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White House officials have begun preparing options to help bolster the American economy and prevent it from falling into a recession, including mulling a potential payroll tax cut and a possible reversal of some of President Trump’s tariffs, according to people familiar with the discussions.Saying that "the fundamentals of the economy are strong" is sort of like saying "the foundation of this structure is sound" even while smoke is wisping out of the attic.
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19 comments:
Of course they're proposing a payroll tax cut, let's weaken Social Security and Medicare to prop up the damage we've done to the economy. Nobody is gonna need that stuff in case of a massive downturn, and besides, we've been trying to kill them since their introduction.
And I thought you didn't believe in Keynesian economics, anyway.
-Doug in Oakland
Damage? Really?
That phrase "the fundamentals of our economy are strong..." sounds a bit familiar...
https://www.youtube.com/watch?v=D1wag6M8_aQ
Yes, B., damage. As of December 2018, the damage was quantified by a number of sources (ImpactECON, Tax Foundation, Maudlin Economics) as 2019 GDP down between $125,000,000 and $365,100,000 ($2,347 per household, $915 per person at the top end), 2,750,000 jobs lost, and lower wage growth for all workers. Cumulative GDP loss between 2018 and 2030 is $2,800,000,000,000. And, by the way, the ImpactECON study was financed by Koch, FYI. Since this study, more tariffs have been added, and as you well know, the U.S. consumer pays the tariffs, not China.
Now, let’s look at Agriculture. Donnie has destroyed the biggest market for U.S. agriculture, basically zeroing exports to China, for a loss of around $5,900,000,000, and that understates the impact on the corn and soy markets. Then he turns around and instructs his people to waive ethanol requirements for a number of refineries, and knocked another 35-45% off corn prices.
Donnie bumped GDP last year with tax cuts, but its back to the baseline again, actually slightly slower than the Obama economy, in fact. So once again he is talking about trying to juice the economy with tax cut or monetary stimulus...so, if the economy is so good, why do we need these tricks? It’s someone else’s fault when the stock market is down, but Donnie’s fault when it’s up, eh?
Donnie is driving the country into the ditch with this trade war, and has finally realized it...the question is how much damage will he do trying to delay the recession until after the election? A payroll tax cut in the current economy would be political suicide for Congress, changing the insolvent date for Social Security into the late 2020’s from the late 2030’s, that’ll make a great attack ad.
Couple of points: Ethanol corn market is different than feed corn. SO that doesn't add up. Corn and soy are fungible. IF the Chinese buy elsewhere, then other countries will end up buying our food. That market is pretty much based on supply, as demand is pretty much just a slow (but steady and predictable increase.
And your economy numbers are all projections. 5-10 years in the future. Those same sources said he'd dump the economy in the first year. I haven't seen it yet, and, frankly, doubt they are correct.
Awfully soon to see what, if any, the "Trade War" will do to our economy. I think that it will make our economy better off once we are weaned off of the Chinese cheap labor, and when China is forced to play fair.
Then again, this time you could be correct.
We will have to wait and see if your hope that the economy crashes in order that Trump will fail comes true.
B., the corn market and soy market ISN’T as fungible as you believe. The problem is that prices have cratered and farmers are being run out of business. The point of the ethanol issue is that the corn for that production was planted, and now demand is halved. President Obama issued less waivers on this subject during his whole run than Donnie directed be issued yesterday.
The economic projections were for 2019...let’s see how we’re doing...2018 GDP growth revised down to 2.5% (sorry, Donnie, there goes that achievement you bragged about), Q2 2109 dropped to 2.1%, down from Q1 3.1%, and is forecast at 2% the rest of the year...and a flat 2% for 2020. Business investment was negative in Q2...FDI has dropped almost 10% since Donnie took office, and that’s money that ISN’T invested in the U.S.
Please tell me how US, the U.S., paying for tariffs will make China play fair? There is the theory that domestic production will magically revive, which has proven false. So perhaps Vietnam, Indonesia and the Philippines will make up the difference at low costs...but then we have building and development in South-East Asia, where Chinese companies rule the roost. So the U.S. consumer is effectively financing both punitive tariffs that are used to give tax curs to the rich AND helping pay Chinese companies to build infrastructure in SE Asia.
