Advertisements

Private Sector GDP Growth is Kind of Anemic

Today’s GDP report got me curious about something: how does private sector GDP compare to total GDP? That is, if you pull out government contributions to GDP growth, what does purely private-sector growth look like? Here it is:

Private sector growth has been declining since the start of the expansion, and that decline has picked up speed over the past two years. It’s no wonder President Trump was so eager to agree to sizeable increases in the federal budget this week. He knows perfectly well that his tax cut has worn off and he needs all the help he can get from government spending to prop up an increasingly anemic private sector. For the next year, anyway.

Personal consumption was up a healthy 4.3 percent, but business investment plummeted -5.5 percent. Exports were down and imports were flat. Federal government spending added more than usual to GDP by about 0.4 percentage points. State government spending was also higher than average, by about 0.2 percentage points. If government spending had been at normal levels, GDP would have increased 1.5 percent instead of 2.1 percent. Inflation was higher than last quarter.

Overall, this is an OK but not great GDP report for the private sector, saved only by higher government spending.

The most remarkable thing about Donald Trump is how eerily stable his approval rating is. Here is 538’s chart over the past year:

After the Republican tax cut passed in late 2017, Trump’s approval rating rose to 41 percent and it’s stayed within two points of that ever since. I don’t know if this is good or bad—bad for Trump, I suppose, since that’s a tough re-elect number—or if there’s much Trump can do to improve it. But it’s definitely unusual. It sure looks like nearly everyone has their mind made up about Trump and isn’t likely to change it.

 

Source: Private sector GDP growth is kind of anemic

Advertisements

Jobs Growth Recovers In March After A Disappointing February

iStock

That sound you’re hearing might be a sigh of relief from investors reacting to this morning’s monthly payrolls report.

After a weak showing in February that raised fears of an economic slowdown, job creation bounced back in a big way with 196,000 jobs added by the U.S. economy in March. That was about 20,000 above expectations, and way above revised growth of 33,000 in February. What we’re seeing here is a revergence to the mean in terms of average employment numbers, and that’s reassuring.

With the March number in hand and job growth back on a more healthy pace, the February number might now be chalked up to the after-effects of the government shutdown and bad winter weather. The government said job growth over the last three months has averaged 180,000, and that’s thanks to strong growth in January and again in March.

Average hourly wages grew 3.2% year-over-year last month, another sign of possible economic strength, while the overall unemployment rate stayed at 3.8%, near 50-year lows. Inflation has been a non-starter lately, so the better than 3% wage growth isn’t likely to get many people worried about potential rising prices that sometimes go along with higher wages.

With the jobs data in hand, stocks added to earlier gains in pre-market trading. If we’d gotten another report like February’s, it conceivably might have weighed on the market. Still, one thing to potentially worry about today is a possible “Friday fade,” where investors see a good number, decide jobs growth isn’t something to worry about, and then go back to worrying about other things.

If you want to find imperfections in today’s data, it might be in the type of jobs created. While business and professional services and health care led the gains—which we’ve seen most of the year and looks great—manufacturing and construction again showed little change, the government said, though 16,000 construction jobs did get added. Those are areas many analysts look for when they seek signs of economic strength, but they’ve been a bit quiet the last two months.

Restaurants and bars, along with construction, all had weak growth in February likely due in part to weather, but only restaurants and bars bounced back as temperatures warmed in March. That could be something to keep our eye on, though it’s not worth worrying about too much.

Going into the report, a lot of focus had been on the February number and what it might mean for the economy. When you combine weak jobs growth with some of the low inflation and sluggish retail sales data seen recently, it appeared to send signals about possible underlying consumer weakness. The stock market struggled in early March as investors wrestled with the February jobs data.

Since then, economic data have improved, but that ominous February jobs reading wasn’t far from many investors’ minds. Today’s report could mean one less worry.

China, Strong Data Also in Focus

The market has seemed a bit like an eager dog straining on a leash this week. Excitement about the potential completion of a trade deal between the United States and China has helped provide forward momentum to continue the enthusiasm from Monday’s strong manufacturing data.

But there does seem to be a leash keeping the market from really going gangbusters. One part of that could be some less-than-stellar economic data this week on U.S. durable goods orders, domestic private-sector payrolls, and German industrial orders.

