Thread: The strongest economy in the world

US growth projected at less than 1%.

Now, once again, the topic of "helicopter money." Send checks of tax rebates to Americans so the spend it. The Fed would write one big check to the Treasury Dept.

Yup. The economy has healed as Obama has said.

A dog chasing its tale?

Helicopter money: central banks' last resort
by Patrick Gillespie @CNNMoney
April 27, 2016


Central banks -- struggling to spark growth -- are basically talking about it.
"It's a last resort of a desperate economy," says Kathy Jones, chief fixed income strategist at Charles Schwab. "I wouldn't rule it out."

Ahead of the Federal Reserve's meeting that started Tuesday, an old metaphor -- helicopter money -- is gaining new traction as world leaders try to improve global economic growth, which the IMF recently described as "fragile."

Famed economist Milton Friedman first introduced the idea of helicopter money in 1969. Essentially, as former Fed Chair Ben Bernanke recently put it, the Fed would write a huge check to the U.S. Treasury office, which would then send tax rebates (read: cash) to millions of Americans.


The thinking and hope behind such an action is that Americans would then spend the money. Consumer spending makes up the majority of U.S. economic activity so more spending would boost the country's growth prospects, which are currently very dim. First quarter economic growth figures come out Thursday and growth is projected to be below 1%.

No one expects the Fed to announce that it will start a helicopter money program or even make a move on interest rates when its meeting ends Wednesday. But mere talk of helicopter money illustrates how desperate central bankers are to spark growth.

Japan and the European Central Bank are using negative interest rates to stimulate spending. The ECB is also in a bond buying spree. Last year China's central bank spent billions to ease the country's economic slowdown.

Can we believe....? "yes we can."

Another round (how many in total now?) of QE may be coming.

This means of course, the previous ones didn't do what was needed.


Money | Wed May 4, 2016
Janus's Bill Gross: 'Helicopter money' is coming in a year or so
NEW YORK | BY JENNIFER ABLAN

The next big monetary and fiscal policy move should include an airdrop of "money from helicopters" to stimulate the U.S. economy and avoid an extended recession, says Bill Gross, a portfolio manager at Janus Capital Group Inc (JNS.N).

Gross may not be entirely serious about "helicopter money," but in his latest Investment Outlook note published Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of dollars to buy government bonds and thereby boost the economy.

"Drop the money from helicopters," wrote Gross, manager of the $1.3 billion Janus Global Unconstrained Bond fund.

"There is a rude end to flying helicopters, but the alternative is an immediate visit to austerity rehab and an extended recession. I suspect politicians and central bankers will choose to fly, instead of die."

"Helicopter money" is an idea made popular by the American economist Milton Friedman in 1969, when he suggested that dropping money out of helicopters for citizens to pick up was a sure way to restart the economy and effectively fight deflation.

Gross noted that the Federal Reserve, the European Central Bank, Bank of Japan, and the Bank of England have effectively bought bonds from their governments for six years and allowed them to spend money to support their sagging economies.

"They buy the bonds by printing money or figuratively dropping it from helicopters, expanding their balance sheets in the process," said Gross.

Janus's Bill Gross: 'Helicopter money' is coming in a year or so | Reuters

U3 unemployment rate declined. What type of jobs have been created? Service sector and/or part-time jobs.

U.S. problem: I work three part-time jobs
by Patrick Gillespie @CNNMoney

May 17, 2016:

For 15 years, Erlinda Delacruz had a full-time manufacturing job in rural Winters, Texas.

It gave her health benefits and four weeks of paid vacation along with a salary that supported a good life. Then the rug was pulled from under her in 2009, when the plant closed. Since then, it's been a battle of survival as Delacruz worked a string of part-time jobs. Last summer, she even lost her home to foreclosure.

U.S. problem: I work three part-time jobs - May. 17, 2016

Things are not rosy for everyone.

Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era
Despite longevity, total growth during this economic expansion is lower than for much shorter business cycles

Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era - Real Time Economics - WSJ

U.S. Economy Grew Less-Than-Forecast 1.2% in Second Quarter - Bloomberg
The U.S. economy expanded less than forecast in the second quarter after a weaker start to the year than previously estimated as companies slimmed down inventories and remained wary of investing amid shaky global demand.
Gross domestic product rose at a 1.2 percent annualized rate after a 0.8 percent advance the prior quarter, Commerce Department figures showed Friday in Washington. The median forecast of economists surveyed by Bloomberg called for a 2.5 percent second-quarter increase.
The report raises the risk to the outlook at a time Federal Reserve policy makers are looking for sustained improvement. While consumers were resilient last quarter, businesses were cautious -- cutting back on investment and aggressively reducing stockpiles amid weak global markets, heightened uncertainty and the lingering drag from a stronger dollar.
“We’re just muddling through," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who had forecast a 1 percent gain in second-quarter GDP. “Consumer spending looks good, but the problem is that the rest of the economy is soft. The economy remains vulnerable to downside risks. The Fed is right to be cautious."

