Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Wednesday, December 18, 2019
Inflation Threat Looms in 2020 as Fiscal and Monetary Stimulus Ramp Up / Economics / Inflation
By: MoneyMetals
The Federal Reserve left its benchmark interest rate unchanged as expected last week. However, Fed Chairman Jerome Powell made news with some of his most dovish remarks to date – stating flatly that he won’t hike rates again until inflation moves up significantly.
“In order to move rates up, I would want to see inflation that’s persistent and that’s significant,” Powell said at a news conference following the Fed’s announcement.
He would be anticipating “a significant move up in inflation that’s also persistent before raising rates to address inflation concerns.”
Tuesday, December 17, 2019
ONS UK Unemployment Statistics Paint a FAKE Picture of Falling Unemployment / Economics / Unemployment
By: Nadeem_Walayat
Today the ONS published it's latest labour market statistics which include headline grabbing news that unemployment has continued to fall to an historic low of just 1.28 million as the below graph illustrates, far below the trough before the financial crisis hit Britain. However there is a fly in the ointment of this rosy picture that the Governments economic propaganda arm (ONS is painting which is that official unemployment statistics have been manipulated lower by successive governments all the way to the point that on their own they are pretty much meaningless. For instance there are over 8.6 million people of working age who are ECONOMICALLY INACTIVE, that's another word for UNEMPLOYED!
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Tuesday, December 17, 2019
Economic Tribulation is Coming, and Here is Why / Economics / Great Depression II
By: Michael_Pento
The global fixed income market has reached such a manic state that junk bond yields now trade at a much lower rate than where investment-grade debt once stood. Investment-grade corporate debt yields were close to 6% prior to the Great Recession. However, Twitter just issued $700 million of eight-year bonds at a yield of just 3.875%. That is an insanely low rate even for investment-grade corporate debt. But, the credit rating on these bonds is BB+, which by the way, happens to be in the junk category.One has to wonder how fragile the fixed income world has become when investors are tripping over each other to lock up money for eight years in a junk-rated company that is offering a yield only 1.5 percentage points above the current rate of inflation. And, in a company involved in the technology space, which is a sector that evolves extremely rapidly with a high extinction rate. Oh, and by the way, Twitter missed on both revenue and earnings in its last quarterly report. Nevertheless, this issue was so oversubscribed that the dollar amount for the offering was boosted by $100 million just days before coming to market.
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Friday, December 06, 2019
What Fake UK Unemployment Statistics Predict for General Election Result 2019 / Economics / Unemployment
By: Nadeem_Walayat
It's the economy stupid! The party in government tends to lose elections to the opposition on the basis of where the economy stands at the time of the general election. So whilst Boris Johnson's "Get Brexit Done" headline grabbing mantra sounds like it could deliver the Tories enough votes to win. However, if the economy is on the slide then all slogans and promises will be ignored, much as was the case for Theresa May's 2017 all about getting Brexit done election campaign.
So the focus of this analysis is where the economy stands and it's direction of travel relative to where economy stood in the run up to the June 2017 General Election as one of the 9 key election forecasting lessons learned from the outcome of the 2017 general election.
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Wednesday, December 04, 2019
America’s “Full Employment” Hides a Dirty Secret / Economics / Employment
By: John_Mauldin
Should just being “employed” make people/workers happy?
On one level, any job is better than no job. But we also derive much of our identities and self-esteem from our work.
If you aren’t happy with it, you’re probably not happy generally.
Unhappy people can still vote and are often easy marks for shameless politicians to manipulate. Their spending patterns change, too.
So it ends up affecting everyone and everything.
Friday, November 29, 2019
We Are on the Brink of the Second Great Depression / Economics / Great Depression II
By: John_Mauldin
You really need to watch this video of a recent conversation between Ray Dalio and Paul Tudor Jones. Their part is about the first 40 minutes.
In this video, Ray highlights some problematic similarities between our times and the 1930s. Both feature:
- a large wealth gap
- the absence of effective monetary policy
- a change in the world order, in this case the rise of China and the potential for trade wars/technology wars/capital wars.
He threw in a few quick comments as their time was running out, alluding to the potential for the end of the world reserve system and the collapse of fiat monetary regimes.
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Tuesday, November 26, 2019
This Artificial Economic Boom Is Coming to an End / Economics / Global Economy
By: John_Mauldin
Nothing is forever, not even debt. Every borrower eventually either repays what they owe or defaults. Lenders may or may not have remedies. But one way or another, the debt goes away.
