U.S. Economy July 2021-

Written by  //  November 26, 2021  //  Economy, U.S.  //  No comments

The almost-normal holiday returns
(Politico) — Inflation continues to dominate voters’ perceptions of the economy , and things are likely to stay that way through the holiday shopping season. Top Democratic pollsters and others in the party are urging the White House to get more vocal and serious about tackling inflation, perhaps even pinning the blame on big companies raking in cash, WaPo’s Annie Linskey and Ashley Parker report from Nantucket. Some legislators want Biden to talk more about rising prices and what he’s doing to combat them, while others think he should instead emphasize other parts of his economic message.
Supply-chain woes are front and center in pretty much every Black Friday story. And with consumers concerned about whether their online orders will be fulfilled before Christmas, it could be a boon for brick-and-mortar businesses. (“Shoppers can leave with goods in hand, versus waiting on promised dates from shippers,” a Deloitte exec told CNN.)

19 November
House passes roughly $2 trillion spending package that would expand social benefits and fight climate change
Republicans delayed the vote, but Democrats pushed ahead on one of Biden’s key priorities. The battle now moves to the Senate.
(WaPo) The measure amounts to a dramatic re-envisioning of the role of government in Americans’ daily lives. It sets aside in some cases historic sums to aid workers, families and businesses, seeking to rewire the very fabric of an economy still recovering from the financial devastation wrought by the coronavirus pandemic.
The successful 220-to-213 House vote on the Build Back Better Act, bearing the name of the president’s 2020 campaign slogan, marks the second legislative milestone for Democrats this month. It comes about two weeks after they joined with Republicans to finalize a separate, sweeping bill to improve the nation’s roads, bridges, pipes, ports and Internet connections, delivering long-sought infrastructure investments that Biden signed into law Monday.

Heather Cox Richardson: November 18, 2021
the economic news continued to be good. A report from the Organisation for Economic Co-operation and Development on Thursday showed that the United States is the only G7 country to surpass its pre-pandemic economic growth. That growth has been so strong it has buoyed other countries.
Meanwhile, the administration’s work with ports and supply chains to handle the increase in demand for goods appears to be having an effect. Imports through the ports of Los Angeles and Long Beach are up 16% from 2018, and in the first two weeks of November, those two ports cleared about a third of the containers sitting on their docks.
Then the Congressional Budget Office (CBO) released its score for the Democrats’ $1.85 trillion Build Back Better Act. The CBO is a nonpartisan agency within the legislative branch that provides budget and economic information to Congress. The CBO’s estimate of the costs of the Build Back Better Act will affect who will vote for it.
The CBO’s projection was good news for the Democrats; it was in line with what the Democrats had said the bill would cost. The CBO estimates that the bill will increase the deficit by $367 billion over ten years. But the CBO also estimates that the government will raise about $207 billion over those same ten years by enforcing tax rules on those currently cheating on them. These numbers were good in themselves—in comparison, the CBO said the 2017 Republican tax cuts would cost $1.4 trillion over ten years—but they might get even better. Many economists, including Larry Summers, who has been critical of the Biden administration, think that the CBO estimates badly underplay the benefits of the bill.
The CBO score also predicted that the savings from prescription drug reforms in the bill would come in $50 billion higher than the House had predicted.

9 November
Paul Krugman: The making of a feel-bad boom
By the usual measures, the U.S. economy has been booming this year. Employment has risen by more than five million since January; a record number of Americans say this is a good time to find a quality job, a sentiment reflected in the willingness of an unprecedented number of workers to quit (yes, high quit rates are a good sign). One answer is that Americans are upset about inflation and disrupted supply chains. And that’s surely true. But I’d suggest that it’s only part of the story — that to an important extent, when you ask people about the state of the economy, their replies don’t necessarily reflect their actual experience. Instead, they respond based on what they imagine is happening to other people, a perception that can be shaped by news reports and their own political leanings.

