Author: scott.hodges

US Consumer: “In Good Shape”

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The current state of the average American consumer, is, according to CEO at The Hershey Company, Michelle Buck a good one. Americans’ confidence in the economy is positive. Brian Cornell feels similar.  As CEO of Target he sees similar activities to his peer Buck, purporting that the “consumer environment may be the strongest [he’s] seen in [his] career.”

One reason for this – Cornell believes – is because Americans are “seeing wages rise.”  According to entrepreneur and investor Kevin O’Leary, it is the “small domestic companies” we have to thank for this.  He said:

“Small domestic companies are the unsung hero of the policy that’s emerged from this administration.”

With a staggering 6.7 million job openings seen at the end of  June 2018; a situation which has been described as “an unprecedented imbalance.” Indeed, as numbers from the Department of Labor show for the end of October, 2018 the amount of people receiving extended jobless benefits – 1.636 million – is the lowest since 1973.

O’Leary further explained that:

“We are having the best year ever — ever in the last decade,” O’Leary said. “The deregulation in the state and the municipal and the federal level has given confidence to these operators to do something they haven’t done in 10 years: to actually take out loans and invest in their businesses, and create jobs, and increase sales, enhance margins, scale up.”

Still, there is some cause for concern since there are currently 7.14 million job openings, which basically means Americans are not skilled enough (or too lazy) to fill these positions.  So there needs to be some work on job training and career guidance.

The midterm elections and policy-making from now until 2020 could have a substantial impact on this.

America vis-à-vis its Chinese Trade War

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America is back in business.  At least according to a recent World Economic Forum Index  ranking the nation as the world’s “most competitive country,” a position it has not had for the last decade, concluding that “economic recovery is well underway, with the global economy projected to grow almost 4% in 2018 and 2019.”

While this is extremely positive, the forum also found that there is room for improvement on social issues.    Caution was called for since “recovery remains vulnerable to a range of risks and potential shocks,” such as the simmering trade war between America and China.  According to a recent article in The Wall Street Journal:

“The U.S. has levied tariffs on a total of $250 billion of Chinese goods and China has retaliated with tariffs on $110 billion of U.S. exports as the two nations spar over trade imbalances and other issues.”

When looking at China vis-à-vis America, with the trade war, there has been an expansion of its economic deceleration with the deterioration of the trade war.  There has been a distinct loss of momentum in China’s economy in 2018, linked to the efforts made by its government to curb the high debt levels.

Clearly both America and china are losing out with the current trade war. Here, we find 11 experts offering possible exits to the war.

Market Alert

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Martin Feldstein – Economics Professor at Harvard University – reports on FOX Business on “how the Trump administration reached a trade deal with Canada and Mexico. Feldstein also discussed the current state of the U.S. economy.”

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US-Foreign Relations: A Snippet of 3 Regions

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US-foreign relations are continually in flux as different regions change expectations and US policy is subject to change. Here, we take a look at three different regions today and how American relations with those nations are faring:  Portugal, Malaysia and Canada.

New Bedford and the South Coast have been hosting excellent Portuguese-US relations as of late.  In recognition of this, various companies were nominated for the Portuguese-American Business Recognition Awards and later this month will appear for an honor on Good Morning, SouthCoast Breakfast.  These are:

Antonio’s Restaurant, Azores Airlines/SATA, Castelo Group, Club Madeirense S.S.Sacramento, DeMello International Center, DeMello’s Furniture, Fernandes Masonry, Hair In Motion, Horacios Inc., Luso-American Financial, Luzo Auto, No Problemo, Places to Go Transportation, Sagres Vacations and WJFD 97.3.

Malaysia’s US relations could have been described as strained since the May elections.  With Mahathir Mahamad’s visit to the US at the end of September, that might now be changing.  Mahathir doesn’t have the best track record with American relations sinceduring his tenure back in the 1980s, “U.S.-Malaysia relations were especially fraught with tensions over a range of issues even as aspects of cooperation continued at the working level, including on the defense side.”  Things improved thereafter, especially over the last ten years when Najib Razak was in power.  Now Mahathir has come back, the situation is once again a cause of concern.  But this visit could help and it should be remembered that it is unlikely Mahathir will remain in power for long since there is talk of Anwar Ibrahim taking over soon.

Even though tensions have been escalating between Canada and America’s governments, Justin Trudeau insisted the “relationship [between the two regions] will endure.”

The Canada-U.S. relationship will endure despite any possible friction between the two governments, Prime Minister Justin Trudeau said as he faces a looming deadline in trade talks:

“The relationship between Canada and the United States is far deeper than between the Canadian government and the U.S. administration. There will be moments where there is better alignment or worse alignment between our two governments, and the relationship will just continue to create, frankly, prosperity and opportunity and security for our citizens.”

Minorities Thriving in the US Business World

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Minorities in America are making it in 2018. At least, that seemed to be somewhat the conclusion of a recent Guidant Financial survey. Minority 2018 Small Business Trends – together with Lending Club – surveyed 2,600 business owners and aspiring entrepreneurs.