One of Western civilization’s largest problems is we’ve convinced ourselves debt can be permanent. We don’t use that specific word, of course, but it’s what we do and is why government debt keeps rising.
Monday, November 25, 2019
Preconditions for BRIC-style growth in Philippines / Economics / Asian Economies
By: Dan_Steinbock
In the postwar and post-Cold War era, the Philippines could have been an economic success story. Yet, the opportunity was missed between the mid-'60s and mid-2010s. In the Duterte era, the country is back on track, but BRIC-style growth is needed to overcome the legacy of past policy mistakes.In the postwar era, the Philippines was one of the expected economic success stories in Southeast Asia. The country was positioned for rapid growth.
Or so it was thought.
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Tuesday, November 19, 2019
China's Grand Plan to Take Over the World / Economics / China US Conflict
By: John_Mauldin
When the US and ultimately the rest of the Western world began to engage China, resulting in China finally being allowed into the World Trade Organization in the early 2000s, no one really expected the outcomes we see today.There is no simple disengagement path, given the scope of economic and legal entanglements. This isn’t a “trade” we can simply walk away from.
But it is also one that, if allowed to continue in its current form, could lead to a loss of personal freedom for Western civilization. It really is that much of an existential question.
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Monday, November 18, 2019
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months / Economics / HyperInflation
By: Steve_H_Hanke
Venezuela is the only country in the world that is suffering from the ravages of hyperinflation. But, you wouldn’t know it from reading the press, where playing fast and loose with words is commonplace. Indeed, the word “hyperinflation” is thrown around carelessly and misused frequently, with claims that multiple countries are suffering from hyperinflation. The debasement of language in the popular press has gone to such lengths that the word “hyperinflation” has almost lost its meaning.
So, just what is the definition of this oft-misused word? The convention adopted in the scientific literature is to classify an inflation as a hyperinflation if the monthly inflation rate exceeds 50%. This definition was adopted in 1956, after Phillip Cagan published his seminal analysis of hyperinflation, which appeared in a book, edited by Milton Friedman, Studies in the Quantity Theory of Money.
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Monday, November 18, 2019
Intellectual Property as the New Guild System / Economics / Economic Theory
By: Frank_Hollenbeck
The standard justification for intellectual property — i.e., patents and copyrights and trademarks — is that the creative process would be significantly reduced if such protection did not exist. The underlying assumption is that the financial reward must be augmented by a grant of exclusivity enforced by the coercive power of government. Because we can freely copy an invention, innovation or other creative ideas, a financial reward is viewed as necessary for these intangible ideas unlike a tangible object sold in the marketplace.
But did inventors or artists starve before IP laws? The answer is no because they benefited from the first-to-market advantage. Boldrin and Levine explain how during the 19th century British authors with IP protection in the UK would sometimes make more money off their non-IP protected US sales by reaching an agreement (a contract) with a US publisher and then flooding the US market with cheap original copies.1 Since any potential copycat will wait to see if an idea is successful, the gains of being first-to-market could be substantial. Many drug makers retain important market share on a drug even though their patent protection has expired and the market is awash with cheaper generic alternatives. There are also many other indirect ways to profit from creative ideas. Many artists make more money off concerts and other appearances than from the original digital sales of their song.
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Wednesday, November 13, 2019
Why China is likely to remain the ‘world’s factory’ for some time to come / Economics / China Economy
By: Submissions
US tariffs have hit the manufacturing giant to the tune of $35 billion, says a recent UN report. But companies have found that China’s rivals are a poor replacement.
In December 2018, about five months after US President Donald Trump imposed tariffs on China to correct the US trade deficit with Beijing that stood at $419 billion (2018), analysts at the Boston Consulting Group said that despite challenges such as rising wages and escalating trade tensions with its trading partners such as the US and Japan, “it is reasonable to assume that China will remain manufacturing’s center of gravity for the foreseeable future”.
It was easy to be sceptical of this assessment given the number of companies that announced plans to move manufacturing out of China following the imposition of Trump’s tariffs. One of them was the world’s largest bicycle manufacturer, Giant. “We started moving before he [Trump] shut his mouth,” said its chairwoman in an interview to Bloomberg in June 2019.
Tuesday, November 12, 2019
Double 11 Record Sales Signal Strength of Chinese Consumption / Economics / China Economy
By: Dan_Steinbock
On Monday, Alibaba’s Single’s Day broke all records. Chinese consumption and ecommerce signal not just continued resilience but evident strength.By 5 pm on Monday Alibaba Group had already broken last year’s record of $31 billion. And at midnight, the new record soared to $38.3 billion – 25 percent higher than last year.
