Why Is The Good Economic News Always Unexpected When A Republican Is President?

Yesterday The Conservative Treehouse posted an article about the July Retail Sales Report.

The article reports:

The Commerce Department – Economic and Statistics Administration – released the figures from July 2018 retail sales today (full pdf available here), showing an incredibly strong .5% increase in spending in July, bringing a 6.4% increase year-over-year;  and the results have dropped the jaws of the “experts”:

“Economists polled by Reuters had forecast retail sales nudging up 0.1 percent in July.” (link)

“Retail spending in the United States increased a half-percent during the month of July — well beyond what experts predicted.” (link)

“U.S. retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong” (link)

The article explains the reason for the growth:

As a direct result of President Trump’s multifaceted economic strategy, manufacturing companies are having to look at TCO which is “Total Cost of Ownership”. You see, President Trump is not only approaching manufacturing growth policy from the trade-agreement and investment side, his policies also approach the larger impacts on raw material, energy and labor.

This multi-pronged policy approach forces companies to look at transportation and location costs of manufacturing. In combination with more favorable tax rates; if domestic costs of material and energy drop, in addition to drops in regulatory and compliance costs of operating the business, the total operating cost differences drop dramatically.

This means labor and transportation costs become a larger part of the consideration in “where” to manufacture. All of these costs contribute to the TCO. Transportation costs are very expensive on durable goods imported. If the durable goods are made domestically, the transportation costs per unit shipped drop significantly. The TCO analysis then further reduces to looking at labor.

U.S. Labor is more expensive, yes. However, if material costs, energy costs, regulatory costs, taxes and transportation costs are part of the TCO equation – then higher labor costs can be offset by the previously mentioned savings.

Economic policies matter. If you want to see this kind of growth continue, elect conservative Republicans to Congress in November. If you want to see this kind of growth come to a screeching halt, elect Democrats–they will take back the tax cuts, put back the regulations, and move to impeach the President. At that point, we will have at least two years of the same economic disaster we saw under President Obama.

Misplaced Values

How much is a human life worth? We live in a world where some countries kill their elderly simply because they are a financial burden on the younger generation. In some countries it is legal to kill children because they have birth defects or other issues. Who decides which lives have value and which do not?

On Monday, CNS News reported:

At the event promoting opposition to President Donald Trump’s Supreme Court nominee Brett Kavanaugh, the former First Daughter of President Bill Clinton credited legalized abortion for helping add trillions of dollars to the U.S economy because women who had abortions were more inclined to enter the labor force:

“Whether you fundamentally care about reproductive rights and access right, because these are not the same thing, if you care about social justice or economic justice, agency – you have to care about this.

“It is not a disconnected fact – to address this t-shirt of 1973 – that American women entering the labor force from 1973 to 2009 added three and a half trillion dollars to our economy. Right?

“The net, new entrance of women – that is not disconnected from the fact that Roe became the law of the land in January of 1973.”

Thus, no matter what other things Americans may care about, everyone should appreciate the economic value of legalized abortion, Clinton said:

“So, I think, whatever it is that people say they care about, I think that you can connect to this issue.

“Of course, I would hope that they would care about our equal rights and dignity to make our own choices – but, if that is not sufficiently persuasive, hopefully, come some of these other arguments that you’ve expressed so beautifully, will be.”

Could one on those aborted babies have grown up and found the cure for cancer, dementia, Parkinson’s Disease? Who did we kill? Could one of those babies have grown up to find the key to nonpolluting green energy, preventing some valuable species from going extinct, or finding a key to longer, healthier living? How much would those discoveries have added to the economy?

The article at CNS News includes an update:

In response to tweets critical of her remarks, Chelesea Clinton declared that “Pro-choice is Pro-life” and that “Reproductive rights have always been about economic rights.”

We have sold our souls for a mess of pottage.

Why Energy Independence Matters

The Washington Times posted an article today about Iranian military exercises in the Straits of Hormuz. The Straits of Hormuz is significant because 35% of all seaborne traded oil, or almost 20% of oil traded worldwide flows through the Straits of Hormuz. This is something to watch as the situation in Iran becomes more volatile.

This is today’s Dry Bones cartoon:

The Washington Times reports:

Iran’s navy sent dozens of small boats into the Strait of Hormuz on Thursday, dramatizing its ability to choke off the strategic Persian Gulf waterway — a move that could send global oil and U.S. gasoline prices soaring — and escalating the confrontation with the Trump administration for withdrawing from the 2015 nuclear deal.

U.S. officials said the naval exercise was Tehran’s way to show its capability to create a disruption in the waterway, through which some 30 percent of the world’s sea-transported oil passes daily. Officials at the Pentagon said they expected the exercise would last only a few hours, although it was unclear Thursday night whether it had ended.