But it’s also possible that investors and traders have kept their optimism in check given the uncertainty ahead of today’s jobs report. And the fact of the S&P 500 nearing an all-time high could be acting as a weight of its own, as the market doesn’t have a huge catalyst to move dramatically higher.

Of the two main causes for worry about global economic growth—the U.S.-China trade war and Britain’s exit from the European Union—it’s a trade deal that seems to be the closest to becoming a catalyst for a rise in stocks. However, it’s also arguable that much of the optimism for a deal has already been priced into the market, as expectations of a resolution have been one of the key drivers for this year’s solid comeback after the market tanked late last year.

Onward and Upward

On Thursday, investors continued to look for developments on the trade front, as President Trump was scheduled to meet with China’s top trade negotiator after the market closed. With sentiment leaning bullish, the S&P 500 continued advancing toward its record Thursday, posting its best close so far this year. The trade meeting ended without too many new details, but stocks moved mostly higher overnight in Europe and Asia.

The Dow Jones Industrial Average also gained yesterday, led by a nearly 2.9% rise in shares of Boeing despite Ethiopia’s transport minister saying the crew in the deadly crash last month of a 737 Max jet made by Boeing had repeatedly performed procedures provided by the company but still couldn’t control the plane. The company’s shares appeared to get some lift after Barron’s highlighted a tweet by Boeing’s CEO about a software update performing safely in a demo flight. Bloomberg reported that the company’s shares gained ground as optimism about a trade deal helped shares shrug off the latest developments on the crash.

In other corporate news, Tesla’s shares fell more than 8% Thursday after the automaker disappointed investors by reporting a bigger-than-expected drop in auto sales. The roughly 63,000 deliveries fell short of what analysts had been expecting.

uncaptioned image

Figure 1: Eye on the Greenback: The U.S. dollar (candlestick) has been climbing vs. other currencies, though it leveled off this week. It’s not far from its 2019 highs thanks in part to some strong U.S. data and concerns about Brexit. Meanwhile, gold (purple line) has been descending, which often happens when the dollar gains ground. Data Sources: ICE, CME Group. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Data Sources: ICE, CME Group. Chart source: The thinkorswim® platform from TD Ameritrade.

Consumers Keeping Their Jobs: In U.S. economic news, initial jobless claims fell to their lowest level since 1969, according to the latest Labor Department numbers. In the seven days ended March 30, initial claims for state unemployment benefits, a rough gauge of layoffs, fell by 10,000 to about 202,000, the third consecutive decline. “The key takeaway from the report is that it suggests employers are reluctant to let go of employees,” Briefing.com said. “That is a positive consideration in terms of the economic outlook since feelings of job security help fuel increased consumer spending activity.”

Sentiment Data on Tap: Speaking of the U.S. consumer, which drives a huge portion of the domestic and global economies, investors are scheduled to get a reading on consumer sentiment for April from the University of Michigan next week. The last reading, for March, increased from February’s number. “Rising incomes were accompanied by lower expected year-ahead inflation rates, resulting in more favorable real income expectations,” the university said then. “Moreover, all income groups voiced more favorable growth prospects for the overall economy.” It could be interesting to see if consumer sentiment for April continues to improve.

Cain on Rise? On Thursday, President Trump said he had recommended former Republican presidential candidate and pizza chain chief executive Herman Cain for a Fed board seat. The news comes after Trump has expressed displeasure with Fed Chairman Jerome Powell after a series of interest rate hikes. But as CNBC points out, Cain may not end up being as dovish as the president might wish, noting a 2014 tweet where Cain said the central bank “can’t keep the economy running on the fumes of artificially low interest rates forever.” For now, though, the Fed seems committed to a dovish policy as inflation remains muted.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500…

Source: Jobs Growth Recovers In March After A Disappointing February

Southeast Asian Business Leaders Must Step Up On Development

Consider two statistics about Indonesia: Economists forecast the country will become the world’s fourth-largest economy by 2050. We also have the world’s highest burden of tuberculosis after India, claiming the lives of 150,000 to 200,000 people every year.

These figures illustrate the extreme inequalities dogging the world’s fourth-most populous nation, despite impressive economic growth in the last decade and cutting poverty by half.