6 November
Congress approves $1.2 trillion infrastructure bill, sending measure to Biden for enactment
The infrastructure proposal, nearly half of which constitutes new spending, marks one of the most significant investments in the country’s infrastructure since Congress responded to the Great Recession. It seeds new funding in the hopes of delivering urgently needed fixes to the country’s outdated inner-workings while setting the U.S. on track to tackle more intractable future challenges, including the fast-worsening climate crisis.
(WaPo) House lawmakers late Friday adopted a roughly $1.2 trillion measure to improve the country’s roads, bridges, pipes, ports and Internet connections, overcoming their own internecine divides to secure a long-sought burst in federal investment and deliver President Biden a major legislative win.
The bipartisan 228-to-206 vote marked the final milestone for the first of two pieces in the president’s sprawling economic agenda. The outcome sends to Biden’s desk an initiative that promises to deliver its benefits to all 50 states, a manifestation of his 2020 campaign pledge to rejuvenate the economy in the aftermath of the coronavirus pandemic and “build back better.”
The path to passage proved littered with political conflict, pushing to the limits a fractious party with still-widening ideological fissures. Democrats initially hoped to approve the infrastructure bill on Friday along with a separate, roughly $2 trillion proposal to overhaul the nation’s health care, education, immigration, climate and tax laws. Doing so would have advanced two spending initiatives that have been stalled on Capitol Hill for months.
[FACT SHEET: The Bipartisan Infrastructure Investment and Jobs Act Advances President Biden’s Climate Agenda  (August 05, 2021)]

26 October
Democrats Hammer Out Novel Plan to Tax Billionaires and Corporate Giants
(NYT) New proposals would fund social and climate programs by tapping billionaires’ unrealized gains and by ensuring that the biggest companies cannot avoid income taxes altogether.
(Reuters) U.S. billionaires would pay tax on unrealized gains from their assets to help finance President Joe Biden’s emerging social-policy and climate-change legislation, according to a proposal unveiled by the top Senate Democrat for tax policy.
The so-called billionaires tax, announced by Senate Finance Committee Chairman Ron Wyden, is part of a two-pronged legislative strategy that also includes a proposed 15% corporate minimum tax on the most profitable U.S. corporations.

13 October
Biden Announces Measures at Major Ports to Battle Supply Chain Woes
The Port of Los Angeles will join the Port of Long Beach in operating 24/7 as the administration struggles to address a problem that is boosting inflation.
(NYT) President Biden announced Wednesday that the Port of Los Angeles will operate around the clock and major companies including Walmart, UPS and FedEx would expand their working hours as his administration struggles to relieve growing backlogs in the global supply chains that deliver critical goods to the United States.
Product shortages have frustrated American consumers and businesses and contributed to inflation, which threatens to hurt the president politically. And the problems appear poised to worsen, enduring into late next year or beyond and disrupting shipments of necessities like medications as well as holiday purchases.
He praised the role of the International Longshore and Warehouse Union in stepping up to work extended hours and also urged the passage of an infrastructure bill that would make significant investments in ports, roads and factories for the longer term.

11 October
Is the U.S. Already in Recession?
(Bloomberg New Economy newsletter) Given America’s pandemic recession is only judged to have ended in April 2020, discussion of a double dip so soon seems premature.
Yet, David Blanchflower of Dartmouth College and Alex Bryson of University College London have kicked off such a debate.
In a new research paper released last week, they used history to wonder if a recent decline in consumer expectations suggests the world’s biggest economy is already in recession again.
Every slump since the 1980s has been foreshadowed 18 months ahead of time by drops of at least 10 points in gauges of consumer expectations from the Conference Board and University of Michigan, according to the authors.

28 September
The Biden administration could sidestep McConnell’s refusal to pay America’s bills by minting a $1 trillion platinum coin
The Treasury Department technically has the ability to issue platinum coins of any denomination.
In theory, Janet Yellen could mint a $1 trillion platinum coin and deposit it at the Federal Reserve.

