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.

It Has Never Worked, Why Did They Think It Would Work?

Fox News posted an article today about Finland’s decision to end its universal basic income program by the end of the year.

The article reports:

The Finnish government reportedly announced Tuesday that it will end the country’s universal basic income program by year’s end — and appears to be taking on new measures to cut benefits to those who do not actively seek employment.

Finland was considered the first European country to pay a monthly check of $685 to its unemployed between ages 25 and 58. It was considered a pilot program — serving 2,000 randomly selected jobless people — that its founders hoped to expand.

…”Proponents said the program wasn’t comprehensive enough to gauge its merits,” Whitley wrote. “Critics say it would have required a 30 percent tax increase on an already over-taxed population to be viable.”

This is a chart showing Finland’s Personal Income Tax Rate. The source is a website called tradingeconomics:

This is what taxes look like under socialism. Consider this–if you are making $15 an hour in Finland, you are making slightly less than $8 an hour after taxes. This is what the conservative members of Congress are trying to avoid. We need to cut spending in America–we need to learn the lesson of socialism–giving people something they did not work for is not a plan for a successful economy.

The critics of the program may have known something that those backing the program did not:

The initial move was met with skepticism from citizens who questioned whether an unemployed young person would be motivated to find a job if they were making a steady income, albeit small.

“There is a fear that with basic income they would just stay at home and play computer games,” Heikki Hiilamo, a professor at the University of Helsinki, told the paper.

The problem isn’t really socialism as much as it is human nature. There is something built into us that generally is not willing to work for something we can get for free.