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Monday, November 11, 2019
Towards a Diverging BRIC Future / Economics / Emerging Markets
By: Dan_Steinbock
Two decades ago, the BRIC economies were projected to surpass the advanced G6 economies by the early 2030s. Today, the huge potential of the BRICs prevails, but the pace has slowed and country trajectories have diverged. China and India are on track, Brazil and Russia are not, thanks to geopolitics.In the early 2000s, Goldman Sachs projected that the four largest emerging economies – Brazil, Russia, India and China, or the BRICs – would surpass the major advanced economies by the early 2030s.
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Thursday, November 07, 2019
China’s path from World’s Factory to World Market / Economics / China Economy
By: Dan_Steinbock
The rise of the Shanghai Import Expo reflects China’s huge transformation from world producer and cheap prices to world consumer and innovator.Speaking at the second China International Import Expo (CIIE) in Shanghai, Chinese president Xi Jinping pledged China will stimulate increased imports, continue to broaden market access, foster a world-class business environment, explore new horizons of opening-up and promote international cooperation at multilateral and bilateral levels.
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Thursday, November 07, 2019
Where Is That Confounded Recession? / Economics / Recession 2019
By: F_F_Wiley
“Ah, excuse me. Oh, will ya excuse me. I’m just trying to find the recession. Has anybody seen the recession?”
Ask that question in a roomful of forecasters, and you’ll hear plenty of reasons why the next recession is dead ahead: the inverted yield curve, the tariff war, weak PMIs, the global manufacturing downturn.
Events might eventually prove those recession forecasts to be correct, although I would say not until mid-2020 at the earliest, and a recession at that time remains just a possibility. I say that because we haven’t yet seen enough cause for alarm in the three areas that most reliably predict recessions. Before every recession, we see at least one, usually two and often every one of the following three precursors:
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Wednesday, November 06, 2019
These Indicators Aren’t Putting to an Economic Resurgence / Economics / US Economy
By: Harry_Dent
When David Stockman spoke at our IES conference in October, he had a whole slew of charts that showed that the main street economy had nothing to do with the Wall Street one – and that there were more signs of weakening growth than strengthening.He recently showed some updates and these were the two that most caught my eye. Both of these are from the more cyclical sectors that most often cause recessions.
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Sunday, November 03, 2019
Lifting the Entitlement Burden Through Increased Infrastructure Spending / Economics / Infrastructure
By: Richard_Mills
On Wednesday the US Federal Reserve cut interest rates for the third time this year, amid continued weak growth both domestically and globally.
The federal funds rate, the baseline for credit card and mortgage borrowing, dropped 25 basis points and is now between 1.5 and 1.75%.
Fed Chair Jerome Powell says the current interest rate levels are “likely to remain appropriate” (ie. on hold for the time being) to meet the Fed’s goal of 2% inflation.
Chairman Powell has been pressured for months by President Trump to continue slashing interest rates to help goose the American economy and keep North American stock markets on the boil.
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Thursday, October 31, 2019
How Trump Tariff Trade Wars Worsen US Trade Deficit / Economics / Protectionism
By: Dan_Steinbock
Since 2018, Trump's trade wars have made US trade deficit only worse, while hurting the poorest economies the most and penalizing global prospects.
According to the new IMF outlook, global growth is forecast at 3.0% for 2019. That’s the lowest since the global crisis of 2008-9. The decline is largely due to the US tariff wars, which have contributed to the projected slowdown in the US and China.
Due to the global slowdown, world growth prospects now hover at levels where they were last amid the darkest moments of 2008/9.
Thursday, October 31, 2019
BEA Reports US Economy Grew by 1.93% GDP Q3 2019 / Economics / US Economy
By: CMI
In their first (preliminary) estimate of the US GDP for the third quarter of 2019, the Bureau of Economic Analysis (BEA) reported that the US economy was growing at a +1.93% annual rate, down -0.08 percentage points (pp) from the prior quarter.
The minor change in the headline masked a material weakening in the growth of consumer spending. The growth rate for aggregate consumer spending on goods and services was reported to be over 1% lower (-1.10pp) than in the prior quarter. The growth of governmental spending (Federal, state and local) also weakened by about half of that amount. But largely offsetting those negative impacts on the headline number were soaring inventories and exports.
Annualized household disposable income was reported to be $253 higher than in the prior quarter, and the household savings rate was reported to be 8.1%, up 0.1pp from the prior quarter.