“We are monitoring it closely, and will continue to work with our partners to ensure freedom of navigation and free flow of commerce,” said a statement by Navy Capt. Bill Urban, U.S. Central Command spokesman.

The development marked Iran’s latest escalation in response to Mr. Trump’s promise to begin reimposing harsh economic sanctions in the coming days that were suspended under the 2015 deal. One Pentagon source said the unexpected Iranian navy moves were meant to hammer home Tehran’s rejection of President Trump’s offer this week for direct, unconditional talks with Iranian President Hassan Rouhani.

The article details the unrest in Iran:

It is an increasingly delicate moment for Mr. Rouhani, who faces protests in Iran over the nation’s struggling economy, weak growth and declining currency.

The Rouhani government has been rocked by a string of protests in cities across the country over the failing currency, mismanagement and investor fears of U.S. sanctions, the first wave of which is set to begin Tuesday. The Trump administration is pressuring Iran’s other trading partners in Europe and elsewhere to curb trade and investment ties as well.

A report by the official IRNA news agency said about 100 people took to the streets Thursday in the northern city of Sari and that demonstrations broke out in at least three other cities. The agency reported that none of the protests had official permission and all were broken up by police.

Iranian dissident groups abroad have detailed multiple demonstrations in recent days, with harsh police crackdowns in response. The Associated Press cited videos circulating on social media purporting to show dozens of demonstrators setting fire to police vehicles and shouting “death to the dictator.” The authenticity of the videos could not immediately be verified.

One way for a dictator to unite his people is to unite them against a common enemy. This may or may not work in Iran since many of the younger people in the country are more inclined toward western ideas than the ideas of the mullahs.

The article concludes:

“Any disruption of oil supplies in the Persian Gulf would be a major threat to the global economy and would hurt U.S. trading partners, thereby damaging the U.S. economy,” said Amy Myers Jaffe, who heads the Program on Energy Security and Climate Change at the Council on Foreign Relations.

U.S. domestic oil and gas production and export increases in recent years “have not reduced the U.S. need to police the free flow of oil from the Middle East,” Ms. Myers Jaffe wrote in an analysis for the think tank this week. “An oil price rise due to the loss of supply in one part of the world is reflected in U.S. price levels as well all other locations across the globe.”

Rockford Weitz, who heads the Fletcher Maritime Studies Program at Tufts University, said that in the Strait of Hormuz, Iran “could damage commercial shipping with relatively cheap anti-ship missiles, fast patrol boats, submarines and mines.

“Even threats and modest disruption to commercial shipping could trigger economic damage in the form of higher marine insurance rates, crude oil supply concerns and unsettled stock markets,” Mr. Weitz wrote in an analysis published by Tufts last month.

We live in a fragile world–keep praying.

Good Economic News

Trading Economics is reporting today:

Labor Force Participation Rate in the United States increased to 62.90 percent in June from 62.70 percent in May of 2018 as the civilian labor force grew by 601,000. Labor Force Participation Rate in the United States averaged 62.99 percent from 1950 until 2018, reaching an all time high of 67.30 percent in January of 2000 and a record low of 58.10 percent in December of 1954.

CNBC is reporting today:

The employment part of the economy continued to power forward in June, adding another 213,000 jobs though the unemployment rate rose to 4 percent, according to a government report Friday.

Economists surveyed by Reuters had expected a nonfarm payrolls gain of 195,000 and the jobless rate to hold steady at 3.8 percent, which had been tied for the lowest since 1969.

Another solid month of job gains provided little help to wages. In addition to the payroll gains, average hourly earnings rose 2.7 percent year over year, a bit below expectations of a 2.8 percent increase.

Despite increasing talk about the economy being near full employment, hiring continues to grow. Along with June’s upside surprise, the Bureau of Labor Statistics revised April’s count up from 159,000 to 175,000 and May’s from 223,000 to 244,000, a total of 37,000 more than initially stated.

The report at CNBC also states:

While the meeting summary indicated a belief that the labor outlook “had continued to strengthen,” there also was concern that businesses are having a hard time filling jobs. While some of the Fed’s contacts indicated they are raising pay, the overall feeling was that wage pressures remain subdued, which was confirmed by Friday’s report.

The bottom line here is that the economy is improving. It may not be as rapidly as some would like, but it is moving in the right direction at a brisk pace. As Americans, we might want to look at the statement that businesses are having a hard time filling jobs. If businesses are having a hard time finding qualified workers, where is the problem? Have we created a society where it is more lucrative to stay home than to work, or is the problem in our education system? Why are our schools not turning out more skilled workers? What do we need to do to change that? Is it time to bring back vocational schools and apprenticeships? Answering those questions might create an economy that continues to thrive.

