In this video – produced by Economics Explained – we learn about the “wealthiest, most powerful nation on the planet’s (USA)” economy. But it is not easy to understand and even macro-economists have a hard time fathoming it. As such this video helps viewers understand its influence and how that transpires.
New US-China 1st Phase Deal
America and China have just announced Phase 1 of a new economic-trade deal that seeks to “put a floor under further deterioration of the bilateral relationship.” According to Craig Allen, US-China Business Council President, this move is “very encouraging.” US Chamber of Commerce’s EVP and Head of International Affairs Myron Brilliant said that it “creates clarity for businesses and provides a lift for American consumers during the holiday season.”
And as Zippy Duvall, President of the American Farm Bureau Federation pointed out, once the trade door is “re-opened” between the two countries, this will be “key to helping farmers and ranchers get back on their feet.”
Trade is so very important for these farmers. One farmer, Tom Waters explained that:
“Getting these trade deals negotiated and in place can do nothing but help us, (and) help our price and our ability to feed the world, really.”
Farmers really do need to return to their engagement in global business, of which US-China trade is a huge part. Added to this fact is that since 2018’s reshaping of trade policy via the Trump administration, American farmers have been faced with “fluctuating prices and uncertain destinations for what they grow and harvest amid increasing tariffs on grain exports.” The farmers really want trade (not aid) but they are facing demands from bankers who want to be paid.
Hopefully though the United
States-Mexico-Canada (USMCA) Agreement will also provide help to farmers moving
forward.
Tariff Collection Bolstering Economy
September figures for US import tariffs reached $7 billion. This marked a 9 percent hike from the month before and 59% jump year on year. Trade Partnership – in conjunction with the Commerce Department – compiled the data which was released by the business/agricultural group collation, Tariffs Hurt the Heartland.
Tariffs have been collected by America historically but not on all items. Now they are even heavier though. Trump’s argument is that they are needed to get China to curtail the practices it is engaged in with its tariffs that excoriate companies in America.
Earlier this month, a Chinese Commerce Ministry spokesperson, Gao Feng said:
“Over the past two weeks, the two negotiating teams had serious and constructive discussions and agreed to remove the additional duties imposed on each other’s products in different phases after they make progress in reaching a deal. Both sides should simultaneously undo existing additional tariffs in the same proportion to reach phase one deal, and that is an important condition for signing a preliminary agreement. As for how much of the tariffs should be removed, the two countries can negotiate based on the content of the phase-one deal.”
It has also been reported from the White House that there is optimism surrounding the likelihood of the two sides “reaching an agreement soon.”
US Economic Ebbs and Flows
America’s economy has been indicating signs of solidity despite minor downturns reported in the third quarter. While economists had indicated concern over a GDP dropoff, the ongoing US-China trade war did little for confidence in the business sector.
With a 1.9 percent economic expansion in the summer, this figure – released by the Commerce Department – exceeded expectations. According to Executive Director of US Economics Advisers, Ben Herzon:
“If I saw cracks in the consumer sector, I would be worried, but I don’t see that yet. The economy is not slowing into a recession.”
There was a definitive decline in business investment, research and development – 3 percent – as well as 15.3 percent drop in office and factory expenditure.
Business Activity: US
Economies, businesses, GDP, revenue – all encountering a reduced pace of movement. America seems to be faring somewhat better – thankfully not yet feeling the impact of the interest rate cuts from central banks. According to figures from the US Commerce Department however, concerns over international trade issues are undermining business activity in the nation.
According to a recent WSJ article however:
“a private survey of business activity separately indicated a slight uptick in U.S. business activity in October, up from earlier lows.”
Still, even though there are real concerns for a recession, other data is indicating that America’s economy is faring well, “reflect[ing] economic strength.”
In addition, last month unemployment fell to a 50 year low and there was a hike in retail sales more than anyone anticipated in August. According to BCA Research Chief US Investment Strategist Doug Peta:
“While the survey data have been steadily disappointing expectations, hard data have been a source of positive surprises. The labor market remains vibrant enough to exert downward pressure on the unemployment rate, and services continue to expand despite the contraction in manufacturing, both here and abroad. The expansion has slowed, but it’s not finished yet.”
Importance of American Business Awards
In this video, Michael Gallagher, founder and executive chair of the Stevie Awards, talks about why – and how – organizations should submit an application for the 2020 American Business Awards.
Recent Job Creation
Last month more jobs were created in the nation’s private non-farm sector than economists predicted. According to the ADP’s National Employment Report the entire private sector added 135,000 jobs in September, 10,000 more than WSJ economists were anticipating.