Minority business owners in America have increased substantially in just 12 months. Indeed, the finding showed that:

“The number of African American small business owners in the United States has increased by a staggering 400% in just a year.”

In 2015, a mere 15 percent of business owners were from minority ethnic groups. So it really has come a long way.

Still though, there is work to be done. Out of the small business owners (black) only 37 percent were women. But at least movement is in the right direction. According to Guidant Financial’s CEO, David Nilssen:

“Growth amongst all minorities including women is promising in America as small business ownership becomes more favorable and easier to attain. We anticipate and hope to see a continued increase.”

Lack of capital is generally what keeps more individuals in minority groups from pursuing their dream of becoming a Small Business Owner. Thus more resources should be created to rectify this.

Good News for US Economy

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The US economy is doing well. It’s a fact. If numbers are anything to go by that is. A recent US Census Bureau Report. 2017 witnessed the highest levels on record of middle class income (to $61,372 for median household – an increase of 1.4 percent from 2016) with a simultaneous decline in national poverty rate (a drop of 2.5% from 2014). Millions of US residents have found jobs again as the deep recession has subsided and thus having two people in a family home work again is a huge contributing factor to these figures.

Caution is still needed however. According to a recent article in The Washington Post debating these figures, there are still many problems:

“While the poverty rate is now at the lowest level since 2006, it is still a full percentage point above the rate in 2000, the last time unemployment was this low… The poverty rates for African-Americans and Hispanics also remain substantially higher than for whites and Asians although the unemployment rates for African-Americans and Hispanics have come down swiftly. Twenty-two percent of African-American households and 19.4 percent of Hispanic households live in poverty compared to 11 percent for whites and 10.1 percent for Asian-Americans, the Census Bureau reported.”

Yet at the end of the day the above figures are still worth celebrating. There is a general consensus that the best way of testing the fiscal status of a typical middle class home is via its median household income. And the Census shows that growth.

US Digital Economy: Women all the Way

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It seems like women are leading the way in the US digital revolution.  The yearly 2018 Bank of America Women Business Owner Spotlight showed that there is a lot of optimism among female entrepreneurs with a staggering 49% of them expecting an improvement within their local economies and 48& to expect this from the national economy.

In general the women are confident: about the economy, about their success in the economy and about elevation in future growth within their particular positions.  In addition, 56 percent of women are planning to expand their businesses within the next five years. According to Managing Director and head of Small Business, Bank of America, Sharon Miller:

“When it comes to small business, women entrepreneurs are at the forefront of the digital transformation. It is exciting to see how they are innovating and leveraging mobile tools to help their businesses succeed. Their increased optimism about the future and the potential for hiring and growth is also very encouraging.”

Digitally, half of all SME owners predict a total switch to digital payments within the next five years and the women seem to be in charge of this, with mobile devices processing payments and engaging in transaction management. Indeed only 26 percent of men use mobile devices to process digital fiscal transactions whereas 33 percent of women do.

 

US Economy: Winners and Losers

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In this video, Ali Velshi and Stephanie Ruhle join Heather Long, Economics Correspondent for the Washington Post, to discuss latest tax projections and who they benefit. They review how the tax breaks fit into the overall economy. As things stand now, Congressional Budget Office forecasts an economic slowdown, partly due to President Trump’s Trade War.

Measuring US Economic Success

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The Bureau of Economic Analysis on July 27th released the gross domestic product (GDP) growth rate for the second quarter of 2018: 4.1 percent.  Everyone has been very excited about this.  It is, after all, a greatly impressive figure, indicative of tremendous growth as compared to  the past few years.  However, according to a recent article by Sophie Mitra, not only does it not tell the whole story, the part of the story that it does tell could be problematic for the average family.  We have to first realize that:

“GDP has many limitations. It captures only a very narrow slice of economic activity: goods and services. It pays no attention to what is produced, how it is produced, or how it might improve lives.”

She pointed out that at the end of the day, what the average American is bringing home in their pay packet each month has remained stagnant “for decades,” irrespective of the fluctuation of GDP and/or unemployment.

Many economists actually believe that “economics considers wealth or the production of goods and services as means to improve the human condition,” and rather it is simply the media that is obsessed with GDP figures.

However, President Trump’s top economic advisor, Larry Kullow insists that the GDP noise “is a boom that will be sustainable,” with Trump himself boasting that “his administration has achieved an ‘economic turnaround of historic proportions’.”

Even if we do consider GDP the be-all and end-all measuring stick of economic success and prosperity, was this all Trump’s doing?  According to a Bloomberg article by Sho Chandra, probably not, since:

“The stars were aligned following 2 percent growth in the first quarter: The biggest tax overhaul since the Reagan era delivered another boost to consumer spending and business investment, and the volatile categories of inventories and trade probably juiced the number — helped by a likely temporary jump in soybean exports ahead of retaliatory tariffs.”

At the end of the day the current GDP number is a nice one but as Mitra pointed out it is much more accurate to engage “complementary measures” involving people as well as products, as an analytic tool.