US Economic Recovery

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Thankfully it looks like the American economy is recovering, as is that of China.  This is having a domino effect on optimism for the global market as IMF’s Managing Director Kristalina Georgieva explained:

“While the outlook has improved overall, prospects are diverging dangerously not only within nations but also across countries and regions. In fact, what we see is a multi-speed recovery, increasingly powered by two engines — the US and China.”

Thanks to vaccinations and more US stimulus money the IMF is predicting economic growth at 5.5 percent for this year. Further, there were over 900,000 jobs added in America in March which is the largest leap since August.  As RSM US Chief Economist Joseph Brusuelas said:

“An American economy about to regain its swagger after a year of pandemic-induced crisis was on full display in the March jobs report.”

Furthermore, according to a recent CNN Report based on IMF predictions:

“At $1.9 trillion, the Biden administration’s new fiscal package is expected to deliver a strong boost to growth in the United States in 2021 and provide sizable positive spillovers to trading partners.”

With the increase of Americans’ purchasing power, this will positively impact international consumer spending as they purchase French fashion, Italian cars, Australian precious metals, etc.

Tips with IDT Energy on How to Save on Electricity Costs

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Utility bills can be pricey but what many household heads do not realize is that with just a few simple tweaks, bills can be substantially reduced. IDT Energy seeks to focus on providing energy-efficient solutions for its customers so that all Americans can benefit from reduced bills. 

According to EIA 2019 figures, the average residential family spends approximately $118.8 on their electricity bill (over $1,400 per year). This figure may not seem exorbitant, but if even a few hundred dollars per year could be put back into one’s pocket, then that is an appealing thought.

Here are a few simple suggestions to get you started:

  1.  Contact the US Department of Energy to find out how to undertake a very simple home energy audit. That way you can go through each room as well as past electricity bills and figure out where there is money to be saved.
  2. Lower the thermostat.  Even by one or two degrees.  This makes a huge difference to heating/cooling costs
  3. Unplug, unplug, unplug.  Whatever you are not currently using, unplug it. Think about the dishwasher for example that you only put on once a week or the computer.  Turning off lights is also recommended since that saves $0.04 per 40 watts.

Saving money on electricity and utility bills really is quite simple.  It is just a case of increasing awareness and being in the know.

Using US-Made Products

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In an effort to move over to more American-created goods and products, President Biden put out an order requesting his staff to “review critical supply chains with the aim of bolstering American manufacturing of semiconductors, pharmaceuticals and other cutting-edge technologies.”  The goal is to reduce the US’s reliance on imported materials, the creation of well-paid jobs in America and strengthening the economy especially when faced with pandemics, geo-political threats and climate change.

In a discussion Biden had with Congress members, Michael Thomas McCaul said:

“China is looking at investing $1 trillion in their digital economy. If we’re going to be competitive, we have to incentivize these companies to manufacture these advanced chips in the United States.”

Further, together with 16 Republican governors, Gov. Spencer Cox wrote a letter to the President asking for a withdrawal of Executive Order 14008 (“Order”), issued on January 27, 2021. This order will ban the development of new oil and gas on offshore waters and federal land.  It said:

“There are many parts of our country where energy is more than a utility bill or tank of gas—it’s a job  creating industry that provides good careers and steady paychecks to families in rural areas and small towns.  Where the recent surge in oil and natural gas provided jobs and created wealth when we needed it most, the  Order will drastically hinder the ability of the oil and gas industry to recover, both onshore and offshore, as  the effects of the COVID-19 pandemic subside. In particular, the Order has a negative economic effect  upon western states with large tracts of federal land and upon Gulf Coast states, chasing away capital  investment for long-term economic growth and undermining public services, public conservation, public  safety, public education, and more. Beyond directly impacted states, the Order is estimated to spike  American residential energy costs by $1.7 billion per year.”

Construction Industry

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America’s construction industry – as we have seen since the start of the pandemic – is thankfully thriving. According to a recent article in For Construction Pros:

“Despite the influence of the COVID-19 pandemic, the December 2020 figure was 5.7% above December 2019’s estimate of $1,410.3 billion. The value of construction in 2020 was $1,429.7 billion, 4.7% above the $1,365.1 billion spent in 2019, led largely by solid growth in the residential construction segment.”

There are many construction projects taking place in America at all times.  Storage, infrastructure and new buildings will always be needed.  Forecasts for 2020-26 in North America indicate that there will be a “healthy growth rate” in construction equipment rental industry which will reach $55bn by 2026. However, this sector was negatively impacted by coronavirus and lockdowns which prevented such companies from operating.

However, Chief Economist at Dodge Data & Analytics, Richard Branch writes:

“While the recovery is underway, the road to full recovery will be long and fraught with potential potholes. After losing an estimated 14% in 2020 to $738 billion, total construction starts will regain just 4% in 2021.”

