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Old 01-15-2020, 10:20 AM
HARDCORE HARDCORE is offline
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Exclamation American workers can look forward to a prosperous decade ahead with better trade deal

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American workers can look forward to a prosperous decade ahead with better trade deals

By Richard Manning

Last year was the best in generations for American workers, but what lies ahead? Can the Trump economy keep roaring through 2020?

The undeniable truth is that fewer Americans are unemployed today than at any time since 2000. The impact of America being at work is resulting in higher wages with low inflation, meaning real income has grown with low-wage workers benefiting the most.

One thing is equally clear – nothing stays the same. When there is a wind behind the sails of an economy, it has a certain amount of inertia, until it doesn’t.

Senate passage of the U.S.-Mexico-Canada Agreement seems likely considering the broad bipartisan support the deal obtained in the Senate Finance Committee. It will provide certainty for the flow of commerce between our three countries. While the trade focus is on China, 34 percent of U.S. exports last year went to Canada and Mexico. China only buys about 7 percent of our goods and services.

Automobile manufacturing in the United States should flourish under the deal. It imposes a higher threshold requiring auto parts and components be made in Canada, Mexico or the U.S. for vehicles to qualify for zero tariffs. A 2019 International Trade Commission report found 176,000 new jobs would be created by the deal, with 76,000 of those in the automotive sector.

With new wage requirements for Mexican auto production, it is more likely that double and triple shifts could become the norm at some of our nation’s auto-part production plants as automakers seek to meet new "country of origin" requirements. This should mean an increase in high-paying auto manufacturing jobs in 2020, along with other ancillary businesses that thrive when factories are buzzing.

The United States is also likely to see a new trade deal with the United Kingdom as they break away from the European Union on Jan. 31, 2020. The U.K. is our nation’s fourth-largest export partner, so a new deal with London is essential to keeping that relationship and the jobs it creates.

Thanks to our trade deals with China and Japan incorporating significant agricultural agreements to purchase everything from beef and rice to chicken, soybeans and corn, the only question will be whether our nation’s farms will be able to meet the foreign demand without it having too much of an impact on the cost of food at the American dinner table. But, once again, the good news is that those whose livelihoods depend upon agriculture production and exports should do well if our foreign trading partners keep their promises.

We can also anticipate that with illegal immigration stabilizing, or possibly even declining, it is unlikely that new immigration proposals will pass Congress. It is fair to assume that wages will continue to rise for American workers – particularly those in the bottom 40 percent of wage-earners, who will most likely face less much competition from illegal immigrants than in the past.

Some experts, such as Continental Resources Chairman Harold Hamm, are predicting oil prices will spike to $75 a barrel. However, the president's energy and regulatory policies have somewhat insulated U.S. consumers from massive price shocks due to domestic production. The world’s shipping industry is also being required to change the fuel their ships burn to a significantly more environment-friendly mix, which may have some impact on the prices of imported goods, but will disproportionately benefit U.S. oil refiners who have the capacity to make the new, required, fuel blend, while many other refiners around the world cannot.

One more major change we will begin to feel is high-speed internet (5G) spreading across America. More jobs will be automated. Ironically, the spread of more mechanized labor will likely accelerate due to the tight labor environment, which encourages businesses to innovate in order to expand. While it is unclear if this "future is now" trend will even be noticeable on the macro-economic scale in 2020, workplaces will undoubtedly begin to adapt to the new capacities of real-time machine-to-machine communication.

This innovation will create a need for a different bottom-up skills training system. This will likely be funded by tax credits to businesses to train employees for their needs, rather than the current system where the federal government attempts to pick labor's winners and losers by training people for jobs that may or may not exist by the time the training is actually completed.

With Congress relatively gridlocked, this kind of revamp will be unlikely until 2021 at the earliest, but the current hyper-partisanship combined with a presidential election is certain to prevent really bad ideas from winning legislative approval. This would be good news for the economy and the workforce as a whole.

Of course, dozens of unanticipated events will also take place in 2020, creating ups and downs that no forecast can hope to predict. However, the legislative and international trade events we know about are likely to benefit the U.S. economy. They will help to solidify employment gains made over the past nine years and help to maintain wage growth.

Rick Manning is the President of Americans for Limited Government.
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Old 01-15-2020, 10:41 AM
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Boats Boats is offline
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Arrow 2nd Opinion: U.S. Economic Outlook for 2020 and Beyond

2nd Opinion: US Economic Outlook for 2020 and Beyond
By: Kimberly Amadeo - The Balance
Re: https://www.thebalance.com/us-economic-outlook-3305669

The U.S. economic outlook is healthy according to the key economic indicators. The most critical indicator is the gross domestic product, which measures the nation's production output. The GDP growth rate is expected to fall below the 2% and 3% ideal range. Unemployment is forecast to continue below the natural rate. There isn't too much inflation or deflation. That's close to a Goldilocks economy.

President Donald Trump promised to increase economic growth to 4%. That's faster than is healthy. Growth at that pace leads to overconfident irrational exuberance. That creates a boom that leads to a damaging bust. The factors that cause these changes in the business cycle are supply, demand, capital availability, and the market’s perception of the economic future.

Overview

Over the next several years, the economy will grow more slowly. Unemployment is expected to remain low, as will inflation.


Economic Growth

U.S. GDP growth will slow to 2.0% in 2020 from 2.2% in 2019. It will be 1.9% in 2021 and 1.8% in 2022. That's according to the most recent forecast released at the Federal Open Market Committee meeting on December 11, 2019.1 The projected slowdown in 2019 and beyond is a side effect of the trade war.

Unemployment

The unemployment rate will average 3.5% in 2020.1 It will bump up to 3.6% in 2021 and 3.7% in 2022. That's lower than the Fed's 6.7% target. 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. As a result, structural unemployment has increased.

