Economics

Discussion in 'Money & Finances' started by Harry Havens, Jun 29, 2017.

  1. Harry Havens

    Harry Havens Very Well-Known Member
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    It's been awhile, so time to reflect/project and mostly make up stuff and then gripe.

    The debt problem mentioned earlier, somehow was resolved without much ado. I guess congress had more important things to do. When last here in June, the National debt had just passed $22T. Five months later and it just passed $23.T. Amazingly, there are still lots of buyers, although not so much foreign companies... but private and U.S. investors, we are told. Commercial debt is another matter as those rates are easing upward.

    Don't worry about the national debt outpacing the economy by nearly 2% per annum. There is plenty of investors buying up bonds... until they don't.

    The Federal Reserve has refused to resume QE, opting for doing the exact same thing by some other name. The ECB which just last year was signaling the end of bond buying has jumped back into the fray with both feet.

    The U.S. consumer steadfastly propping up the economy, as personal consumption expenditures are slightly increasing. Isn't debt a wonderful thing?

    The U.K. is, as always, on the verge of resolving that Brexit thing. Here is a bold prediction... the conservatives will win a substantial majority and will then fall into disarray over Brexit. It's just a remake of the previous movie... without the suspense.

    It's good to see that whole trade thing was resolved while I was away. We clearly won that war, as exports are up 0.15% over last year. Ignore in the imports being up 0..85%. If the FED can change definitions of words and phrases... I should be able to do the same with that word... win.

    Inflation seems to be picking up in the U.S. now that C.O.L.A. has been established, although one month upswing does not a trend make. A place that does have an upward trend in inflation is China., where food prices are skyrocketing. When I say skyrocket, think of the egg fiasco in the U.S. a few years back. Much of it is being blamed on the local governments and likely to follow upward. The culprit being a disease among the pig population. There is deep concern that the central government might attempt to deflect their population away from their daily ills... to some sinister foreign plot. Not sure how it will moo goo gai pan out, but governments have used that gambit from day one. I know it is a chicken dish, but I bet the Chinese are like Americans, when a price rises on a commodity AND guess which country just lifted a ban on chicken from the U.S.


    I guess I'm done now!
     
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  2. Harry Havens

    Harry Havens Very Well-Known Member
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    It has been awhile since commenting on inflation...

    The latest BLS report is out... https://www.bls.gov/news.release/cpi.htm

    Much of the commentary is related to seasonal adjustments. As I track my own expenses and do not seasonally adjust... I focus on the data before adjustments. It's an apple to apple thing.

    Here is the unadjusted 12 month graph for the CPI report, followed by my own tracking system. (note: I have tracked since the early 90s, but the abrupt changes since retirement necessitated starting anew circa 2015/16.)

    inflation.JPG

    My personal household inflation is running 2.9% y/y, while the unadjusted CPI-U is running 2.04% y/y. The CPI-W is 1.9% y/y.

    As mentioned in the official release, Medical Care is still sailing along at about 5.1% y/y.
     
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  3. Harry Havens

    Harry Havens Very Well-Known Member
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    Back on May 28th I opined that a lot of joy was about, based on much lower vote turnout in the U.K. and how I thought it a bit premature.

    http://seniorsonly.club/threads/economics.7269/page-7#post-341489

    Now just over 6 months later, it seems a lot of overjoyed people are now wringing their hands in dismay (At least it isn't miss may.)

    I'm sure the losers will attempt to focus on the 43%~44% vote the conservatives were given, which isn't a majority vote and attempt to ignore the majority in Parliament, after spending the past 3~4 years saying parliament takes precedence over a majority vote.

    Wanna bet?
     
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  4. Harry Havens

    Harry Havens Very Well-Known Member
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    Yes, politics impacts economics, so here goes...
    The democrats are on the cusp of impeaching Trump. Big Whoop!
    It will be close...

    house.JPG

    Any thought of Delaney and Gabbard recusing themselves is probably delusional. In a court of law, it would be considered a requirement, but this isn't a court of law.

    In any case, it is likely to happen, but the majority whip has their work cut out, as at least 17 democrats are already threatened to possibly lose their seats next year. High minded talk about putting the country first... goes out the window, when the gravy train is threatened.