There will be a rise in single unit home construction starts Branch believes by around 7 percent this year.  But multi-family homes he believes “will pay the price for single family’s gain” as the dollar value of these is predicted to drop by 1 percent this year.

So there is still recovery needed. But overall – and especially compared to other industries – the pandemic has definitely not been the worst for America’s construction industry.

Current Economics of US Oil

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While there are many US industries that are struggling to maintain their normal business activities (if they have not collapsed altogether), there are some which are thriving during this pandemic. One of them is oil which has been seen to make a comeback, at least from an initial superficial glance.

Brent cruse’s barrel price increased to over $60 for the first time in over 12 months.  In addition, cobalt and lithium (among other battery metals) have seen a price increase alongside copper and nickel which has gone up even more. This is definitely good news but according to experts, not yet quite reason to celebrate a return to normal times.

According to forecasts from the American Petroleum Institute, the industry could encounter up to a million loss in jobs by 2022 as well as $9 billion risk to government revenue and American households having to spend $19 billion more on energy by 2030. Some states will be even more negatively impacted such as New Mexico and Wyoming which are likely to not only lose “thousands of industry jobs and access to affordable energy, but also billions in state revenue that could hurt public services, schools, infrastructure and health care.”

Assessing US Economic Recovery

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It is not so simple to pinpoint a trajectory for economic recovery vis-à-vis the continuing impacts of the pandemic.  Jerome Powell of the Fed believes it will depend a lot on how the pandemic plays out and in respect to government regulations.  With new mutations and the resurgence of a more contagious stream, he insists that we remain aware that it is not over yet and people must continue to “stay focused on it as a country and get there. [He added that] the path of the economy continues to depend significantly on the course of the virus. A resurgence in recent months in COVID-19 cases, hospitalisations and deaths is causing great hardships to millions of Americans and is weighing on economic activity and job creation. Overall, economic activity remains below its level before the pandemic and the path ahead remains highly uncertain. As with overall economic activity, the pace of improvement in the labour market has slowed in recent months.”

It’s not easy that the burden has not been shared equally among all  Americans. Those who have suffered the most include low wage owners, African Americans and Hispanics.

Having said that, there is some indication of an economic recovery. There were 22  million jobs lost in March and April of 2020 from the pandemic.  Half of those have come back.  The economy is also only operating at 82 percent capacity. And with the vaccine and additional stimulus checks this could also forge the economic recovery further ahead.

Increased Industry Spending

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At the beginning of this year, the US Congress  again received a request from industry trade associations for more spending.  This is not news in and of itself since most years it makes this request but this year the situation is even tougher. 

According to Tom Donahue, CEO of the US Chamber of Commerce, there will be more than just the stimulus endeavors Joe Biden is offering.  He pointed out that:

 “We can also stimulate the economy in a major way if we finally do the long overdue and broadly supported work of rebuilding our infrastructure. It’s the number one way to raise productivity, create jobs, and drive up incomes in a hurry. Our lawmakers should enact a fiscally and environmentally responsible infrastructure package that focuses on urgent needs like roads and bridges, modernizes our critical networks, and upgrades and expands technology like broadband. Even in a 50-50 Senate and a House divided by five votes, this can be done—and it might build some goodwill for bipartisan progress on other priorities. We’ve been working on this for more than 20 years. Let’s find a way to pay for it, and let’s get moving. This year, there can be no excuses for failure.”

In addition, the American Society of Civil Engineers (ASCE) released a series of Failure to Act reports as a prelude to the Report Card for America’s Infrastructure version.  This was an investigation into the metal and concrete-intensive construction, surface transportation, electricity, waterway systems, airports and more.  The summary found:

 “The total documented cumulative investment gap between projected needs and likely investment in these critical major infrastructure systems is more than $2.6 trillion by 2029, and more than $5.6 trillion by 2039”

Jobs in the Energy Industry

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According to a recent US Federal investigation on jobs in the clean energy sector, the pay for this work is generally 25 percent higher than the country’s media salary.  One example is solar power versus regular fossil fuel.  Standard fossil fuel jobs pay (on average) $24.37 per hour.  The national average is $19.14 but when you work in wind/solar power the average jumps to $24.85 per hour.  Plus the accessibility is better as every single state offers fossil fuel work.

Further, those who get a job in the clean energy sector are also more likely to receive healthcare and retirement packages.  Indeed around 90% of those who work in the sector do which is 20% higher than those who work in the general private sector.

Hence it is probably no surprise that in September 2020, solar installers and turbine technicians were ranked by the US Bureau of Labor Statistics as two of America’s fastest growing occupations.