Thursday, April 2, 2020

AMERICAN ECONOMY EXPECTED TO CONTRACT 7% - BUT THAT IS ONLY A FANTASY NUMBER


CBO Expects Economy to Contract 7% in Second Quarter

PORTSMOUTH, ENGLAND - JUNE 05: President of the United States, Donald Trump reads from the 32nd U.S. President President Franklin D. Roosevelt's prayer to the US on stage during the D-Day Commemorations on June 5, 2019 in Portsmouth, England. The political heads of 16 countries involved in World War II …
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The Congressional Budget Office said Thursday that the U.S. economy will shrink by 7 percent in second quarter of this year.
“If that happened, the decline in the annualized growth rate reported by the Bureau of Economic Analysis would be about four times larger and would exceed 28 percent,” the CBO said. “Those declines could be much larger, however.”
The CBO described its latest reading of the economy as “very preliminary estimates, which are based on information about the economy that was available through this morning and which include the effects of an economic boost from recently enacted legislation.”
The CBO sees the unemployment rate exceeding 10 percent during the second quarter.

Bullard Says Unemployment Could Rise to 30%

Photo by John Vachon/Library Of Congress/Getty Images
23 Mar 2020523
1:15
The unemployment rate in the U.S. could hit 30 percent, Federal Reserve Bank of St. Louis President James Bullard said in Bloomberg News interview.
“This is a planned, organized partial shutdown of the U.S. economy in the second quarter. The overall goal is to keep everyone, households and businesses, whole,” Bullard said. “It is a huge shock and we are trying to cope with it and keep it under control.”
That would be the highest rate of unemployment since the Great Depression.
Bullard said he expects economic growth to plunge 50 percent in the second quarter but for the economy to bounce back later in the year, so long as the appropriate measures are taken by the fiscal and monetary authorities.
“I would see the third quarter as a transitional quarter,” Bullard said. The next six months, however, could be very strong. “Those quarters might be boom quarters,” he said.
Bullard also said the Fed was far from being “out of bullets,” as some Fed watchers have claimed.
“There is more that we can do if necessary,” he said. “There is probably much more in the months ahead depending on where Congress wants to go.”


Donald Trump’s Economic Record Isn’t What He Says It Is

He claims the economy is “the best it has ever been.” A closer look at the data tells a different story.
February 5, 2020
U.S. Department of Agriculture/Flickr
Donald Trump has been on a mission this week to distract from his impeachment by touting his administration’s economic record. First, he launched a 30-second ad after the Super Bowl promising that “the best is yet to come.” Then, in his State of the Union address Tuesday night, Trump highlighted the “American Comeback.” The speech was full of audacious—and characteristically inaccurate—claims: “our economy is the best it has ever been”; the “average unemployment rate … is lower than any administration in the history of our country”; and “wages are rising fast.”
The reality, however, doesn’t match Trump’s 
rhetoric. In fact, it would take much longer than a 
30-second commercial to highlight the many 
ways that the U.S. economy isn’t working for all
Still, the moment provides an opening for Democratic presidential candidates to challenge the president’s record.
In 2019, for instance, the gap between the richest and poorest households in the United States reached its highest point in more than 50 years. The number of Americans without health insurance continues to climb following years of declines since the passage and implementation of Obamacare. And household debt is now in excess of $14 trillion, exceeding the pre-recession high.
Even with low unemployment, wage growth is lagging. The most recent employment report reported wages increasing by just 2.9 percent over the last year. With inflation at 2.1 percent, that’s not much of a pay raise. To the extent that wage growth has picked up in recent months, a major contributor has been increases in state and local minimum wages that Republicans and the president opposed.
Trump’s signature legislative accomplishment, the 2017 tax cut, has produced none of its promised benefits, including the $4,000 pay raise that he and his allies promised to American workers. 
In fact, as a result of the tax cut, 91 companies in the Fortune 500 paid no federal taxes last year. The country’s six biggest banks saved $32 billion at the same time that they laid off more than 1,000 employees.
The tax cut has also failed to produce the “four, five and even six percent” economic growth that Trump promised. In the fourth quarter of 2019, the GDP growth of 2.1 percent was lower than both the growth rate before the tax cut was passed in 2017 and the average of Obama’s second term (2.4 percent). Instead, the tax cuts have produced annual budget deficits of $1 trillion, which Trump has signaled may lead to cuts in Social Security and Medicare, in addition to his ongoing efforts to erode the social safety net.
Ironically, despite the president’s pledge to help the “forgotten men and women,” blue-collar job growth—which includes construction, manufacturing, and mining—remains anemic, only growing at 0.8 percent in 2019 compared to 2 percent in Obama’s final term.
What’s more, the ongoing trade war plunged the manufacturing sector into recession last year, which has stunted economic growth in states like Wisconsin and Michigan. Tensions with China produced a 24 percent increase in farm bankruptcies last year, with the most coming from Wisconsin. The Congressional Budget Office estimated recently that Trump’s trade policies will cost American households an average of $1,277 this year.
Worse yet, employers reported the highest number
of layoffs in four years. For workers who are able 
to find new jobs, data shows they earn about 10 
percent less than before. That gap is even greater 
for workers who were at the same job for three 
years or more.
But while the economic reality under Trump is troubling for most Americans overall, it’s even more daunting for African-American workers, who have an unemployment rate almost twice as high as white workers. Displaced African Americans earn 13 percent less in their new jobs. Those who were employed for three or more years earned 31 percent less in their new jobs.
Despite the headlines, too many workers are not feeling the economic boom Trump describes. Instead of making investments to provide Americans with the world-class education and training needed for 21st-century jobs, the president and the Republican Congress chose stock buybacks to benefit the wealthy and a temporary sugar high for the economy that has now worn off.
Democrats can and should challenge Trump on the economy in 2020. Millions of workers are looking for good jobs and a pay raise. Policies to build an economy for all should be central to any campaign’s message. But it’s more than just good politics. Building an economy that works for the 90 percent instead of just the top 10 percent is sound economic policy.
“The remarkable thing is how weak wages are, how weak the economy is, given that as a result of the tax bill we have a $1 trillion deficit.”

