Those Stubborn Facts: A Coming Boom in Free Lunches?

Tags

Germany, Those Stubborn Facts, UBI, universal basic income

Number of recipients slated to get no-strings income grants for three

years regardless of financial need from a German foundation’s pilot

program: 122

 

Number of applicants to this program: “More than 1.5 million.”

 

(Sources: “Money for nothing: Germany starts basic income experiment,” by Andreas Becker, DW.com, June 1, 2021, Money for nothing: Germany starts basic income experiment | Business| Economy and finance news from a German perspective | DW | 26.08.2020 )

 

Making News: Podcast On-Line of National Radio Interview on Biden & China…& More!

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allies, Biden, China, Japan, Making News, Taiwan, tariffs, Ted Galen Carpenter, The John Batchelor Show

I’m pleased to announce that the podcast is now on-line of the podcast of my latest interview on John Batchelor’s nationally syndicated radio show. The segment, which aired last night, can be found here, and focused on the Biden administration’s surprising (to me, anyway) decision to keep in place all of former President Trump’s towering and sweeping tariffs on Chinese goods.

In addition, my good friend (and incisive foreign policy analyst) Ted Galen Carpenter quoted my views on the U.S.-Japan security relationship in this recent blog post. Indeed, Ted’s piece shows that the likelihood of Tokyo helping the U.S. military meaingfully in a shooting war over Taiwan is even dimmer than I had previously written.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: March U.S. Manufacturing Job Gains Lagged – For a Good Reason

Tags

aerospace, aircraft, aircraft engines, aircraft parts, American Jobs Plan, automotive, Biden, Build Back Better, CCP Virus, coronavirus, COVID 19, Donald Trump, Employment, fabricated metal products, Jobs, Labor Department, lockdowns, machinery, manufacturing, non-farm jobs, pharmaceuticals, PPE, recession, recovery, regulation, semiconductor shortage, semiconductors, tariffs, taxes, Trade, travel services, vaccines, Wuhan virus, {What's Left of) Our Economy

This morning’s figures from the Labor Department show that U.S. domestic manufacturing was a bit of a jobs creation laggard in March – and that was good news. The reason? The employment gains for the rest of the economy were so enormous.

This latest monthly U.S. jobs report showed that non-farm payrolls (the definition of the U.S. jobs universe used by the Labor Department, which tracks these data), rose by 0.64 percent in March – to 144.210 million. Job-creation in the private sector advanced at a virtually identical rate.

Payrolls in manufacturing were up by a lower 0.43 percent – to 12.284 million. But they still increased by 53,000 – their best performance since September’s 55,000. It’s also possible that hiring in the automotive sector was held down by a global shortage of semiconductors – which has led to production cutbacks and even some layoffs.

The only disappointment in the new manufacturing jobs numbers concerned revisions – which were mostly negative. February’s initially reported 21,000 net employment gain is now estimated at 18,000. January’s 14,000 job loss (already downgraded from an initially judged 10,000) is now pegged at a still greater 18,000. But December’s improvement was upwardly revised again – from 34,000 to 35,000.

As a result, manufacturing has now regained 63.83 percent (870,000) of the 1.363 million jobs the sector shed during the peak CCP Virus lockdowns period of last March and April. That’s fewer relatively speaking than the recovery in private sector employment – 66.88 percent (14.172 million) of the 21.191 million jobs it lost during that period.

But because of continuing weakness in the public sector – which has recovered just 66.42 percent of its 22.362 million job loss last spring – manufacturing’s payrolls’ rebound is still ahead of the entire economy’s. In fact, manufacturing jobs now account for a higher (8.52 percent) of total non-farm employment than during the last full pre-pandemic data month (8.39 percent in February, 2020).

The biggest manufacturing jobs winners in March? Far and away the champ was the big fabricated metals products industry, which expanded employment by 13,700 – more than a quarter of the manufacturing total. Next came two smallish sectors – miscellaneous non-durable goods and printing and related support activities (up 7,400 and 5,900, respectively). Encouragingly, jobs increased by 3,500 in the big machinery sector – whose products are used throughout not only the rest of manufacturing but the entire economy.

The worst performers were transportation equipment – whose 3,000 lost March jobs included 1,000 in the automotive sector, which has been forced into production cutbacks and some layoffs due to the global semiconductor shortage – and furniture (down 1,300).