Heather Cox Richardson September 27, 2021
Today, the Senate considered a bill to fund the government until December and to raise the debt ceiling. The Republicans joined together to filibuster it. … The Republicans are taking the country hostage to undercut the Democrats. If Congress does not fund the government by Thursday, the government will shut down. And if the country goes into default sometime in mid-October, the results will be catastrophic
The new fiscal year starts on October 1, and if the government is not funded, it will have to shut down, ending all federal activities that are not considered imperative. This year, such activities would include a wide range of programs enacted to combat the economic crisis sparked by the coronavirus pandemic.
Not funding the government means it will have to shut down; not paying our debts means catastrophe. Both of these measures will hobble the economic recovery underway; refusing to manage the debt ceiling will collapse the economy altogether and crash our international standing just as President Biden is trying to reassert the strength of democracy on the world stage.

23 September
Why Trouble at a Chinese Real-Estate Company Led to a U.S. Stock Market Plunge
Wall Street seems to be wrapping its head around just how fast things are changing in Xi’s China. Evergrande’s woes are emblematic of those changes.
(New York) While Wall Street scrambled to understand how an Evergrande bankruptcy would affect the global financial system, another narrative started to form: that Evergrande’s troubles are best read as yet another sign that Xi is dead serious about cracking down on the go-go culture of the last two decades, zeroing in on video games, tech, and the elite — including billionaire real-estate developers. This line of thinking also tends to lead to the seismic conclusion that all the U.S. companies pinning their long-term growth strategies on doing more business in China may soon have to do a major rethink.

18 September
Geriatric millennials have the most power in the workforce right now
Older millennials and younger Gen Xers are driving America’s Great Resignation, per HBR.
In the middle of this cohort are geriatric millennials, known for acting as a generational bridge.
With their unique skillset and greater freedom to quit, they have the upper hand in the workforce.

(Business Insider) By now, you’ve probably heard about the Great Resignation.
Coined by psychologist Anthony Klotz, the trend involves millions of Americans dropping out of the workforce throughout the economy as it reopened more and more. Over 3.6 million people quit in April, May, June, and July, according to the Bureau of Labor Statistics.
According to a recent analysis by the Harvard Business Review that looked at 9 million employee records from more than 4,000 companies, mid-career employees are driving the quits. Resignation rates are highest among 30- to 45-year-old employees, increasing on average by more than 20% over the past year.

8 September
America’s new retirement age is 62 — or younger. The ‘Great Resignation’ is giving boomers their golden years back.
Nearly half of Americans in a New York Fed survey said they expected to retire before turning 62.
Retiring earlier lets Americans use their “golden decade” for better financial planning.
But the economy depends on older workers, and a move to retiring early could upend the labor market.

4 September
Why America has 8.4 million unemployed when there are 10 million job openings
The economy is undergoing massive changes. There’s a big mismatch at the moment between the jobs available and what workers want.
(WaPo) [T]he nation remains in the midst of a deadly pandemic with covid-19 hospitalizations back at their highest rates since January. The surge is weighing on the labor market again, with a mere 235,000 jobs added in August. There are still 5 million fewer jobs compared to before the pandemic, reflecting ongoing problems, including child care as some schools and day cares shut down again from outbreaks.
This weekend, the employment crisis will hit an inflection point as many of the unemployed lose $300 in federal weekly benefits and millions of gig workers and self-employed lose unemployment aid entirely. Some anticipate a surge in job seekers, though in 22 states that already phased out those benefits, workers didn’t flood back to jobs.

30 August
Nouriel Roubini: The Stagflation Threat Is Real
(Project Syndicate) I have been for several months that the current mix of persistently loose monetary, credit, and fiscal policies will excessively stimulate aggregate demand and lead to inflationary overheating. Compounding the problem, medium-term negative supply shocks will reduce potential growth and increase production costs. Combined, these demand and supply dynamics could lead to 1970s-style stagflation (rising inflation amid a recession) and eventually even to a severe debt crisis.