    On to the Senate...

    senate.JPG

    Again, this isn't a court of law, but to believe that 20 republicans will cross the aisle and join 45 democrats and 2 republicans... is lunacy, imo.

    This is, was and will remain about the 2020 elections. As it stands now, the democrats will likely to keep their hold on the house, but can be expected to lose 5~7 seats, imo. As for the Senate, it will remain about the same, although some shifting of faces is likely.

    On to the presidential election, with how I see the current electoral map, followed by the "toss-up" states. Again these are my opinion.

    president.JPG

    Minnesota and New Hampshire are on my list, as it somehow went unnoticed in 2016... how close these states were.

    As Bill Clinton once said "I did not have sex with that woman", no, no, no... not that one... the other one... "It's the Economy, stupid."

    The perception of the economy come November will be the determining factor, imo. Things can change, but there is nothing indicating doom in 2020, on the economic front.
     
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  5. Bess Barber

    Bess Barber Very Well-Known Member
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    This whole thread is very interesting!! I've not seen it before. Thanks @Harry Havens !!
     
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  6. Lois Winters

    Lois Winters Very Well-Known Member
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    I agree about Delaney and Gabbard, Harry. I am watching both of them closely for the upcoming year. Either, I believe could be a dark horse to upset Trump's apple cart. If the get the momentum and money, it could be a very interesting year indeed.
     
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  7. Harry Havens

    Harry Havens Very Well-Known Member
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    Thanks for the comment and dropping by.
     
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  8. Harry Havens

    Harry Havens Very Well-Known Member
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    Delaney is going nowhere, imo. When your home state only gives you 1% in the polls, it is hard to imagine any upward momentum.

    Gabbard got a bit of a boost with the Clinton dust-up, but that seems to have moved out of the news cycle. It takes money to win a presidential election and neither the money or the support appears forthcoming.

    Speaking of her majesty Clinton, I don't think we have heard the last of her. Oddly, she is polling in double digits, which is omitted from the news cycle as she has not entered the race. I would suggest she is waiting for the impeachment process to end, before jumping into the fray, as it would hamper a roll out, imo. I'm cynical enough to believe that is one of the factors in the Democrats dragging out the process and the Republicans wanting to hurry it along.
     
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  9. Harry Havens

    Harry Havens Very Well-Known Member
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    Time for a meaningless graph...

    imports and exports.jpg

    This is about the trade imbalance and more specifically oil. For a very long time, U.S. oil imports versus exports were a fairly substantial portion of the overall trade imbalace. Thus the cries for using less of those products, becoming less dependent on OPEC... yada yada.

    To this day, there are some people that mistakenly believe this remains the same, when in fact... it is false. While some point to the still large imports of petroleum products and the U.S. production of crude... which would provide numbers very similar to pre-recession, a couple of important points get left out.

    Actual consumption in the U.S. by Americans and American businesses has fallen significantly... somewhere in the 6.5 million barrel per day category. U.S. production of crude oil has more than doubled... from 5mbpd to over 11mbpd. Total imported product has fallen from 15.5mbpd to 10mbpd. Those are the numbers that get cited on a regular basis. What is omitted is the exports of petroleum products, which have risen from a paltry 1mbpd to nearly 9mbpd.

    So yes, we are near balanced on petroleum products.
    As for the graph... I highlighted the years 2003~2007 on overall trade imbalance. Back when we were screaming about the price of oil, etc. Something had to be done. Fast forward to today and we can see via the 2nd graph that pulling out the oil imbalance from that period, shows our overall trade imbalance is almost back to pre-recession levels... sans oil.

    I get the difference being that Americans focus their thoughts on what they are spending out of pocket for items, but little thought seems to be given to where that pocket money came from in the first place.

    Since 1980, our overall trade deficit has been north of $16T, with north of $13T since 2000. While we like to claim that foreigners are buying treasuries... not to that extent. Roughly 6.8T is held by foreign entities. https://ticdata.treasury.gov/Publish/mfh.txt

    Our overall external debt is over $20T. https://ticdata.treasury.gov/Publish/debta2019q2.html

    Granted we (the U.S.) has foreign holdings but the net position is over $10T in the hole. https://fred.stlouisfed.org/series/IIPUSNETIQ

    I've said this before... I don't know when, but "it" is out there.
     