Unfortunately, these latest figures indicate that employment in many CCP Virus-fighting goods continues to lag. To be sure, their payrolls seem to be up from the last pre-pandemic levels whereas overall manufacturing jobs are down (by 4.02 percent). But given the nature of the emergency, and the shortages it revealed, it’s surprising they’re not higher still.

The relevant numbers only go through February, and in the broad pharmaceuticals sector, employment rose by 1,600 sequentially. And January’s initially reported 700 job loss has been upgraded to a decrease of only 100. But the sector’s payrolls have grown by a mere 2.60 percent since that last pre-pandemic month of February, 2020.

The performance of the pharmaceuticals subsector containing vaccines was considerably better. February payrolls expanded by 1,300 sequentially, and January’s gains are now estimated at 500, not 100. As a result, this vaccine-related sector’s employment levels are now 6.23 percent higher than in February, 2020.

The story, however, has been more discouraging lately in the manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns. Payrolls were flat on month in February, and the initially reported January job loss of 800 was only upgraded to a decline of 700. Still, payrolls in this sector have climbed by 7.98 percent since February, 2020.

Interestingly, despite the rebounding orders for Boeing’s popular but previously grounded 737 Max jetliner, the recovery of national and global travel, and the resumption of deliveries of its also-troubled 787 Dreamliner, none of these positive developments has shown up in the aerospace jobs numbers.

For example, aircraft employment in February (also the latest available figures) grew by only 1,000 on month and not only remains down 10.66 percent on year, but substantially lower than all of last year’s safety crisis- and the worst of the CCP Virus-plagued months. Similar trends hold for aircraft engines and engine parts, and non-engine aircraft parts.

The outlook for domestic manufacturing job creation still seem bright, as vaccinations are being administered rapidly, reopenings are spreading, igniting renewed overall economic activity, Boeing does seem to be emerging from its safety and manufacturing-related troubles, and the high, sweeping Trump tariffs keep pricing many Chinese goods out of the U.S. market, thereby creating new opportunities for American producers.

But that global semiconductor shortage, which will eventually affect much more than automotive output, may not end until late next year. It’s tough to know the overall impact of the Biden administration’s American Jobs Plan and other Build Back Better virus recovery proposals on the one hand, and the tax increases proposed to pay for them on the other, as well as the new regulations that will be involved – assuming even that they pass Congress reasonably intact. And vaccines production won’t be booming forever.

So no one concerned about domestic manufacturing’s health and prospects has any excuse not to peruse carefully all the industry-related data and news that are in store in the weeks and months ahead.

Glad I Didn’t Say That! Is China Calling Biden’s Bluff on U.S. Allies?

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alliances, allies, China, Glad I Didn't Say That!, Global Times, Joe Biden, multilateralism, Trade

“Rather than picking fights with our allies and undermining respect for America, Biden will work with our closest allies [to end China’s trade abuses], mobilizing more than half the world’s economy to better deliver for our workers.”

–The Biden presidential campaign, 2020

“If Washington wants to exploit its alliance system to deal with China, it is bound to be restrained by its allies. Many US allies have economic interests with China and they are not willing to confront China in an effort to strengthen alliances with the US.”

–– Chinese state-run publication Global Times, November 8, 2020 

 

(Sources:  “The Biden Plan to Ensure the Future is ‘Made in All of America’ by All of America’s Workers,” “Joe’s Vision,” Joe Biden for President, Official Campaign Website, undated, https://joebiden.com/made-in-america/ and “Drop illusions over China-US relations, but don’t give up efforts:  Global Times editorial, November 8, 2020, https://globaltimes.cn/content/1206128.shtml) 

Im-Politic: Is the U.S. Really a CCP Virus Outlier?

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CCP Virus, coronavirus, COVID 19, lockdowns, shutdowns, therapeutics, Trump, vaccines, Worldometers.info, Wuhan virus

It seems pretty clear that President Trump is in serious danger of losing Election 2020 in part because of his handling of the CCP Virus. Much less clear, especially as a second virus wave washes over not only the United States much of the rest of the world, is whether, as frequently charged , Mr. Trump’s record has been such an outlier. And if this allegation is still clear to you, consider the following data showing the rising numbers of infections in the world’s major high-income economies.