One Result Of A Strong Economy

On Monday, Breitbart reported that for the first time in eight years, the number of American households on food stamps has dropped below 20 million.

The article reports:

The latest data from the USDA reveals that the number of households on food stamps in February 2018 dropped to 19,992,124—the first time it fell below 20 million since September 2010, when 19,979,385 households were enrolled in the Supplemental Nutrition Assistance Program (SNAP).

The USDA notes that not only is the number of households receiving food stamps at a record low level, but the number of people enrolled in food stamps has also gone down. From January to February of this year alone, overall food stamp enrollment dropped from 40,640,170 to 40,032,131.

The downward trend in enrollment has only continued over President Trump’s first year in office, keeping on pace with the stable decline in SNAP participation since 2013.

The food stamp program is included in the Farm Bill which is currently in Congress.

The article reports:

Although the Trump administration is making it a priority to require food stamp recipients to work to receive benefits, the Senate version of the 2018 Farm Bill released Friday does not include the work requirements sought out by the Trump administration and the House Agriculture Committee.

The House’s version of the bill includes a provision that would require most adults ages 18 to 59 who enroll in food stamps to work, receive job training, or look for work under a case manager’s supervision.

It is time for the people the government is feeding to go to work. The idea that working people should pay exorbitant taxes to allow other Americans to live well without working is just ridiculous. It is time for the gravy train to end.

The Positive Economic News Continues

Yahoo News is reporting today that jobless claims expectantly fell last week. (Why was it unexpected–the trend has been going downward for a while?) Because of this, the Federal Reserve is expected to raise interest rates next week to keep the economy from overheating. I have mixed emotions about this. We do have to get back to reasonable interest rates, but it seems as if the federal reserve also has a habit of overreacting and slowing down (or speeding up) the economy a little too quickly.

This is a chart of interest rates starting in approximately 2008 taken from trading economics:

As you can see, the rates were kept very low during the Obama Administration in order to avoid an economic crash. Ideally, the Federal Reserve will raise them very slowly so as to protect the economic growth we are currently seeing.

Yahoo News reports:

The dollar was trading lower against a basket of currencies. Prices for longer-dated U.S. Treasuries rose marginally and stocks on Wall Street were mixed. The labor market is considered to be close to or at full employment. Nonfarm payrolls increased by 223,000 jobs in May and the unemployment rate dropped to an 18-year low of 3.8 percent.

The jobless rate, which has declined by three-tenths of a percentage point this year, is now at a level where the Fed projected it would be by the end of this year.

The number of people receiving benefits after an initial week of aid increased 21,000 to 1.74 million in the week ended May 26. The four-week moving average of the so-called continuing claims dropped 13,250 to 1.73 million, the lowest level since December 1973.

…The strong job market conditions were also underscored by the publication on Thursday of the Labor Department’s Contingent and Alternative Employment Arrangements survey, which showed 1.3 percent of U.S. workers in May 2017 held jobs they considered temporary or did not expect to last beyond a year.

That is a decline from 1.8 percent in February 2005 when the government last conducted a similar survey.

When self-employed individuals and independent contractors were included, the share of workers was 1.6 percent in May 2017, down from 2.3 percent in February 2005. Most contingent workers were under the age of 25.

The Labor Department will publish its Contingent Worker Supplement report in September. It is expected to shed light on the so-called gig economy.

Like him or not, President Trump is a successful businessman who understands how economics works. It might be a good idea in the future to elect businessmen to the presidency instead of politicians.

James Pethokoukis On The Economy

James Pethokoukis, columnist for American Enterprise institute, was on the Bill Bennett radio show this morning talking about the economy.

Some of his statements:

Last year the economy grew at a rate of 1.1 and we generated about 150,000 jobs a month. No one thought that was a good year. …If anything goes wrong, we do go back into recession. …I think it’s a pretty fragile situation. …This is a very, very weak recovery. …We should be adding 250,000, 300,000, 400,000 jobs a month, which we would be if the economy was growing faster.

A caller remarked:

If President Obama is trying so hard, why have we not had a budget?

The President talks about saving the automobile industry.  What about the bond holders that were swept under the rug and lost all their money because all the money was given to the unions?

Mr. Pethokoukis commented that the President will be coming out with a plan today to extend the Bush tax cuts on taxpayers earning less than $250,000. Mr. Pethokoukis pointed out that the plan the President is proposing represents a $70 billion tax increase on those earners, many of which are small business owners. There is no way that helps the economy.

Mr. Pethokoukis also reminded us that during the 1983 recovery from the Jimmy Carter recession, we have one month where the economy gained one million jobs.  A recovery after a severe recession should post that kind of numbers—not the numbers we are currently seeing.

Don’t be fooled by the campaign rhetoric—the Obama economic plans have not worked.

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