Meanwhile the US economy continues to thrive

Despite all the political turmoil and President Trump’s confrontational and divisory approach the US economy continues to do very well, but there are some warning signs

The US share market is easing off record highs – the boom there may be a good sign, but could also pose future risks of a big bust.

Market Watch:  Job creation, wages slip in September as unemployment falls to 48-year low

The U.S. unemployment rate sank to a 48-year low of 3.7% in September as the economy added 134,000 new jobs, setting the stage for a strong holiday season to finish out what’s been stellar year for the U.S. economy.

The increase in hiring was the smallest in 12 months and below the recent trend, perhaps reflecting the effects of Hurricane Florence. Economists polled by MarketWatch had forecast a 168,000 increase.

Yet the increase in new jobs was enough to lower the unemployment rate to 3.7% from 3.9%. The last time the jobless rate was lower was in December 1969 — when the first man walked on the moon.

Many economists predict the jobless rate will fall even further in the months ahead.

Reuters:  U.S. job growth cools; unemployment rate drops to 3.7 percent

U.S. job growth slowed sharply in September likely as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near a 49-year low of 3.7 percent, pointing to a further tightening in labor market conditions.

“The weaker gain in payrolls in September may partly reflect some hit from Hurricane Florence,” said Michael Pearce, senior U.S. economist at Capital Economics in New York. “There is little in this report to stop the Fed continuing to raise interest rates gradually.”

Fed Chairman Jerome Powell said on Tuesday that the economy’s outlook was “remarkably positive” and he believed it was on the cusp of a “historically rare” era of ultra-low unemployment and tame inflation.

Bloomberg:  Powell Heaps Trump-Like Praise on Economy as Rate Hikes Loom

In what Fed watchers say was unprecedented four public appearances over the past week, Powell repeatedly lauded the economy’s performance, calling it “remarkably positive,” “extraordinary” and “particularly bright.” And he said he expected the good times to continue.

“Interest rates are still accommodative, but we’re gradually moving to a place where they’ll be neutral,” neither holding back nor spurring economic growth, Powell said. “We may go past neutral. But we’re a long way from neutral at this point, probably,” he added.

The Fed raised its interest-rate target range last week to 2 percent to 2.25 percent.

Breaking with decades of presidential precedence, Trump has repeatedly criticized the Fed in recent months for raising rates. His latest salvo came on Sept. 26, just hours after Powell and his colleagues boosted rates for the third time this year.

Asked by veteran television anchor Judy Woodruff for his response to Trump’s outbursts, Powell replied, “My focus is essentially on controlling the controllable”.

The current economic expansion is already the second-longest in history, trailing only the 10-year period of the 1990s. If it continues, it will surpass that upturn next year.

But one trend should be of concern, US Government Debt:

Today the Federal Debt is about $21,605,363,414,469.16.

The amount is the gross outstanding debt issued by the United States Department of the Treasury since 1790 and reported here.

But, it doesn’t include state and local debt.

And, it doesn’t include so-called “agency debt.”

And, it doesn’t include the so-called unfunded liabilities of entitlement programs like Social Security and Medicare.

Forbes: Why The Federal Deficit Isn’t Cause For Panic… Yet

If you’re reading this, then it probably means you have also watched pundits scream at the top of their lungs about the impending doom brought about by the US deficit. Numbers like $20 Trillion are enough to scare anyone, so concern is warranted, however, panic is not.

The federal government is projected to add $985 billion to the federal deficit during fiscal year 2019. That’s because the government plans to spend over $4.4 trillion dollars, while bringing in only $3.42 trillion dollars. Nearly $400 Billion of the spending will go to service debt that’s already accrued over the years and that figure will only rise as interest rates increase.

While those numbers are astonishing and difficult to really wrap your mind around, it’s not as bad as it sounds. According to the non-partisan Congressional Budget Office’s (CBO’s) Budget and Economic Outlook: 2018 to 2028, “In CBO’s baseline projections, which incorporate the assumption that current laws governing taxes and spending generally remain unchanged, the federal budget deficit grows substantially over the next few years. Later on, between 2023 and 2028, it stabilizes in relation to the size of the economy, though at a high level by historical standards.”

Now I said not to panic earlier, because there are a number of adjustments and scenarios that will let the U.S. keep borrowing and spending long after any individual would have had their credit cards canceled. That said, at some point time will run out and our options to fix the situation will be less and less friendly. It’s the equivalent of waiting until you’re in the hospital to make lifestyle adjustments. By then, it might be too late.

