approval rating of 35 percent, the lowest approval rating of any president at this point in modern American history (every other president since Kennedy was above 50 percent, except for Reagan in 1981, who clocked in at 49 percent). If Trump could just curb his own appetite for the spotlight and stop feeling the need to sound off like a commenter on Breitbart on every issue, he’d be in much more solid position to keep winning on the issues Americans care about. If he can't, he'll continue to polarize Americans, drive young voters away from him, and help lead to losses in the Congress that will prevent him from winning -- and may prevent his re-election, too. Rhetoric matters when you're the president, contrary to popular conservative opinion, and Trump should remember that. In fact, he should know that better than anyone else: he's a salesman first, and he's not selling himself or his accomplishments. That's a mistake he should work to rectify, if it's not too late.

Monday, November 20, 2017

Trump Economy Up Bigger Than Anyone Ever Expected

TRUMP EFFECT: U.S. GROWTH FORECASTS ON THE RISE

New York Fed projecting 3.8% GDP growth for 4th quarter

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Don’t look now, but U.S. growth forecasts are moving higher. That’s helping to support U.S. stocks.
Projections for U.S. economic growth from two Federal Reserve banks have risen in recent weeks. The Federal Reserve Bank of New York on Friday forecast that gross domestic product will rise 3.8% in the fourth quarter, up from a forecast of 3.2% a week earlier.
A separate measure from the Federal Reserve Bank of Atlanta forecast 3.4% growth last week. Research firm DataTrek noted that the rival forecasts are outpacing projections from human economists, who on average expect 2.7% growth for the quarter.

Tuesday, May 31, 2016

Article 1 Of 3 Showiing Economy Is Not Working

Yardeni: US Operating on 2 Cylinders

Image: Yardeni: US Operating on 2 Cylinders (DPC)
By Dr. Edward YardeniTuesday, 31 May 2016 08:21 AMMore Posts by Dr. Edward Yardeni

The demand side of the GDP accounts shows that the U.S. economic engine has six cylinders: consumer spending, residential investment, capital spending, inventories, net exports, and government spending. In recent quarters, it seems like most of the torque has been provided by the first two cylinders, while the others have been sputtering.

On the income side of the GDP accounts, there are also six cylinders: labor compensation, dividend income, rental income, interest income, and corporate profits. Actually, there are only five cylinders on a pre-tax basis; on an after-tax basis, the sixth cylinder is income redistribution. In recent quarters, four of them have been humming along just fine, while interest income and corporate profits have been sputtering.

Ideally, all the cylinders should be well tuned. However, this rarely happens, and when it does, it doesn’t happen for very long. Nevertheless, if the economy gets enough power from enough of the cylinders, there’s no need to worry about stalling out, though the economy’s cruising speed may be somewhat disappointing. Debbie and I think that’s the current situation.

Let’s look underneath the hood:

(1) The new cruise speed. Real GDP was revised higher for Q1 from 0.5% (saar) to 0.8%. On a y/y basis, it rose 2.0%. That’s more or less what it has been doing since mid-2010, when the bears started growling that 2% was the economy’s stall speed. That was true in the past--whenever growth slowed to that speed, a recession followed. So far, 2% appears to be the “new normal” economy’s cruising speed. Today’s economy hasn’t been able to travel in the old normal’s fast lane of 3%-4% growth.

The big drag on growth during the current business cycle has been weak government spending on goods and services. Excluding this category, real GDP grew in a range between a low of 1.8% during Q2-2013 and a high of 4.0% since mid-2010, and averaging 2.9%. However, currently, it is back to the bottom of that range.

(2) Wages accelerating as profits slow. The National Income and Product Accounts (NIPA) show that the demand side of GDP must be equal to the income side of GDP, i.e., Gross Domestic Income (GDI) plus a small statistical discrepancy. GDI is equal to National Income plus Consumption of Fixed Investment. The statistical discrepancy between nominal GDP and GDI has been negative since Q1-2011, and hovering around 1.5% of GDP since 2012.

During the current economic cycle, the share of pre-tax labor compensation in national income fell from 66.2% during Q4-2008 to a low of 60.9% during Q3-2014, which matched its Q4-2011 reading--with both the lowest since Q1-1955. Over the past six quarters through Q1-2016, this share has risen smartly back to 63.1%.

Meanwhile, the share of pre-tax corporate profits from current production (i.e., on a cash-flow basis) in national income jumped from a cyclical low of 8.4% during Q4-2008 to a cyclical high of 14.5% during Q4-2011, which was the highest since Q4-1950. It remained around there, but then dropped down to 12.0% during Q1-2016, mostly over the past six quarters.

On a y/y basis, labor compensation is up 5.0% while profits are down 5.8%. Workers finally may be gaining income share as the labor market has tightened, boosting both employment and hourly pay. This development is squeezing profit margins.

(3) Consumers on a healthy joy ride. This certainly explains the strength in real consumer spending, which rose 2.7% y/y during Q1, outpacing overall real GDP growth. In current dollars, that growth has been led by consumer spending on health care, which is up 4.8% y/y, while total consumer spending is up 3.8%. The rising share of consumer spending in nominal GDP over the past four and a half decades is all attributable to health care. The overall share of consumer spending has risen from a series low of 58.5% during Q1-1967 to 68.6% during the first quarter of this year. Excluding health care, the share has been hovering in a range between 53% and 56% over this entire period!

Real consumer spending excluding spending on health care goods and services has slowed recently, and may continue to do so as the average age of the US population increases because people are living longer and the fertility rate is relatively low. Older people are likely to spend more on health care and less on everything else. Health care spending, in current dollars, now accounts for a record 19.0% of disposable personal income, up from 14.4% 20 years ago.

(4) Business tapping the brakes. The recent downturn in the profit margin and the long-term uptrend in consumer spending on health care may weigh on business spending. Nonresidential investment is driven by profits. A profits squeeze attributable to rising labor costs could dampen business enthusiasm to increase plant and equipment capacity. If the economy’s fastest growth comes from consumer spending on health care, that might not have multiplier effects on business spending as large as we would see from lots of spending on autos, say.

The recent data on nondefense capital goods orders excluding civilian aircraft have certainly been disappointing. In April, this series was down 5.0% y/y to the slowest pace since April 2011.

Inventory indicators also may be signaling an overhang of materials and merchandise. Commercial and industrial loans have soared 10.1% y/y ($190 billion) through mid-May. Intermodal railcar loadings have been seasonally weak recently, suggesting that inventory levels may be bloated. The ATA truck tonnage index, which spiked in February, reversed the jump in March and April.

Four of the five Fed business surveys are available for May, i.e., Kansas City, New York, Philadelphia, and Richmond. We average them together and found that they are relatively well correlated with the national manufacturing PMI. The latest available data for the three available surveys show that the average of the composite indexes fell from 4.5 last month to -4.2 this month (Fig. 15). The average of the orders indexes fell from 6.8 to -2.6. The employment index edged up from -5.1 to -2.6, remaining below zero for the 11th consecutive month.

Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research. To read more of his blogs, CLICK HERE NOW.
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