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  10. Harry Havens

    Harry Havens Very Well-Known Member
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    Time for a little political commentary, though this is an economy thread. But the economy and wars are part of any political discourse. Granted the latter doesn't seem to be much of a factor these days.

    Harken back to early November, 2016... Clinton was the presumptive winner according to the polls. Just before the election, Clinton had all but been assured that to be a fact with 260 electoral votes already in her column. She only needed a little help from "toss up states"... either North Carolina(15), Ohio(18) or Florida(29) individually or any two/three of the following, Alaska(3); Colorado(9); Iowa(6); MIssissippi (6); Nevada(6); New Hampshire(4). She got Colorado, New Hampshire and Nevada, but lost safe states such as Wisconsin(10), Pennsylvania(20) and Michigan(16) and 1 in Maine.

    She ended up with 232 on election day and with faithless electors... the final tally was 227.

    The Pollsters took a beating, but I always wondered what changed? This time of year 4 years ago... Any republican was ahead of Clinton on an electoral basis. That generic republican was outpolled by Bernie Sanders on that same basis. Oddly, some guy named Donald was leading the republican pack for electability. The democratic party got $%^&h slapped into backing Clinton.

    My theory is that the bulk of citizens have already decided which party they are voting for, regardless of candidate. From now until the election, they were doing what the character Sim Carstairs said in the movie Josey Wales. "you know in my line of work, you gotta be able either to sing “The Battle Hymn Of The Republic” or “Dixie” with equal enthusiasm… dependin’ upon present company." Sometimes it is referred to the Bradley Effect.

    Here we are nearly 4 years later and focusing on national popularity, while ignoring the individual states and their electoral impact.

    4 years ago, the electoral vote potential showed Sanders, Trump and Clinton in that order. Of course Clinton burnt all manner of bridges to get her place in the sun. The 2016 final result was predicted this time 4 years ago.

    Onto the current set of polls. They indicate Biden, Trump and Sanders in that order, although Trump/ Sanders are really close. The rest of the democrats come up short on potential electoral votes. Almost any democrat would garner 232 electoral votes, so the path should be easier. However 2016 clearly shows it was possible. Clinton is not running... yet!!! I doubt that she does as she is still campaigning for the 2016 elections and doesn't have much time for 2020.

    It will be an odd year, imo, as states like Michigan and Pennsylvania seem firmly planted in Trump's favor, while a state like Georgia may finally revert to the democrats. Yes you read that correctly. A state that has only voted democrat in 1976,1980 and 1992. Carter was the first two and Clinton was the last. It should be noted that Clinton got 15,000 more votes in Georgia than the Elder Bush, during a year when Perot got over 300,000. But then I always suspected that Perot cost the Elder Bush that election, as Perot affected about 154 electoral votes.

    Speaking of oddities, Sanders is polling ahead of Trump in Utah. How is that even possible?

    At this juncture, the republicans need Biden out of the race, so expect the focus to be there.
     
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  11. Lois Winters

    Lois Winters Very Well-Known Member
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    As for Sanders leading in the polls in Utah, just who is being polled there? If college students (there a copious numbers there) are the folks answering to the pollsters, then, no surprise. If you listen to Biden, he will take himself out of the equation altogether. I can barely understand what comes out of his mouth.
     
    #116
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  12. Harry Havens

    Harry Havens Very Well-Known Member
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    Every state is different and Utah would be a perfect example. In the 2016 Utah caucus/primary, Sanders got nearly 80% of democratic votes, while Trump got 13% of republican votes. The reason Utah was not in doubt in 2016, was not the pro-trump bias, but a rather strong anti-Clinton sentiment.

    As for the polls, it is the Y2 Analytics run by https://www.utahpolicy.com/. It tends to have a small sampling of registered voters, but has had 100% accuracy in the past, despite the wide sampling margin of error. (100% being the result of the last poll before an election).

    A lot of people would likely disagree with Sanders policies, but as he is portrayed as an outside and radical... well those that think things need to be shaken up might go that route if there is no other alternative.
     
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  13. Harry Havens

    Harry Havens Very Well-Known Member
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    Overlooked items of 2019.

    I completely forgot to address the October Release of The Supplemental Poverty Measure through 2018.