The Baltimore Sun: U.S. debt addiction threatens national security

Arising China. An emboldened Russia. A nuclear Iran. Cyberwarfare. Ask a defense expert to name America’s biggest security concerns, and one of these will likely top the list.

These threats are real, of course. But one of the biggest dangers to our nation isn’t a hostile foreign actor. It’s a domestic one — our leaders’ addiction to debt.

The U.S. national debt is rising unsustainably. The Pentagon recently has been asking for more money, and Congress has been inclined to give it to them. Absent dramatic reform, national security will soon take a back seat to mandatory debt service.

The Hill: Congress approved $2.4 trillion in additional debt during fiscal year 2018: Watchdog

Congress approved $2.4 trillion in debt during fiscal year 2018, according to an analysis published this week by the watchdog group Committee for a Responsible Federal Budget (CFRB).

Trump administration officials have insisted that the tax law will ultimately bring down the deficit due to economic growth, a conclusion that’s been rejected by many budget watchers as well as some official bodies.

“At a time when debt is already at record-high levels and growing unsustainably, the $2.4 trillion added to the projected debt over the past year is incredibly irresponsible,” CFRB wrong in a blog post. “These changes alone will increase projected debt from 86 percent of GDP to 94 percent.”

Trump is used to taking big financial risks in business, but the financial health of the United States as well as the world are at stake. If things crash it won’t be as easy to walk away as it has been from his business failures.

If the New Zealand Government was increasing debt here to anything like 86% or 94% of GDP they would be strongly and widely criticised, for good reason. But for some reason business leaning pundits don’t seem to care about those levels of debt in the US, they hail the economy there as great.

23 Comments

  1. They aren’t overly concerned with the debt because that was happening anyways, long before Trump came along, Bush, who was an idiot, was the first to double it to Epic Proportions, then his successor Barack Obama doubled that, and neither new how to stimulate economic growth to account for or cushion any of it, Trump has done that part already, and will likely move forward in attempting to cut spending over the next couple years, if not then, I’d say it’s high on stay does so after the 2020 election in the lead up to the 2022 midterms.

    The continuously growing debt [edited] can be laid squarely at the feet of Congress at present, if it’s still a problem by the time Trump leaves office then you can blame him, but until then that’s on the Congress. They control the purse strings, they did this to us and large part, and they are the only ones currently continuing to do this to us, Trump is told them to cut, he told them he was pissed but the first budget they sent him to sign off on, he even threatened not to, but took it since its souped-up military spending and that fulfilled a campaign promise of his, I don’t think he’s going to be so receptive to trillion dollar spending bills in the future though. He knows full well that if he doesn’t do something to push back sometime within the next 6 years his legacy will be tarnished was criticism of the same thing criticized Barack Obama for, and one of the strong points of how vain he is, is he probably won’t want that to happen. It would make him, and America, look bad and he knows it.

    • Gezza

       /  October 6, 2018

      I’d say it’s high on stay does so after the 2020 election in the lead up to the 2022 midterms.

      The continuously growing dad can be laid squarely at the feet of Congress at present,
      . . . . . . . . . . .
      Turn off auto correct

      • Sometimes I don’t have time to type everything out and I use talk to text; I’d say he starts actively and aggressively trying to cut spending immediately following 2020, and in the lead-up to the 2022 midterms. That satisfy you?

  2. David

     /  October 6, 2018

    Trump, a stable genius. While liberals clutch their pearls at his twitter American workers and particularly blue collar workers are in the best position they have been in for over a decade.

  3. David

     /  October 6, 2018

    One frustrating thing is with the inept idiots running NZ in comparison with the excellent job Trump is doing is the exchange rate and my planned trip to experience Trumps re election in 2020 is going to be expensive.

    • Gezza

       /  October 6, 2018

      Good.

      • David

         /  October 6, 2018

        It will be worth it. Watching libs wail in impotency and confusion..priceless.

    • Blazer

       /  October 6, 2018

      its on T.V…David.

      • Alan Wilkinson

         /  October 6, 2018

        Yep, I’ll be enjoying it from here. But before that the Kavanaugh confirmation will be a delight to behold. The loony Left will be topping themselves.

  4. Zedd

     /  October 6, 2018

    The economy maybe ‘booming’ under MrT ? echoes of the NZ ‘rockstar economy’ under ‘team-key & co.’??