Private fixed investment, which includes residential and business spending, dropped at a 3.2 percent pace in the second quarter, the most in seven years.
With Friday’s report, the Commerce Department also issued its annual revisions, updating the data back through 2013. The first-quarter’s reading was revised from a previously reported 1.1 percent gain.
For a story on U.S. GDP revisions, click here.
The new breakdown shows a more pronounced slowdown in the economy heading into 2016. The year-over-year growth rate cooled from 3.3 percent in last year’s first quarter to 1.9 percent in the final three months of 2015, rather than the previous downshift from 2.9 percent to 2 percent.
The easing in growth continued into the first half of this year. The year-over-year pace for the first quarter of 2016 was revised down to 1.6 percent from 2.1 percent, the revisions showed. That revised trajectory has implications for Fed officials, as they’re faced with an expansion that has been steadily losing steam.
Friday’s report also showed that in the second quarter, GDP expanded at a 1.2 percent rate from the same period a year earlier.

Economists’ second-quarter estimates for GDP, or the value of all goods and services produced, ranged from 1 percent to 3.2 percent, according to a Bloomberg survey. The growth estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available.
Inventories were reduced by $8.1 billion in the second quarter, the most since third quarter of 2011 and subtracting 1.16 percentage points from the economy. At the same time, leaner inventories could set the stage for a pickup in production later this year should demand hold up.
Household consumption, which accounts for about 70 percent of the economy, grew at a 4.2 percent annualized rate, the biggest jump since the end of 2014 and adding 2.83 percentage points to growth. That followed a revised 1.6 percent increase from January through March. The Bloomberg survey median forecast for the second quarter was 4.4 percent.
Business Spending

Corporate spending on equipment, structures and intellectual property, decreased an annualized 2.2 percent after a 3.4 percent fall in the first quarter. Outlays for equipment dropped for the fourth time in the past five quarters. Spending on structures -- everything from factories to shops to oil rigs -- have increased in just one quarter since the end of 2014.
Inventories and the trade gap are two of the most volatile components in GDP calculations. To get a better sense of demand in the U.S., economists look at final sales to domestic purchasers, or GDP excluding inventories and net exports. That measure increased 2.1 percent last quarter after a 1.2 percent gain.
Also holding back economic growth in the second quarter was a decrease in residential investment, which fell at a 6.1 percent pace. That was the most since the third quarter of 2010 and marked the first decrease in two years.
Government spending also shrank last quarter, declining 0.9 percent, the most in more than two years as outlays for the military fell. States and municipalities also cut back.
The GDP report also showed price pressures remain limited. A measure of inflation, which is tied to consumer spending and strips out food and energy costs, climbed at a 1.7 percent annualized pace compared with 2.1 percent in the prior quarter.

Fed policy makers, who left interest rates unchanged this week, said risks to the U.S. outlook have “diminished” and the labor market is getting tighter, suggesting conditions are turning more favorable for an increase in borrowing costs.

Australia is not doing quite nicely at the moment, the Share market is on a big roll after being in shit street for a year.

Getting close to getting back in the game again.

I'll wait till Trump wins the election though and see what happens then.

Originally Posted by Cold Pizza

Things are not rosy for everyone.

Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era
Despite longevity, total growth during this economic expansion is lower than for much shorter business cycles

Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era - Real Time Economics - WSJ

Thanks to the Rethug obstruction in Congress.
Then they go and blame the Dems for their fuck-ups
Then suckers like you know who buy into it.
Not an unusual cycle.

So what drives the US economy. The previous report says 70% is domestic spending so what is the other 30% ? Well the military and arms industry is a considerable factor :

https://www.brookings.edu/2015/08/19...e-u-s-economy/


Defense Industry: Keep Paying Us or the Economy Dies

https://www.wired.com/2011/10/defens...-cuts-economy/

Defense giant Lockheed Martin had a totally sweet quarter, raking in $700 million and looking forward to the same this time next year. So it raises eyebrows when Lockheed’s anointed mouthpieces predict mass economic disaster if Congress touches the defense budget.
On Tuesday, the aerospace industry put out a report saying that chopping the defense budget would put over a million Americans out of work. Cuts that could total up to a trillion dollars over 10 years would “devastate the economy and the defense industrial base and undermine the national security of our country,” said Marion Blakeley, president of the Aerospace Industries Association, which sponsored the report.