In Jakarta and other main cities, a burgeoning middle class is drawing local and international investors, from vehicle companies to financial services to digital technology to retail and fast food chains. Yet tuberculosis still affects far too many people, particularly poor people suffering from malnutrition, while malaria remains a major problem in the remote, heavily forested province of Papua in eastern Indonesia.

To achieve its full potential, Indonesia needs to tackle inequality by investing more in its people. According to the World Bank, growth has primarily benefited the richest 20% and left the remaining 80% of the population–about 205 million people–behind.

As the Bank’s Human Capital Project points out, education and health are two of the best ways to support prosperity and prepare countries for the economy of the future. With education you can change the fate of a country, but better health is central to human well-being. Healthy people live longer lives, are more productive and save more.

I was born into a working-class family at a time (the 1950s) when most families in Indonesia had no access to healthcare. Thousands of children died each year from preventable diseases such as measles, polio and malaria. My father had a business making pedicabs, while my mother ran a fabric shop in the city. When I became an entrepreneur, I felt compelled to give back to Indonesia. Philanthropy is not about making a donation. It is a commitment related to continuity and sustainability, and requires a well-planned system to have impact.

Since 2015, the Tahir Foundation has partnered with the Bill & Melinda Gates Foundation and the Global Fund to Fight AIDS, Tuberculosis and Malaria, which have played a key role in reversing the course of these epidemics around the word. In Indonesia, the partnership’s efforts are paying off: TB mortality rates have fallen by 44% and TB incidence was down by 14% from 2000 to 2017, thanks to improved case finding and better diagnostics. In 2017, more than half of Indonesia’s districts were officially declared malaria free–a major feat for a diverse archipelago of more than 17,000 islands and more than 300 ethnic groups.

Still, more robust investments are needed. Tuberculosis places a huge social and financial burden on the people who have the disease, as well as on their families and communities. Most of the infections occur in people at their most productive age, draining billions of dollars in loss of productivity due to premature death and medical costs.

I hold the conviction that the private sector and business leaders have an important role to play in public health and development in emerging economies in Southeast Asia, many of which share similar challenges and opportunities. The private sector can bring not only funding, but technical expertise, creativity, and innovation, and are often well positioned to drive policy change.

The government of my country has done a lot for public health, including rolling out a universal health insurance scheme that is designed to provide a wide range of services from maternal care to heart surgery for its entire population by the end of 2019. But the private sector can fill the gaps to complement public resources by expanding access so that all Indonesians benefit from better health.

In 2014, a coalition of Indonesian business leaders, in partnership with the Bill & Melinda Gates Foundation, came together to create the Indonesia Health Fund, a significant step toward making Indonesia self-reliant in health funding and a model for philanthropic collaboration in the region. Over the past four years, the fund has contributed to family planning programs, TB research and advocacy programs, as well as TB screenings

It shows what can happen when public and private sectors come together with a common aim. It is more important than ever with the Global Fund now calling on the world to step up the fight against HIV, TB and malaria in the face of new threats from all three diseases. Raising their target of at least $14 billion will help save 16 million lives over the next three years, avert 234 million new cases and infections, and help us get back on track to end these diseases. The fund is calling on the private sector to contribute at least $1 billion of this total. So let us all do our share.

uncaptioned image

Doctor Yulismar checks the condition of a patient who has tuberculosis bacteria at the Indonesian Association Against Tuberculosis (PPTI) clinic in Jakarta, Indonesia, on March 24, 2016. (Photo: Jefri Tarigan/Anadolu Agency/Getty Images)

Disclosure: Dr. Tahir is the owner of the license to publish Forbes Indonesia magazine.

Source: Southeast Asian Business Leaders Must Step Up On Development

The world’s weird self-organizing economy — Our Finite World

1.jpg

Why is it so difficult to make accurate long-term economic forecasts for the world economy? There are many separate countries involved, each with a self-organizing economy made up of businesses, consumers, governments, and laws. These individual economies together create a single world economy, which again is self-organizing. Self-organizing economies don’t work in a convenient linear […]

via The world’s weird self-organizing economy — Our Finite World

 

 

Your kindly Donations would be so effective in order to fulfill our future research and endeavors – Thank you
https://www.paypal.me/ahamidian

 

%d bloggers like this:
Skip to toolbar