 

Donald Trump is ‘just wrong’ about the economy, says Nobel Prize-winner Joseph Stiglitz


President Donald Trump told business and political leaders in Davos, Switzerland last week that the economy under his tenure has lifted up working- and middle-class Americans. In a newly released interview, Nobel Prize-winning economist Joseph Stiglitz sharply disagreed, saying Trump’s characterization is “just wrong.” 
“The Washington Post has kept a tab of how many lies and misrepresentations he does a day,” Stiglitz said of Trump last Friday at the annual World Economic Forum. “I think he outdid himself.”
In Davos last Tuesday, Trump said he has presided over a “blue-collar boom,” citing a historically low unemployment rate and surging wage growth among workers at the bottom of the pay scale.
“The American Dream is back — bigger, better, and stronger than ever before,” Trump said. “No one is benefitting more than America’s middle class.”
Stiglitz, a professor at Columbia University who won the Nobel Prize in 2001, refuted the claim, saying the failure of Trump’s economic policies is evident in the decline in average life expectancy among Americans over each of the past three years.
“A lot of it is what they call deaths of despair,” he says. “Suicide, drug overdose, alcoholism — it’s not a pretty picture.”
The uptick in wage growth is a result of the economic cycle, not Trump’s policies, Stiglitz said.
“At this point in an economic recovery, it’s been 10 years since the great recession, labor markets get tight, unemployment gets lower, and that at last starts having wages go up,” Stiglitz says.
“The remarkable thing is how weak wages are, how weak the economy is, given that as a result of the tax bill we have a $1 trillion deficit.”
As the presidential race inches closer to the general election in November, Trump’s record on economic growth — and whether it has resulted in broad-based gains — is likely to draw increased attention.
BLOG: THE GREATEST TRANSFER OF WEALTH TO THE RICH OCCURRED DURING THE OBAMA-BIDEN BANKSTER REGIME
“The middle class is getting killed; the middle class is getting crushed," former Vice President Joe Biden said in a Democratic presidential debate last month. "Where I live, folks aren't measuring the economy by how the Dow Jones is doing, they're measuring the economy by how they're doing," added Pete Buttigieg, a Democratic presidential candidate and former Mayor of South Bend, Indiana.
Trump has criticized Democrats for tax and regulatory policies that he says will make the U.S. less competitive in attracting business investment.
“To every business looking for a place where they are free to invest, build, thrive, innovate, and succeed, there is no better place on Earth than the United States,” he said in Davos.
Stiglitz pointed to Trump’s threats last week of tariffs on European cars to demonstrate that turmoil in U.S. trade relationships may continue, despite the recent completion of U.S. trade deals in North America and China.
“He can’t help but bully somebody,” Stiglitz said.
Max Zahn is a reporter for Yahoo Finance. Find hi


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