Read more and take note that this report was paid for by the defense industry.

Another report : Military Economy: The Military and Defense Industry: An Economic Force in the U.S. | Site Selection Online
The Military and Defense Industry: An Economic Force in the U.S.



Exports only make up 12.6% of GDP and that includes military exports, less than Thailand and less than half of that of the UK.


Exports of goods and services (% of GDP) | Data


So it is essence an insular economy relying mainly on the people who live there to spend money that is mostly borrowed as the country itself lives on ever increasing debt.

Originally Posted by MrG

Originally Posted by Cold Pizza

Things are not rosy for everyone.

Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era
Despite longevity, total growth during this economic expansion is lower than for much shorter business cycles

Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era - Real Time Economics - WSJ

Thanks to the Rethug obstruction in Congress.
Then they go and blame the Dems for their fuck-ups
Then suckers like you know who buy into it.
Not an unusual cycle.

It is NOT about Dems and Repubs, IMO. It is NOT about "Congress."

The US economy is far too complex and enmeshed in the international globalized world for that.

birding:
[quote]

Originally Posted by birding

So what drives the US economy. The previous report says 70% is domestic spending so what is the other 30% ? Well the military and arms industry is a considerable factor :

https://www.brookings.edu/2015/08/19...e-u-s-economy/

Correct. Actually, I think consumption spending (people buying sh*t) is 71% of the US economy now, or more. And yes, the MIC, which takes money from taxpayers and gives it to the numerous MIC corporations.

To say it again to MrG: IT'S NOT ABOUT A POLITICAL PARTY OR CONGRESS.

The US economy is heavily dependent on consumer spending, and the fact is that the rich bastards that have been trousering all the cash and stashing it offshore don't give much of a fuck.

Originally Posted by harrybarracuda

The US economy is heavily dependent on consumer spending......

71% of the US economy is this --> consumer spending = people buying sh*t.

That's why the "durable goods orders" (purchases) are ssoooo important.

Not a great economic model, IMO.

Here is Schiff and the current economy, GDP, and inflation:

https://www.youtube.com/watch?time_co...&v=aG1Bx_5SSAk

Trying to make head or tail of the new US job statistics the seem to influence currencies and stock markets around the world. These numbers are supposed to be good news that shows the US economy is getting better, but take a closer look.

It is said that the nonfarm payrole employment rose by 270,000 in June while the unemployment rate rose by 0.2% to 4.9%. Farther along it tells us that's an unemployed increase of 347.000 to 7.8 million.
So the increase in unemployed is 77,000 more than the increase in employment.

It says that :

"Job growth occurred mainly in "Leisure and hospitality, healthcare and social assistance and financial activities. Employment also increased in information mostly reflecting the return of workers from a strike"

So no or very little growth in export industry and it include workers returning from a strike.

Now if people are on strike they are on strike from jobs they still have so surely it must be a stretch to include them as newly employed.

It goes on to detail all sort of things but read it yourself and try to work out why it is so good :

Employment Situation Summary

Most countries hold strategic grain reserves in case of major emergency or food shortages but not the US it sold all its grain reserves back in 2008 and now has nothing.

Strategic Grain Reserves Are Completely Gone in US - The Washington Standard

From the above :

The stores were gradually depleted until 2008, when the USDA decided to convert all of what was left into its dollar equivalent. And so the grain that once stabilized prices for farmers, bakers and American consumers ended up as a number on a spreadsheet in the Department of Agriculture.

Originally Posted by birding

Most countries hold strategic grain reserves in case of major emergency or food shortages but not the US it sold all its grain reserves back in 2008 and now has nothing.

Strategic Grain Reserves Are Completely Gone in US - The Washington Standard

From the above :

The stores were gradually depleted until 2008, when the USDA decided to convert all of what was left into its dollar equivalent. And so the grain that once stabilized prices for farmers, bakers and American consumers ended up as a number on a spreadsheet in the Department of Agriculture.

No surprise really, the bankers were emptying the tills so Bush probably sold everything he could get his hands on.

Originally Posted by harrybarracuda

Originally Posted by birding

Most countries hold strategic grain reserves in case of major emergency or food shortages but not the US it sold all its grain reserves back in 2008 and now has nothing.