The period covered is, with the exception of France, October 2 (around the time when increases began significantly increasing) to yesterday (November 9). The numbers come from the well regarded Worldometers.info website:

United States: 140.20 percent

France: (Oct. 3): 18.75 percent

Spain: 74.62 percent

United Kingdom: 81.64 percent

Italy: 911.33 percent

Germany: 481.19 percent

Netherlands: 22.35 percent

Canada: 117.61 percent

Sweden: 380.20 percent

Japan: 53.07 percent

It’s important to note that these percentages could well change dramatically on very short notice – because some have already changed dramatically in the last few days. For example, through November 7, France’s increase was 411.74 percent. Through October 30, the Netherlands’ was 190.69 percent.

But it’s even more important to note that, especially taking these recent and potential fluctuations into account, America’s results are in the middle of the pack – and even closer to the lower end.

Although any evaluation of these statistics also needs to recognize that major, virus-relevant differences separate these countries (e.g., population density, climate, various demographics), they’re also separated, as widely noted, by substantially different approaches to CCP Virus mitigation. (Regarding population density in particular, that’s why I’m not mentioning very small, crowded European countries like Belgium and Switzerland and Luxembourg. In fact, I almost left out the Netherlands for this very reason.)

And in this vein, it’s more than a little interesting with worst recent records than the United States are Germany and Italy – where lockdowns of their economies and societies have been much more prompt and complete than in the United States.

This leaves the continuing major knock on the Trump record the exceptionally big absolute numbers of virus infections in the United States (including on a per capita basis) compared with those of peer economies and societies. It’s a big knock. But unless you think that large countries can or should be shut down until whatever public health goal their governments happen to set at a given time (bending the curve? slowing the spread? “crushing the virus”?), it shouldn’t be difficult to recognize that the appearance of a second wave immediately following the first reopenings in heavily locked down countries shows that putting the clamps on at best kept the virus temporarily dormant.

One possible conclusion to which these common problems being faced by such a diverse group of countries is one that the American character seems especially resistant to — that not all problems are readily solvable, or solvable at all, or even easily mitigated (at least until science figures out how to produce safe and effective vaccines and cures much faster). And if many of President Trump’s critics can be faulted for such assumption, he’s guilty of similar pollyannism due to his numerous claims that the virus is “under control” – even though nothing about its spread through Europe, in any case, indicated that enduring progress like this was possible at these stages.

That’s not to say that Americans shouldn’t prize their can-do spirit, or that governments are helpless in the face of such disasters – especially since, as far as is known, this disaster wasn’t government- or man-made. And it certainly doesn’t mean that better performance (in addition to better messaging) shouldn’t be expected and demanded. But it does point to the need to scale back expectations and demands, specifically to the realm of the doable, of tradeoffs and genuinely tragic choices, and of the priority-setting that naturally follows.

There’s no guarantee that national leaders will be rewarded for this kind of sober realism. But if this latest U.S. presidential election is any indication, there’s no guarantee that peddling overly rosy scenarios pays off with voters, either.

Glad I Didn’t Say That! So We’ll Need to Learn to Live with the Virus After All?

“[Trump] says that we’re learning to live with [the CCP Virus]….Learning to live with it. Come on. We’re dying with it, because he’s never said. See, you said, ‘It’s dangerous.’”

–Democratic Presidential Candidate Joe Biden, October 22, 2020

“Joe Biden vowed Wednesday not to campaign in the election homestretch ‘on the false promises of being able to end this pandemic by flipping a switch.’”

–Democratic Presidential Candidate Joe Biden, October 28, 2020

(Sources: “Donald Trump & Joe Biden Final Presidential Debate Transcript 2020,” Rev.com, October 22, 2020, https://www.rev.com/blog/transcripts/donald-trump-joe-biden-final-presidential-debate-transcript-2020 and
“Pandemic politics: Biden shuns ‘false promises’ of fast fix,” by Will Weissert, Aamer Madhani and Alexandra Jaffe, Associated Press, October 29, 2020, https://apnews.com/article/election-2020-donald-trump-virus-outbreak-arizona-health-2041443d40a5689a1a03b19fb9b29aec)

(What’s Left of) Our Economy: The Trade Wars Would’ve Been Much Easier to Win if Not for Boeing

Tags

(What's Left of) Our Economy, aerospace, aircraft, aircraft parts, Boeing, manufacturing, metals tariffs, tariffs, Trade, trade wars, Trump

Today’s grim news about recent Boeing aircraft orders and deliveries is just the latest valuable reminder that any evaluation of the Trump record on manufacturing and trade policy has to take into account the entire aircraft and parts industry’s transformation from a slight to a bigtime industrial laggard. Moreover, Boeing’s weakness – which has nothing to do with the President’s trade or any other policies — seems likely to continue for the foreseeable future, at least according to Boeing. The company’s latest long-term forecast for the global aircraft market affirms that it will take years for aviation worldwide to return to pre-CCP Virus levels.