That notorious liberal powerhouse,J.P. Morgan, has the current tariff costing a household $600 per year, increasing to $1000 when the new tariffs roll out completely.
https://www.cnbc.com/2019/08/20/a-recession-dashboard-from-credit-suisse-indicates-the-economy-is-nowhere-near-a-recession.html?__source=facebook%7Cmain&fbclid=IwAR0rrp-do4aUqKBWfBNz9nAnYRgB6-G9ls2NRy4nbMt3rq73J-dl5kX5S8s
Just sayin'.
And it is from CNBC, so not a "Conservative Media" source
Easy there, B. Shifting the goalposts like that is a bad look. Implies that you know you've been thoroughly beaten and are trying to distract from the original discussion.
You started this conversation by objecting to Doug's assertion that Trump has damaged the economy. CP continued it by providing some strong, well-sourced evidence to back it up and a then further rebuttal of your "couple of points". Abruptly shifting from "has Trump damaged the economy" to "do indicators suggest a recession will occur" is, at best, a non sequitur.
Your chosen article would also appear to bolster CP's claims about the present economic trend. It notes that the economy is at its weakest level in the last three years and chalks that up to trade worries.
Oh and the "< a >" tag is your friend...
"A ‘recession dashboard’ from Credit Suisse indicates the economy is nowhere near a recession"
How is this ambiguous?
How is this "Shifting goalposts"? 'Twas what I keep getting asked for...a cite....and not one from a "Conservative Rag" but from one of your own media.
What color is the sky in your world?
As to CP'S "Rebuttal" he obviously doesn't understand what sets the market pricing for Corn and Soybeans. Nor the aim of Tariffs.
But hey, hope that the economy fails so you can keep claiming "Orange Man Bad". I find it sad that you are falling for the obvious manipulation by the Media. Have you noticed that they ALL jumped on "the economy is bad" bandwagon at the same time? Odd that. Almost as if someone is telling them to do so.
And, honestly, if folks hear it loud enough and often enough, they might just curb their spending, which could make that claim into a reality.
Of course, if they do make it happen, they'll hurt their countrymen a lot, but that doesn't matter if they can damage Trump....right?
Really, B., really? You asked for evidence of damage, I obliged your request, and you changed to no sign of a recession. That is most certainly moving goal posts.
I’d love to hear you explain why I don’t understand soy or corn pricing, as would a whole series of economics professors who taught me. Let’s start slowly, China used to consume 60% of the United States exported soy bean crop, or about 25% of the entire U.S. production. China now buys 0, that’s ZERO U.S. soy beans, so the market is now distorted, with an immediate 33% oversupply internal to the United States. So now the farmer receives less for his soy beans because the buyer has less demand, or only more expensive places to sell the product. The second biggest market for U.S. soy (and corn, for that matter) is Mexico, who is buying less from us and more from Brazil because of Donnie’s tariff threats...if a tariff might appear suddenly while a shipment is on the way, the importer could take a big loss. The next market is the Netherlands, but the transport for these soybeans is in the Pacific...so Spain is also out...and we move to Japan. Japan imports about 4% of what China used to, so that leaves 24% of the U.S. soy bean crop looking for silo space.
The problem here is that the silos are already full. U.S. production has been a high levels for years, and commodity prices have tumbled as a result. Current delays in planting will help, but farmers are facing a tough calculation. They can plant and risk a poor crop due to the lateness, of claim crop insurance that pays about half what a normal crop would. Now the additional reduction of demand will have to factor into the decisions farmers make.
Commodities prices have trended down for several years, even as fixed costs have risen, resulting in an increasing number of family farms failing and/or selling to corporate farmers. Crop price supports have not kept up with the fall, and have in a perverse way contributed to the surplus that now bogs the system down. A large number of Congressmen receive such subsidies.
Down, if you’d like to talk corn, and the market distortions introduced by the ethanol mandate and then modified year after year as Congress tinkered with the requirements and definitions, before Donnie singlehandedly literally destroyed the market by giving away the farm (literally) to Exxon-Mobil and company, that’s another post.
CP: you are talking out of both sides here.