Strategic Grain Reserves Are Completely Gone in US - The Washington Standard

From the above :

The stores were gradually depleted until 2008, when the USDA decided to convert all of what was left into its dollar equivalent. And so the grain that once stabilized prices for farmers, bakers and American consumers ended up as a number on a spreadsheet in the Department of Agriculture.

No surprise really, the bankers were emptying the tills so Bush probably sold everything he could get his hands on.

Maybe just once you could post something with a factual back up.

Originally Posted by Cold Pizza

71% of the US economy is this --> consumer spending = people buying sh*t.

Yes, but with the only exception being most of the food I bought and a few things like toothpaste, almost everything else was imported, mostly from China and Mexico.

Whose economic clitoris is that stimulating?

Originally Posted by BobR

Originally Posted by Cold Pizza

71% of the US economy is this --> consumer spending = people buying sh*t.

Yes, but with the only exception being most of the food I bought and a few things like toothpaste, almost everything else was imported, mostly from China and Mexico.

Indeed. Hordes go out to wal-mart to buy cheap low quality stuff made in China that will last about 2-3 years.

Whose economic clitoris is that stimulating?

The PRC Prime Minster's wife. Forgot her name.

Originally Posted by birding

or a story on U.S. GDP revisions, click here. The new breakdown shows a more pronounced slowdown in the economy heading into 2016. The year-over-year growth rate cooled from 3.3 percent in last year’s first quarter to 1.9 percent in the final three months of 2015, rather than the previous downshift from 2.9 percent to 2 percent. The easing in growth continued into the first half of this year. The year-over-year pace for the first quarter of 2016 was revised down to 1.6 percent from 2.1 percent, the revisions showed. That revised trajectory has implications for Fed officials, as they’re faced with an expansion that has been steadily losing steam. Friday’s report also showed that in the second quarter, GDP expanded at a 1.2 percent rate from the same period a year earlier.

Thalking about revisions a report has been published regarding the Q1 numbers. It seem the POTUSE nubers bragged about in Feb 16.

"Back February 2016, Obama took to the stage at a press conference to boast about job growth and "most importantly" how the stronger job market was "finally starting to translate into bigger paychecks." He also took the opportunity to jab at Republicans saying the strong jobs data was "inconvenient for Republican stump speeches" as they continued their "doom and despair tour." Obama's specific comments were: Most importantly, this progress is finally starting to translate into bigger paychecks. Over the past six months, wages have grown at their fastest rate since the crisis. And the policies that I’ll push this year are designed to give workers even more leverage to earn raises and promotions.

So, as I said at my State of the Union address, the United States of America, right now, has the strongest, most durable economy in the world. I know that’s still inconvenient for Republican stump speeches as their doom and despair tour plays in New Hampshire. I guess you cannot please everybody

Turns out that revisions to historical real wage growth figures issued by the Bureau of Labor Statistics yesterday are actually fairly "inconvenient" for Obama. Time to get the band back together for a reunion of that "doom and despair" tour.
In yet another stunning tribute to the "accuracy" and "consistency" of economic propagandadata being reported by our government agencies, the Bureau of Labor Statistics yesterday reported a massive downward revision of the 1Q 2016 YoY real wage growth from +4.2% to -0.4% (a 4.6% swing).
But we wouldn't worry much about it because the revisions resulted in only "small" changes in the underlying data according to the BLS:

Indexes of all hours-related measures in the business, nonfarm business, and nonfinancial corporate sectors show historical revisions because hours in the base year of 2009 were revised; resulting revisions to percent changes are small.

We guess "small" would be one way to describe a 4.6% swing in YoY real wage growth...we would probably choose something more like "abysmal" or "disastrous" but we're not ones to split hairs. Revisions to manufacturing wages and durable manufacturing wages were even worse. Real manufacturing YoY wage growth was revised from +2.8% to -4.3% (a 7.1% swing) while real durable manufacturing YoY wage growth was revised from +1.9% to -5.6% (a 7.5% swing)"


Who is going to believe any number created by an Ameristani government agency .
From +4.2% to -0.4%
From +2.8%R to -4.3%
..............

Looking forward to the Q3 "numbers", should be of interest to the voters and presidential candidates.

US banks, lending, stress tests, in this biggest stock market boom in 8 years.

It starts at 13:00, but before it is the recent story (citing The Guardian) about a recent bank in northern Italy that went down, and 18% of Italian banks loans are not being repaid.

Ameristani Health care cost increasing a great deal more than the alleged 1% inflation figure.



Obamacare Sticker Shock: Average 2017 Premium Surges 24% | Zero Hedge

Remaking US foreign policy: may the wisdom of its forefathers prevail.