The degree of the pain inflicted by Boeing’s troubles – which also include major safety woes that started making headlines in early 2019 – on the whole of domestic industry, and how unrelated manufacturing’s overall Trump era performance has been to the President’s tariff-heavy trade policies, becomes clear from diving into the most detailed U.S. manufacturing output figures available: the Federal Reserve’s industrial production data.

For example, the Fed numbers show that, during the Obama administration, adjusting for inflation, manufacturing output increased by 14.65 percent. Real aircraft and parts production output growth was just slightly slower: 12.39 percent.

But from the start of the Trump years until the arrival of the pandemic (February, 2017 through February, 2020), whereas the manufacturing sector as a whole expanded by 3.60 percent in price-adjusted terms, the aircraft and parts industry shrank by 13.10 percent.

Since the virus struck (from February through the latest available – August – numbers)? Manufacturing output is down by 6.39 percent after inflation, and aircraft and parts production is off by 10.81 percent.

As for the trade war impact, from March, 2018 (the first full month of President Trump’s metals tariffs and a good place for marking the start of the broader trade wars) until February, 2020 (the last month before the virus began significantly affecting manufacturing and the entire domestic economy), overall manufacturing production grew by a bare 0.83 percent. But that poor performance was clearly dragged down by the nation’s aircraft and parts factories – which turned out 10.74 percent less in terms of constant dollar product value.

Aircraft and parts were major industrial also-rans, too, during the comparable 23-month period preceding the first full month of the Trump metals tariffs. Their real production slumped by 4.11 percent, as manufacturing’s overall production rose by 4.07 percent.

The bottom line, then, couldn’t be clearer. The President was wrong in insisting that trade wars for big deficit countries like the United States are “easy to win.” But the facts also demonstrate that the victories the nation has won in these conflicts – which have been significant – would have been come much easier had the aerospace sector and its long-time leader Boeing not turned into such major losers.

Making News: Podcast Now On-Line of Last Night’s NYC Radio Appearance

Tags

court packing, FBI, filibuster, Frank Morano, Kamala Harris, Making News, Mike Pence, rock music, Supreme Court, The Other Side of Midnight, Trump-Russia, Vice Presidential debate, WABC AM, Yankees

I’m pleased to announce that the podcast is now on-line of my appearance last night on Frank Morano’s “The Other Side of Midnight” program on New York City’s WABC-AM radio station. For a – really – wide-ranging discussion encompassing tonight’s Vice Presidential debate, the Supreme Court, rock music, the economy, the latest revelations about FBI misdeeds, and of course the Yankees, click here and then on the “Staten Island” link. My segment beings at about the 20:30 mark.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Making News: On New York City Radio in the Wee Hours Tonight!

I’m pleased to announce that I’m scheduled to appear tonight (technically, Wednesday morning) on Frank Morano’s “The Other Side of Midnight” program on New York City’s WABC-AM radio. The segment, slated to start at 1:30 AM, will deal with the Vice Presidential debate and no doubt lots of other headline issues (along with some breaking New York City sports news!).

You can listen live by clicking this link, and then pressing one of the Play buttons on top. If you can’t stay up that late, I’ll post a link to the podcast as soon as one’s available.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Another Better-Than-It-Looks Monthly U.S. Trade Report

Today’s new official U.S. trade figures (for August) once more teach the crucial lesson – which has only grown more crucial during this economically unprecedented CCP Virus era – that the real story can only be gleaned by going deep into the weeds (including deeper than I normally go here at RealityChek). And that lesson goes double for judging policies that were put into effect before the virus struck – including President Trump’s tariff-centric trade policies.

This insight is especially important – and good news – for Mr. Trump, since the transforming U.S. trade policy has been one of his signature issues, and the various records and multi-year highs set in August in many of the wrong categories superficially bear out claims like this one from Politico:

“The monthly U.S. trade deficit in goods hit a record high in August, despite President Donald Trump’s 2016 campaign promises to reduce it dramatically by negotiating new trade deals and getting tough on unfair foreign trade practices, a Commerce Department report showed on Tuesday.”

