Wall Street Journal (July 9)
“Slack Chinese imports are a symptom of the underlying reason China’s trade surpluses, not just with the U.S. but the world, persist: China consumes too little and saves too much.” Though China’s surpluses have shrunk as a share of GDP, due a decade of explosive GDP growth, the surpluses “remain enormous.” Domestic “consumption is still under 40% of Chinese GDP, one of the lowest ratios among major economies. The persistence of those imbalances is why trade conflicts aren’t about to go away even if Mr. Trump isn’t re-elected.”
Tags: China, Conflicts, Consumption, GDP, Growth, Imbalances, Imports, Saves, Slack, Trade surpluses, Trump, U.S.
Institutional Investor (July 23)
However you look at it, “positive inflation momentum is apparent” in the U.S. From the top down, unemployment has fallen. As slack lessens, “we may begin to see signs of this tightening appear in the form of wage growth.” And from the bottom up, there were “multiple factors that pushed inflation lower over the past 12 to 18 months: predominantly, disinflation from medical and core goods components.” But these were driven by unique events like the sequester and the strength of the U.S. dollar. “Neither the medical nor the core goods component is likely to be a drag on inflation going forward.”
Tags: Core goods, Disinflation, Dollar, Drag, Inflation, Medical, Momentum, Sequester, Slack, Tightening, U.S., Unemployment, Wage growth
New York Times (July 4)
The U.S. jobs report brought welcome news: 288,000 jobs in June and the unemployment rate hit 6.1%, the lowest since September 2008. “Behind the good news, however, there is still enormous slack in the economy. Human capital is being wasted. Economic ground is being lost, often irretrievably.”
Tags: Economy, Human capital, Jobs report, Slack, U.S., Unemployment rate