67,000 of these new positions are in large businesses and medium sized businesses added 39,000 jobs. Small businesses also did well with an additional 30,000 new jobs.
Despite the fact that there are significant problems within America’s economy, the job market is on solid footing. Unemployment has remained at the same 3.7 percent and there have been 107 months of continued job growth. In addition, salaries have gone up by 3.2 percent over the last 12 months and unemployment rate in minority groups has decreased (African-American unemployment dropped .5%, a record low data since 1972.
So if there are issues with the US economy (which there are), as long as job creation continues to rise, so does optimism alongside it.
Growth of US Economy
The US Economy has enjoyed expansion recently in many sectors. The two we will specifically look at here are: the Internet and beer.
In 2018, approximately 10% of America’s GDP came from the internet. $2.1 trillion money was made from this sector according to estimates from The Internet Association. This represents America’s fourth largest economic sector (1-3 being real estate, government, manufacturing). The Internet provides almost 6 million (direct) jobs – 4 percent of all of America’s jobs and 13 million (indirect) jobs. $64 billion was spent by internet companies in capital expenditures.
In 2018, according to numbers from the Brewers Association approximately $79.1 billion was contributed to the American economy by craft brewers. This translates to around 0.4 percent of America’s GDP. It is 4 percent higher than the contribution from craft brewery in 2017. The contribution from small and independent brewers was also significant with the provision of 559,545 jobs, 150,055 of which were directly from breweries.
America’s Minority Groups: How are they Faring
It is important to keep tabs on how minority groups in America are faring, particularly since Kim Hart recently pointed out that the country:
“is more racially diverse than at any point in history, and racial minorities are becoming more geographically dispersed than ever before.”
Hispanics and Asian Americans are the fastest-growing racial minority groups. Plus the white population has seen a mere 0.1% growth since 2010 (as opposed to Hispanics at 18,6% and Asian Americans at 27.4% during the same time frame) with projected further decline moving forward.
At the moment of this writing we are currently in the middle of National Hispanic Month, a celebration instituted in 1968 originally known as Hispanic Heritage Week. The idea behind this is to celebrate and recognize the contributions of the Hispanic community to America. Now it continues for a month annually between September 15 to October 15. This year’s theme is “Hispanic Americans: A History of Serving Our Nation.”
In particular, the Hispanics are making a huge contribution to Hampton Roads in leadership capacities in business, education, faith, politics, military and more. They are giving back disproportionately more to their communities than others. Further, Hispanics have possession of 2.1 percent (573) of the 27,270 businesses operating in the region. According to SimIS Inc. Hispanic founder and owner Johnny Garcia:
“The potential for Hispanics to grow our economy is enormous. The Hispanic community is the fastest-growing segment of the immigrant population. Clearly, Hispanic Americans will continue to play an important role, as our nation faces the challenges of the 21st century.”
In addition, there was a drop to 2.1 percent in unemployment figures for Asian Americans living in America in June of 2019. This is the lowest it has been since 2003 and indicates that this demographic is now looking (and finding) work in mainstream industries. And, according to Kayleigh McEnanay, one of Trump’s campaign spokespersons:
“The Asian American community has never been stronger than under President Trump’s leadership. Millions of Asian Americans have secured access to the strongest economy in modern history, with the Asian American unemployment rate hitting a record low under the leadership of President Trump.”
Consumer Views on US Economy
America’s economy is currently not in as poor state as some of the commentators are suggesting. When one looks at numbers of hiring, wage increase, and consumer spending the situation is far from bleak. In fact hourly wages increased.
According to the government’s job report at the beginning of this month, employers in America are actually adding jobs. True, it’s at a lower pace (hiring at 130,000 jobs in August), but it is still happening. Unemployment figures remained stagnant (as for the last 3 months) at 3.7 percent. This is almost the lowest number for unemployment in 50 years. Plus, the longer the good unemployment rate continues, the better for employees as bosses may have to adjust how they work to ensure longer-term growth. In other words, they will have to provide better packages for workers and invest in training, equipment etc.
Average hourly wages increased by 11 cents last month which marked a 3.2 percent escalation from 2018 figures. Indeed, according to PNC chief economist Gus Faucher:
“With slower, but still-solid job gains and good wage growth, households will continue to spend. The U.S. economy should avoid recession.”
US consumerism is looking good also. The highest jump in consumer spending in five years was witnessed in the 2019 April-June quarter. July looked good as well.