The real unemployment rate includes the underemployed, the marginally attached, and discouraged workers. For that reason, it is around double the widely-reported rate. You can put this report into perspective by viewing the unemployment rates since 1929.


Inflation

Inflation will average 1.9% in 2020.1 It will rise to 2.0% in 2021 and 2022. The core inflation rate strips out those volatile gas and food prices. The Fed prefers to use that rate when setting monetary policy. The core inflation rate will average 1.9% in 2020, 2.0% in 2021, and 2.0% as well in 2022. The core rate is right at the Fed's 2% target inflation rate. That may give the Fed room to lower interest rates. The U.S. inflation rate history and forecast helps predict the coming years’ inflation levels.

Projected U.S. Economic Outlook 2019, 2020, 2021, and 2022

View chart on site only;
Show(s) a graph with GDP Growth - Unemployment - and Core Inflation
Chart: The Balance - Source: By: The Federal Reserve

Interest Rates:

The Federal Open Market Committee has maintained the current fed funds rate at a range between 1.5% and 1.75% as of its Dec. 11, 2019 meeting.2 It doesn't expect to increase this interest rate until 2021.1 The Fed is more concerned about promoting growth than about preventing inflation. In fact, right now it doesn't see inflation as a threat anytime in the next three years. But - that could change under certain circumstances!

The Fed Funds rate controls "short-term" interest rates. These include banks' prime rate, the Labor, most adjustable-rate loans, and credit card rates. "You can protect yourself from any rate hikes by choosing fixed-rate loans wherever possible."

The Fed began reducing its $4 trillion in Treasury's in October 2017. The Fed acquired these securities during quantitative easing, which ended in 2014. At the July 31, 2019, meeting, it announced it would stop reducing its holdings.

Since the Fed is no longer replacing the securities it owns, it will create more supply in the Treasury's market. That should have raised the yield on the 10-year Treasury note. This should have driven up long-term interest rates, such as those on fixed-rate mortgages and corporate bonds. Instead, investor concerns over global economic volatility has kept rates low.

Treasury yields also depend on the demand for the dollar. If demand is high, then yields will drop. If the global economy improves, investors will demand less of this ultra-safe investment.

Oil and Gas Prices:

The U.S. Energy Information Administration provides an outlook on oil and gas prices from 2019 to 2050. It predicts crude oil prices will average $60 a barrel in 2019 and $60/b in 2020.3 That's for Brent global. West Texas Crude will average around $5.50/b less.

The EIA's energy outlook through 2050 predicts rising oil prices. By 2025, the average Brent oil price will increase to $81.73/b.4 This is a quote in 2018 dollars, which removes the effect of inflation. "After that, world demand will drive oil prices to the equivalent of $107.94/b in 2050." By then, the cheap sources of oil will have been exhausted, making crude oil production more expensive.

This forecast does not take into account any of the effects of climate change. Governments may increase renewable energy production to stop global warming. That would reduce the price of oil significantly.

Jobs:

The Bureau of Labor Statistics publishes an occupational outlook each decade. It goes into great detail about each industry and occupation. Overall, the BLS expects total employment to increase by 8.9 million jobs between 2018 and 2028.5

Health care occupations will account for 18 of the 30 fastest growing occupation's.5 One reason for that is the aging of the population. Computer and math occupations, and those based on alternative energy production, will also grow rapidly.

(***) Three occupational groups will lose jobs.5

These include (1) Production, (2) Administrative Support, and (3) Sales. These jobs are being replaced by computer and technological solutions. Retail sales will also lose jobs, as e-commerce continues to predominate. That shift will also increase jobs in transportation and warehousing.

Climate Change:

The Federal Reserve is concerned about how climate change is affecting the Economy.6 Research from the Richmond Fed estimated that it will reduce U.S. economic growth by 30% over the next century.

The Fed is also requiring banks to plan for the economic impact of "increased extreme weather." For example, it is asking Florida banks to have risk management plans for hurricanes.

Former Federal Reserve Chairs have urged Congress to enact a "Carbon Tax" to lower the dangerous levels of greenhouse gas emissions.

Damage from natural disasters, such as hurricanes, floods, and wildfires, was $160 billion in 2018.7 That’s lower than the record $350 billion set in 2017. These disasters killed 10,400 people in 2018 and 13,000 people in 2017. Insurance companies paid out $80 billion in 2018 damage claims and $140 billion in 2017.

These have become worse and more frequent due to "Global Warming.7" There were 850 natural disasters in 2018, compared to only 500 a year between 1988 and 2017. U.S. insured losses were $80,000, double the 30-year average. Note: The industry is frustrated by the lack of action on global warming solutions.

How It Affects You:

2020 will experience subdued economic growth, although a recession is unlikely. The effects of President Trump's tax cuts have led to increased stock buybacks, "not the jobs he promised." Also, companies are concerned about uncertainty resulting from the trade war.

(**) The best thing to do is to stay focused on your financial well-being. Continue to improve your computer and math skills. Chart a clear course for your career in the fastest-growing industries like health care. If you've invested in the stock market, be calm during any pull-back. All in all, an excellent time to reduce debt, build up your savings, and increase your wealth.

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Warning: There are no guarantee's in life. These are merely projections of the possibilities of things to come. There are many external issues that could result in "better or worse" conditions - thereby altering the projected notations as stated above.

Boats
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Boats

O Almighty Lord God, who neither slumberest nor sleepest; Protect and assist, we beseech thee, all those who at home or abroad, by land, by sea, or in the air, are serving this country, that they, being armed with thy defence, may be preserved evermore in all perils; and being filled with wisdom and girded with strength, may do their duty to thy honour and glory; through Jesus Christ our Lord. Amen.

"IN GOD WE TRUST"
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