    The oft stated poverty measures are based on $1 being the same in the continental U.S. and adjusted for Alaska and Hawaii. A one size fits all, in a nation of multiple sizes. The supplemental report adjusts for cost variations. Generally the major factor is housing, followed by utilities. It is simply supply and demand. Large population centers have much higher housing and utility costs. Significantly higher housing costs in highly populated Metro areas skews the statewide data, so metro/non metro data is included.

    The top ten highest poverty percentages, based on the Supplemental Poverty Measure.

    upload_2019-12-31_11-30-47.png

    The Metro and Non Metro columns are based on 1 being the median cost across the nation. (I downloaded that Data earlier in the year and have lost the link).

    The official poverty measure has the ten highest as...
    upload_2019-12-31_11-44-31.png

    Time to close the books on 2019. Happy New Year!!
     
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  14. Harry Havens

    Harry Havens Very Well-Known Member
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    Modern Politics and the economy seem to go hand in hand. Considering the size and scope of consumers in relation to our GDP, some thoughts going forward.

    My pre-retirement strategy was based on how to overcome severe hiccups in the economy. Historically, my savings and investment were based on finding a strategy that would overcome all obstacles. The problem became serious downturns accompanied by or caused by bouts of inflation. All of this led me to look at the cause of such serious bouts. One of the underlying causes were oil shocks/shortages etc. I became interested in Oil and oil products, pricing, etc.

    Currently, the data I compiled looks like this. (All is pulled from eia.gov)

    upload_2020-1-2_12-20-57.png

    For the last report, we are net 408,000 bpd more exports than imports, although we are behind 662,000 over the past 6 months. Often it is stated that we (USA) are consuming 20mbpd, that includes refiners that are turning around and shipping products out at the tune 9mbpd+ per day.

    Imports by country of origin over the past 6 months (BPD) and exports by country of destination, same period (BPD)

    upload_2020-1-2_12-25-43.png

    I think I can safely rule out serious shocks in 2020 to the economy by petroleum. Granted it is a global product, but staying on the good side of Canada and congress reinstating export restrictions would alleviate any threat... provided congress were to agree to anything. Then there is the Strategic Petroleum Reserve, which remains healthy.

    On to the next potential issue.
     
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  15. Harry Havens

    Harry Havens Very Well-Known Member
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    I should look back at some of my thoughts/predictions for 2019...

    Will China's growth continue to slow? It is looking very likely.
    It slid from about 6.5% in 2018 to 6% through October, 2019. It was not rocket science that I got this one right. 2020... indicates a bit more slow growth. As China's economy matures, it would tend to slow a bit... but slowly.

    Will the EU's growth continue to slow? Also likely.
    Again this was a no brainer, as it had slowed from beginning of 2018. The IMF says so and they are notoriously optomistic... so who am I to differ.

    Will the US growth continue to slow? Likely?
    The final numbers won't be out for 2019 until end of January. My crystal ball indicates it will be down slightly - 2018: 2.51% and 2019-2.3%. (Note: it would take 4th qtr GDP annualized at 2.8% to match last year... Ain't gonna happen,imo.) Not really a big crystal ball moment, imo. Expect it to stay in the 2% range, imo.

    Will the U.S. Federal Reserve raise rates again in 2019? Ignore the chatter... the answer is likely by year's end, unless we clearly see a recession.
    Really, really messed this one up, as the Fed lowered rates and we are not in a recession. They've started QE4 buying bonds, so not very likely to raise rates.

    Will the European Central Bank fully reverse their negative interest on excess reserves? That would be near suicidal in my opinion.
    This was one of those things that was hinted at by certain member(s) of the ECB, but I don't think anyone took it serious and there was a good reason... one that is still in play.

    Will the U.S. fall into recession in 2019? Considering everything was "looking good" back in June, 2008 and 2 years later the official start date of the recession was set at December, 2007... We will likely need a few more years to answer that one. My guess is no. It will be an interesting 2020 election, imo
    I think we can all say this didn't happen. Unless something dramatic takes place, that smashes consumer confidence... not likely in 2020. The consumer runs the economy and as long as they are happy and the credit spigot is full-on... no recession. On the other hand... some of those doomsayers about the economy and wishful thinking politicos, have started to back off the recession talk. As a contrarian, it is a bit worrying to me.

    No charts and graphs, so maybe some next post... whenever.
     
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