    BUT as per usual 90% is going to the top 10% & the rest (90%) fight over the scraps, that fall or are thrown from the ‘top table’.. AGAIN …you cant fool all the people.. all time… so now we see the light ? :/

    • Pink David

       /  October 6, 2018

      You will, of course, have comprehensive data that supports your assertion than all the rewards are going to the top, and none to the bottom, won’t you?

      • Zedd

         /  October 6, 2018

        prove it wrong.. widely reported that 90% of the global wealth is owned by <10% of all people

      • Blazer

         /  October 6, 2018

        not exactly hard to find is..it.

        • Zedd

           /  October 6, 2018

          Ive even seen a news item that said, about half the global wealth is owned by about 10 families ?

          • Pink David

             /  October 6, 2018

            That same report has the United States having the largest number of the world’s poorest people. More poor people than China and India combined, and much poorer.

            I would have thought you would be smart enough to know that is risible nonsense.

    • David

       /  October 6, 2018

      funnily enough Zedd the people most benefiting are blue collar workers unlike under the last guy where it was bailouts for bankers.

  5. PartisanZ

     /  October 6, 2018

    Speaking of balance –

    “The unemployment rate will drop to 3.7 percent in 2018, and 3.5 percent in 2019 and 2020. That’s lower than the Fed’s 6.7 percent target. But former Federal Reserve Chair Janet Yellen admitted a lot of workers are part-time and would prefer full-time work. Also, most job growth is in low-paying retail and food service industries. Some people have been out of work for so long that they’ll never be able to return to the high-paying jobs they used to have. Structural unemployment has increased. These traits are unique to this recovery … Yellen admitted that the real unemployment rate is more accurate. It’s double the widely-reported rate.”

    https://www.thebalance.com/us-economic-outlook-3305669

    • The Consultant

       /  October 6, 2018

      True. But then it was also true when Obama partisans were cheering on the “low” unemployment rate in 2016 – even as Bernie Sanders was pointing out the doubling factor.

      The real key is the US Workforce participation rate, and as you can see from this graph, it shows no signs of recovering back to where it was a decade ago. Mind you, it was often lower than this in the 1950’s.

      And finally, there’s no question that wages and salaries are rising across almost all industries, sectors and skills. They need to keep risng for a few years yet, which is questionable, but it all comes as a relief after almost a decade of stagnation.

  6. PartisanZ

     /  October 6, 2018

    Some of the really big white-collar fraudsters do get caught …

    ‘How four men’s $41m crimes threatened New Zealand’s global financial reputation’ – Heraldo

    https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12094983

    … not so sure about their sentences compared to others though? I wonder if Sensible Sentencing Trust has a position on this sort of thing?

    • Gezza

       /  October 6, 2018

      No I doubt SST would have a position on this sort of thing. They have a more specific focus:

      SENSIBLE SENTENCING TRUST (SST) | Advocates On Behalf Of The Victims.
      The Sensible Sentencing Trust (SST) is not a registered charitable trust because this trust unashamedly exists to advocate on behalf of the victims of serious violent and/or sexual crime and homicide in New Zealand, with a view to ensuring effective sentencing and penal policies that reduce reoffending and ultimately keep the public safe. All donations received by this trust assist our volunteers to travel to meet with politicians about the SST’s policy wishlist (such as bail and parole reform, Three Strikes and public Offender Databases), attend select committee sessions, educate our membership database regarding SST policies and activities, and run lobbying campaigns such as Christie’s Law.

      SENSIBLE SENTENCING GROUP TRUST (SSGT) | Supporting Victims
      The Sensible Sentencing Group Trust (SSGT) has donee status with the IRD which means donors are eligible for donation tax relief. If you make a donation to the SSGT (for the specific purpose of supporting victims of serious violent and/or sexual crime and homicide) you may be able to claim part of it back as a tax credit. We serve to educate the public as to the plight of these victims and to ensure such victims and their families are fully aware of their rights and entitlements, providing both education and practical support during their time of trauma.All charitable donations received by this trust are tax deductible and fund our volunteers to assist with such things as educating these victims regarding their rights and entitlements, emotional and practical support during pre-trial court hearings, criminal justice trials, parole board hearings, and an annual homicide victims conference.

    • Gezza

       /  October 6, 2018

      10 months home D for Slack & Foster seems pretty light.