You claim that you understand the reasons for farm commodities pricing. Then you claim that Donnie's tariffs brought it down. Then you point out that commodities are a surplus, and have been for a few years. Then you point out that prices were already trending down, BEFORE Donnie's trade war. You do understand what drives prices, right? You claim to, but your words say otherwise.
Now, corn specifically grown for ethanol, yes, Donnie did destroy the pricing. But the ethanol mandate was a net loss for taxpayers, didn't do shit to lower emissions, and was an artificial market driven by "Green" folks who have no idea as to how or why it was a bad idea. Ethanol is a net loss energy wise, and if it were a good idea, then we'd not need so many subsidies nor the mandate that our gasoline have 10 (or more) percent ethanol. The market would include it if it were an economic gain or if the consumers demanded it. Neither is true. Donnie simply removed the forced inclusion of a useless additive. Just like other businesses, no one guaranteed to buy the product.
As for "evidence of damage: You said we were heading into a recession. I refuted it. Here's another that shows no sign of a recession and doesn't see any evidence of "damage" 5-10 years in the future:
https://www.marketwatch.com/story/bank-of-americas-ceo-has-one-simple-reason-why-he-doesnt-see-a-recession-looming-2019-08-21
See: cites are easy to find that state one thing or another. These folks have as much agenda as you or I.
Nope, B., I opined we were heading for a recession, I provided proof of harm to the economy. You never refuted the harm to the economy, you just said “my daddy doesn’t believe a recession is coming”. So, we have a 77%+ indicator of a recession bound, but your hero’s don’t see one...oh, of course, because even 99+% is not proof enough, as your climate change position shows.
The good news, Indiana won’t flood...the bad news, Indianapolis will have a climate more like Columbia or Charleston, SC. Good for sunbathing, not so good good for grain crops.
So, Federal deficit to top a trillion next year, heck of a job, eh?
"Have you noticed that they ALL jumped on "the economy is bad" bandwagon at the same time? Odd that."
Not really. They all jumped when the yield curve inverted, an event that has preceded the last six recessions.
Now we can have a discussion about whether it is signalling the approach of another recession or not, but not about why people started writing about it when they did, they started when it inverted.
-Doug in Oakland
Found this from CNBC, B. You were saying about Credit Suisse?
The spread between the yield on the 10-year Treasury note and that of the 2-year note on Wednesday turned negative for the second time in one week, a recession warning that flashed for the first time since 2005 on Aug. 14.
The inverted bond-market spread is seen by many veteran traders as an important recession omen, though the timing on the eventual downturn is less predictable. Shortly before 4 p.m. ET, the yield on the benchmark 10-year Treasury note was below the 2-year Treasury note yield by a hair. The spread then quickly widened again and was last seen at a positive 1.8 basis points with the 10-year yield at 1.587% and the 2-year rate at 1.569%. A basis point is 0.01 percent.
Link
Now three inversions, multiple reports of the damage done in terms of lost growth and GDP costs...and more calls suggesting a recession is coming too.
Nope, you provided 3 opinions, not proof. Cites to a story, but just opinions.
What makes them more valid than the opinions of at least two bank CEO's (Hint: There are more if you bother to look)? They obviously don't believe in the "Damage" to the economy you'd like to believe Trump did.
See, you only believe or even give credibility to those opinions that meet your beliefs. The rest you ignore.
I'll believe the CEO's over your so called experts. I won't discount what they say, however, and will keep an eye on the indicators they point out. I will assume that they MIGHT be right. That's the difference. I won't let my hate for "Orange Man Bad" overwhelm me enough that I won't believe anything that says otherwise. Barry did as much damage to our economy, and yet it recovered quickly, so even if you are correct, it might not make any difference in the long term. Doesn't mean I won't hedge my bets.
DA: you link goes to "Not found" even when I tried fixing the typos. I'd like to read it if you can find it again.
Here’s the link, B
https://www.google.com/amp/s/www.cnbc.com/amp/2019/08/22/us-bonds-treasury-yields-tick-higher-ahead-of-jackson-hole-symposium.html
DA: Thanks.
Interesting.
B., CBO projections on GDP and deficit are hardly opinions.
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