Promoting Competition in the US Economy

Earlier this month, President Biden signed an Executive Order to “promote competition in the American economy.”  This seeks to decrease costs for families while increasing salaries, promote innovation and ultimately result in faster economic growth.

The idea behind this order is a “decisive action” on the part of Biden to somehow decrease the trend that has been escalating in the creation of corporate consolidation and increase realistic competition, putting consumers, farmers, workers and small businesses in the driving seat.  The Executive Order features 72 initiatives undertaken by over a dozen federal agencies who will be expected to counter some of the most worrisome competition issues nationwide.  Ultimately – once they are fully in place – people’s quality of lives will be enhanced.

Too many people were hit financially hard by the pandemic.  With this Executive Order strategic action is meant to provide hope for people seeking to start a business, grow a business or even get a better job. The Order has many features.  Some of these are:

  1. The banning/limiting of non-compete agreements and bureaucratic occupational licensing requirements which hinder economic flexibility. This should help people change jobs more easily.
  2. Sell hearing aids over the counter, saving thousands of dollars for hearing-impaired.
  3. Enforce clear disclosure of add-on fees from airlines, making it easier for consumers to get refunds.
  4. Help federal agencies promote greater competition via their spending decisions and thus increase opportunities for small businesses.
  5. Augment the Department of Agriculture’s tools, empowering farmers, increasing their wages and ending the abusive practices of some meat processors.

As Biden said in his recent White House Briefing,

“The heart of American capitalism is a simple idea: open and fair competition — that means that if your companies want to win your business, they have to go out and they have to up their game; better prices and services; new ideas and products. That competition keeps the economy moving and keeps it growing.  Fair competition is why capitalism has been the world’s greatest force for prosperity and growth.”

Let’s hope the Executive Order works the way it has been intended. 

Importance of Infrastructure for US Economy

It has been 65 years since the Federal-Aid Road Act was enacted, paving the way for the creation of the Interstate Highway System (HIS). To this day, it is still recognized as one of the most influential and useful elements of America’s economy. Encountering close to 75 percent of all truck freight that moves through the Interstates, this figure is huge considering it covers such a small amount of roadway miles – just 1 percent.

Further, over the last 65 years, America’s population has doubled and the amount of miles that have been covered on the HIS has increased by 422 percent. In addition, the HIS has contributed to the country’s GDP a 340 percent growth since its inception.

This data shows that the IHS is deserving of some serious renovation if it is to continue to be one of America’s most valuable economic asset.  According to Dr. Alison Premo Black, chief economist at the American Road & Transportation Builders Association (ARTBA):

“The Interstates need a shot of investment to remain healthy and vibrant for the future. A renewed federal commitment to America’s transportation network is one of the best ways to preserve the Eisenhower legacy and ensure the Interstates remain the engine of economic growth for decades to come.”

One possible solution – or at least something that would make a start on this project is the American Jobs Plan. The idea behind this is to make a serious investment in America that would rebuild its infrastructure, while at the same time, create millions of jobs and give the country a boost in its relationship with China. Even though America is the world’s wealthiest nation, it comes up as a low number 13 vis-à-vis infrastructure quality.  Hopefully the American Jobs Plan is the start of a way ahead for this invaluable asset

America’s Economy: Fighting Back

Wedding, Couple, Marriage, Ceremony, Bride, Husband

There have been some great numbers showing that the US economy could well be on its way back from the coronavirus pandemic that caused substantial financial loss in many industries.  Thanks to the fact that 300m vaccination shots have been given nationwide (a number that is continuing to increase), a true sense of “back to business” is being felt.

Take a look at the fashion industry for example. For so long people were in Zoom or other online meetings so were not so interested in purchasing new clothing. Marshalls and TJ Maxx encountered a 12 percent increase in sales this quarter and Rent the Runway has reported a demand for crop tops four times what it was in 2019.

WFH is being slowly morphed back into return to the workplace. Large corporations like Bank of America and Morgan Stanley are bringing their workers back, with some even offering return-to-work programs.

Large entertainment events are returning as well as we see more weddings take place. With the ditching of masks and opening of restaurants and other leisure activities, there is a lot of hope for the economy showing signs of recovery.

US Economic Boom Predicted

The American economy has historically been in far better shape, however, there was a 6 percent growth in Q12021 thanks to stimulus checks and vaccination rollout which led to an uptake in consumer spending. In addition, it is hoped that Biden’s promise of massive new federal investments will continue this trend of growth.

Where to Invest Right Now

There are always so many seemingly conflicting opinions and suggestions as to where best to invest money. According to finance and tech investor Mozes Konig, “trends come and go very quickly on the stock market. This makes it more challenging to advise people on long-term investing as even the seemingly most stable companies’ stocks will drop at times.”

Mozes Konig has been involved in investments for a number of years.  Sometime ago he went through some issues with Interpol which he thankfully has now resolved.  Since then, he has been working with a variety of different companies – primarily but not exclusively in the tech sector – and advising clients on investment opportunities.

“I believe that while no company is 100% safe and guaranteed as a good investment, there are definitely some that are more viable than others,” Konig says. “Take Microsoft, Apple and Amazon for example; none of them are going down anytime soon,” he added.

For those looking for stability (perhaps even more important during these times, having lived through COVID) they would probably be best advised to invest money in the solid, long-standing companies like the ones mentioned above.