Particularly embarrassing, it would seem, for the President (though generally ignored so far by his critics) – the recent ballooning of the trade deficit for manufacturing, whose fortunes Mr. Trump has rightly identified as key to the U.S. economy’s future, and whose workers’ votes are central to his reelection hopes.

Yet as with last month’s trade report (for July) the deficit details make clear how highly concentrated the deterioration in the manufacturing and overall trade balances have been; how little these adverse developments have to do with the trade measure championed and put into effect by the President’ and how much they have to do with the stop-start nature of the virus-era economy.

Let’s start with the manufacturing deficit. The August total of $102.37 billion actually represented a 2.16 percent dip from July’s $104.63 billion level. Unfortunately, that July result was an all-time worst, and the August level comes in right behind it at Number Two.

To add insult to injury, the combined July and August manufacturing trade gaps ($207 billion) represented a 19.06 percent ($33.19 billion) jump from the $173.84 billion combined May and June total.

So it looks like for all the tariffs (and new trade deals with China, on the one hand, and Canada and Mexico on the other – in the form of the U.S. Mexico Canada Agreement that revised the North American Free Trade deal), domestic manufacturing has settled back into its pre-Trump pattern. That is, as it’s been bouncing back strongly during the third quarter this year from the dramatic CCP Virus-induced slump suffered during the second quarter, it’s sucking in supertanker-loads of imports. Meanwhile, as widely reported, it looks like retailers are rushing to replenish their inventories of imported consumer goods to prepare for the holiday season.

Closer examination, however, reveals that most of the widening of the manufacturing trade deficit over the last two data months stems from three sectors tracked in these monthly trade reports: automotive (vehicles and parts combined), civilian aircraft, and cell phones. And as explained last month on RealityChek, the trade developments in these industries are unrelated to Trump or anyone of his predecessors’ trade policies.

After all, the automotive sector shut down almost completely early in the virus period, and has reopened just as suddenly. The U.S. aerospace industry – until recently the nation’s biggest trade surplus winner – has been hobbled first by Boeing’s safety woes and then by the virus-induced collapse of air travel. And Mr. Trump exempted cell phones from his otherwise steep and sweeping China tariffs.

In May and June, the combined trade deficits of these industries came to $28.29 billion. In July and August, this figure shot up to $47.10 billion. The $18.81 billion difference accounts for 56.67 percent of the $33.19 billion of the soaring manufacturing trade deficit during this period.

The same sectors had an even greater effect on the surge in the overall U.S. goods trade deficit. In fact, between May and June on the one hand, and July and August on the other, the $18.81 billion worsening of this trio’s total trade deficit actually exceeded the $17 bilion growth of that entire goods trade deficit.

As for the trio’s impact on the combined goods and services trade deficit during this period, their worsening situation produced nearly all (98.22 percent) of its May-June to July-August increase.

But in terms of trade policy, the most important flows to measure are the non-oil goods flows. As known by RealityChek regulars, by leaving out trade in energy and services, they represent that portion of U.S. trade most affected by trade agreements and similar decisions.

Between May -June and July-August, this “Made in Washington” trade deficit expanded by $18.80 billion. So all else equal, it, too, would have stayed almost exactly the same had automotive and aerospace not experienced their own special, non-trade policy-related difficulties, and had Mr. Trump tariffed those cell phones.

None of this is to say that as the U.S. recovery got underway, these sectors wouldn’t have seen worsening trade deficits anyway. But their whoppingly outsized contributions to the bigger trade shortfalls indicate that the worsening of their own trade flows wouldn’t have been nearly as stunning. Instead, their trade pictures would have roughly resembled the continuing stabilization and improvement seen in the rest of manufacturing.

At the same time, extra special caution these days is warranted in predicting whether these developments will last, and not just because the economy still seems far from reaching a new post-CCP Virus normal. The White House could well change hands next month, too, and with it, decisive control over economic recovery policy in general and trade policy in particular. But there still seems to be a good chance that the best way to gauge the underlying effectiveness of U.S. trade policy, the manufacturing sector, and the economy in general, will be to keep a close on not only on all the big virus and political moving parts, but on those industry- and tariff policy-specific details.