Heather Cox Richardson August 10, 2021
Last Friday, the Bureau of Labor Statistics in the Department of Labor released the jobs report for August 2021. It was stronger than economists had predicted, and even stronger than the administration had hoped.
In July, employers added 943,000 jobs, and unemployment fell to 5.4%. Average hourly wages increased, as well. They are 4% higher than they were a year ago.
Harvard Professor Jason Furman, former chair of President Barack Obama’s Council of Economic Advisors, tweeted: “I have yet to find a blemish in this jobs report. I’ve never before seen such a wonderful set of economic data.” He noted the report showed “Job gains in most sectors… Big decline in unemployment rate, even bigger for Black & Hispanic/Latino… Red[uctio]n in long-term unemp[loyment]… Solid (nominal) wage gains.”
“Still a long way to go,” he wrote. “[W]e’re about 7.5 million jobs short of where we should have been right now absent the pandemic. But we’ve made a lot of progress.”
The jobs report is an important political marker because it appears to validate the Democrats’ approach to the economy, the system the president calls the “Biden Plan.” That plan started in January, as soon as Biden took office, using the federal government to combat the coronavirus pandemic as aggressively as the administration could and, at the same time, using federal support to restart the economy.

6 August
New York Intelligencer Slack Chat: Delta Be Damned, the U.S. Economy Keeps Chugging Along
Benjamin Hart spoke with Intelligencer senior writer Eric Levitz about what appears to be a piece of unambiguously good news, the state of inflation and labor shortages, and to what extent the pandemic still threatens the economy.
Ben: Friday’s jobs report was encouraging in almost every sense of the word. There were strong hiring numbers in most industries, for a total of 943,000 jobs added in July. The unemployment rate ticked down significantly, to 5.4 percent. (Still more than a point higher than pre-pandemic.) It’s never smart to make too much out of one month’s data, but this comes amid generally strong economic indicators elsewhere. What is your first-blush impression of this report and how it fits in with the overall economic picture in America?
Eric: My first impression is that the recovery is much stronger than we realized (or at least, was much stronger before Delta really took off.) The report didn’t just show that the economy added more jobs in July than had been expected; it also revised June’s number upward. As the Times’ Neil Irwin notes, yesterday, the consensus estimate of the average monthly job gain across May, June, and July was 567,000. That number is now 832,000.
What’s more, the drop in the unemployment rate is especially impressive because the pool of job-seekers also expanded. The headline unemployment rate tells us the percentage of Americans who are actively looking for work but can’t find any.

2 August
$1 trillion infrastructure bill heads for Senate debate
(AP) — Senate Majority Leader Chuck Schumer sought to speed up consideration of a nearly $1 trillion bipartisan infrastructure package Monday, promising that Democrats would work with Republicans to put together amendments.
Formally the Infrastructure Investment and Jobs Act, the proposal clocked in at some 2,700 pages late Sunday after a hurry-up-and-wait rare weekend session.

29 July
US economy returns to pre-pandemic level but misses growth forecasts
(The Guardian) Gross domestic product (GDP) increased at a 6.5% annualised rate in the three months to the end of June, according to figures from the US Commerce Department on Thursday, as government financial support helped power a sharp rise in consumer spending.
This marked an increase on a revised rate of 6.3% in the first three months of the year, but was lower than forecasts of an 8.5% rise – stoking fears over a faster than expected slowdown in the world’s largest economy amid the spread of the Delta variant of Covid-19.
Shortages of workers, raw materials and computer chips in recent months have also threatened to weigh on growth and drive up inflation.

26 July
US Economic Turmoil: The Paradox of Recovery and Inflation
By Syed Zain Abbas Rizv
(Modern Diplomacy) The US economy has been a rollercoaster since the pandemic cinched the world last year. As lockdowns turned into routine and the buzz of a bustling life came to a sudden halt, a problem manifested itself to the US regime. The problem of sustaining economic activity while simultaneously fighting the virus. It was the intent of ‘The American Rescue Plan’ to provide aid to the US citizens, expand healthcare, and help buoy the population as the recession was all but imminent. Now as the global economy starts to rebound in apparent post-pandemic reality, the US regime faces a dilemma. Either tighten the screws on the overheating economy and risk putting an early break on recovery or let the economy expand and face a prospect of unrelenting inflation for years to follow.

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