Post-Pandemic Prosperity

America’s economy seems to be coming back from the pandemic, having recorded its  fastest first-quarter GDP growth in nearly four decades.

Consumer spending is up (thanks to tax credits and stimulus checks).  Hiring is also increasing, even in New York where just a few short months ago it seemed like the pandemic would never end. Moody’s Analytics chief economist Mark Zandi said:

 “I’ve never seen an economy that feels as good as this one today. The economy is booming. It’s busting out all over.”

Further, Oxford Economics predicts a growth of American GDP to average out this year at 7.5%, higher than what we’ve seen for nearly 70 years.

However, there is still great cause for concern given unemployment numbers (which indeed is substantially less than a year ago) given that there are an additional 4 million unemployed Americans than there were in February 2020. To counter this, continued China trade will be required in particular in movies (which accounted for 30 percent of China’s box office sales in 2019) and education (exports support more than 3 million people who work in the industry in America).

Lab Grown Diamonds

Diamonds are a classic staple as a desired jewel.  As Shirley Bassey said: “diamonds never leave you…men do.” Starting in the 20th century with the De Beers marketing campaign, the market has grown significantly for this type of investment. 

But what about lab grown diamonds? According to business investor Mozes Konig, this particular sector has changed a lot since De Beers started selling man-made diamonds since its U-turn policy change in 2018. Following that decision, more and more people were looking to purchase these diamonds for engagement rings. Now, De Beers is seeking to elucidate to its customers the distinction between natural gems and lab-grown diamonds as a way of highlighting the fascination with earth-uncovered diamonds so that there is still a huge desire for them.

There is a slight problem with this however.  By marketing lab-grown diamonds, De Beers runs the risk of undermine its natural diamonds. Having said that, the production costs for lab-made diamonds has significantly decreased within the last ten years which gives the jewelry firm and others like it the opportunity to further reduce their consumer prices.

“In conclusion” notes Konig “what we have seen is a huge growth in the market since 2018 as more retailers purchase these and customers learn about it through publicity and friends.”

Small Businesses in a Pandemic Era

Small businesses have definitely had a lot to deal with over this past year-and-a-half.  Since March 2020, many have suffered from lockdowns, stay-at-home orders and restricted gatherings. While no-one has managed to avoid challenges during this time, it seems financially that this particular demographic has possibly suffered the most.

According to a recent article  on the subject, the first thing we have to remember anyway is that America’s business demographic is made up of 99.9% small businesses. Of those working in the private sector, a little less than half work for these firms.  Closure of these businesses is currently 34 percent (compared to January of 2020) and San Francisco has been severely impacted with a rate much higher than that of 48%. Experts are now discussing a K-shaped recovery but with these numbers, that could be slowed down as well.

Despite all of this, people’s spirits are still strong and there is much work that is being done to turn this around.  For example, while there is a national Small Business Day held in November, New Jersey had one last month.  NFIB New Jersey (New Jersey’s leading small business association) held its Small Business Day on May 5 2021 and discussed a variety of issues relating to the devastation small businesses have encountered and what they need the state to do.  One action is aid to provide the $1bn lost from New Jersey’s Unemployment Fund since the start of the pandemic.  To do this, liability protection laws must be passed for small business owners and of course, re-opening the economy.

Joe Olivo, NFIB member and a local small business owner further explained:

“I know I am not speaking just for myself when I say that the past 13 months have been among the most challenging I have faced in the 33 years that I have been at the helm of my business. Many of the Executive Orders coming from the Governor have made the cure worse than the disease. Many of our political leaders and the media continue to lump all business together as though we are all multi-national corporations. Fortunately, NFIB provides us a way to collectively voice our opinion regarding legislation that is often detrimental to not just our businesses, but to the millions of people we collectively employ.”

 According to New Jersey’s NFIB State Director, Eileen Kean, the recent Small Business Day provided a “wonderful opportunity for our small business owners to engage with their legislators…[who] need to hear from real people that are being affected by what they do in Trenton.”

Yes, much work still needs to be done but the fact that days like this are being held – in which legislators can really hear what the people need – is a good start.

College, Coronavirus and Consumer Spending

The coronavirus taking its toll on college education. According to a recent Junior Achievement and Citizens (which polled 2,000 American teenagers), a quarter of high school students have put their college plans on hold, primarily due to lack of financial support from traditional familial sources. Given that tuition fees are extraordinarily oppressive, people are now looking at the worthiness of college vis-à-vis investment in the future.  CEO and President of Junior Achievement, Jack Kosakowski explained:

“We’ve had this ‘college thing’ up on a pedestal. As costs have gone up, it’s forcing people to take a more realistic view.”

At this time, high-schoolers are focusing more on career training.  This is understandable for three reasons:

  1. Exorbitant college fees
  2. Seeing how easy it is to lose a job because of COVID-19, irrespective of a college degree
  3. Having time during COVID-19 to come up with ideas to make money.

Regarding the latter, youngsters have been finding a variety of ways of making money. These include:

  1. bitcoin investment (this has become very attractive with the younger generation which is seeing new ways of expanding their money while gaining more control over it);
  2. vlogging/blogging
  3. video game playing for money (think Playtest Cloud)
  4. online tutoring for other kids.

US Economic Recovery

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.