The Nation 26/8/59

There is no denying that the United States is the most powerful country on Earth, both militarily and economically.

According to the Stockholm International Peace Research Institute, last year the US spent $597 billion (2.3 per cent of GDP) on defence, nearly half of the world's total defence spending of $1,676 billion.

China came in second at $215 billion (3.3 per cent of GDP). More importantly, the US military is fighting in conflict zones around the world.

In its "2016 Report on Global Military Strength" Washington think-tank the Heritage Foundation ranks the US No 1, with both hardware and software that leaves main rivals Russia and China in the dust. The report, nonetheless, expressed concerns over its inherent weaknesses. It concluded that the current US military force is adequate to meet the demands of a single major regional conflict while also attending to various "presence and engagement" activities. But it cautioned that given the current "threat environment", the US is poorly equipped to handle two, simultaneous regional flare-ups.

That said, the fact that the US does possess unmatched war capabilities compels its politicians to repeatedly boast of the most powerful military in history - and the willingness to use it.


Also worthy of note is that the US is also easily the world's largest seller of arms, responsible for nearly 33 per cent of global exports.

Economically, meanwhile, America is also the undisputed superpower, with an $18-trillion economy that accounts for 24.5 per cent of the gross world product. The US economy also maintains advantage over others via its highly advanced technology, infrastructure and abundant natural resources. Despite the fact that the US has lost its lead to China in terms of GDP-based Purchasing Power Parity (PPP) - $19.4 trillion for China versus $17.95 trillion for the US, America is still far ahead in terms of GDP per capita (PPP) at about $55,805, versus China's $14,107.

However, in today's global situation of chaotic, intertwined and violent security narratives, military and economic power is no longer sufficient to win conflicts. And even if they do succeed, the result is hardly beneficial. As Bertrand Russell said, "War does not determine who is right - only who is left." In an age where too many countries have the nuclear capability to destroy our planet many times over, the next large conflict could see the end of us all.

Like it or loathe it, America is a global power with global interests. To retain that status it must use its military and economic power to navigate this highly intricate and multifaceted global security context. To do this it needs strategic guidance - better known as foreign policy.

Heavy-handed foreign policy uses military force to protect or bolster a country's status, or else economic force via sanctions and other means to force another country to change its behaviour. But victory in such cases has usually proved elusive and unsustainable. The "beggar thy neighbour" policy always backfires.

The US, however, does not lack shining examples of successful foreign policy that has helped navigate the country through challenging times.

When George Washington became president in 1789, six years after the Revolutionary War, the British were still trying to undermine US domestic security and international trade. Washington refused to react impulsively. When France launched the French Revolutionary Wars (1792-1797) against Britain, Austria and other European monarchies, the US conducted an adroit foreign policy to protect its own interests without getting involved in conflict. Washington, who had served more than 40 years in the army, regarded war as the worst tool of foreign policy. He argued forcefully that the "Great Rule" in conducting American foreign policy was "to maintain commercial partnerships without becoming involved in the politics of foreign lands".

Another military man-turned US president, Dwight D Eisenhower (1953-1961), steered America clear of contentious conflicts with Russia and China by upholding a foreign policy of peace and respect, in search of win-win solutions that didn't include diving up the pie equally.

A recent article in the National Interest by Daniel L Davis quoted Eisenhower's 1953 speech on foreign policy:

"No people on earth can be held, as a people, to be an enemy, for all humanity shares the common hunger for peace and fellowship and justice." Second, "No other country's security and well-being can be lastingly achieved in isolation but only in effective cooperation with fellow nations." And third, "Any nation's right to a form of government and an economic system of its own choosing is inalienable."

Hear that? A country has an "inalienable" right to choose its own form of government and economic system.

In these two presidents America had statesmen who possessed a prudent global view, and who would have steadfastly opposed the arrogant and self-righteous policy governed by a short-sighted and insular outlook that we have witnessed in recent times. Such policy has repeatedly proven to be counterproductive and detrimental to America's own interests. In its utter disrespect for other nations' autonomy, the US has alienated friends and allies, and is garnering increasing anti-American sentiment around the globe.

As America is poised to welcome its 45th president, let the world hope that the new US Commander-in-Chief heeds the wisdom of his/her nation's forefathers and overhauls its calamitous foreign policy of today.


Hear that? A country has an "inalienable" right to choose its own form of government and economic system.

If every US president since Eisenhower had lived by that the world would be a better and safer place today. And the US would be a better and more respected country.