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Confounding and confusing events 1/31/22

An iceberg known as A68a broke off from the ice shelf on the Antarctic peninsula in 2017. It measured 100 miles long and 30 miles wide and drifted over 1,000 miles to near the islands of South Georgia in the south Atlantic where it ultimately dissipated. In its prime it was nearly 800 feet thick with only 120 feet of that above the water line. The dissipation of this iceberg will have ecologists studying for years it impact.

The US is threatening to take actions against Russia utilizing trade as the vehicle, as opposed to military action, at least in part. The US is studying whether or not it should ban exports to Russia of products that use microelectronics based on US equipment software or technology. This could have a critical impact on Russia’s ability to develop and utilize artificial intelligence, quantum computing and aerospace hampering the Russian high-tech industry. The flip side of this as we learned when this approach was used with China, is that our industries may not have alternative purchasers for their products, and thus, exports may well be negatively impacted. This is certainly a good idea, but it has to be thought through carefully and to the extent our national security negatively impacts these businesses, we need to take that into account by providing appropriate economic assistance.

Secretary of Agriculture, Tom Vilsack, penned a letter entitled, “Big Meat Takes Advantage of Small Producers” as he expresses concern about the farmers and ranchers receiving declining shares of what consumers spend on meat. An article written by Sheldon Kimmel, a former AG Department employee, says that there is another explanation. He claims that the movement by consumers to prepared meals has driven the cost of product down while the profit is trapped in the preparation and delivery of these foods. An interesting thought as I think most of us believed that it was the middleman who caused the problem, but maybe not. Clearly, we always need to get all of the facts before reaching a conclusion.

In a recent American Legion Magazine, the national commander indicated that the American Legion strongly supports an expedited path to US citizenship through military service. This is an important comment, and one that, interestingly enough, was largely ignored by President Trump and many Republicans. I searched for Congresswoman’s Stefanik’s position on this issue and could find nothing, but given her support of President Trump and his anti-immigrant attitudes and actions, it is quite likely that she would not support this route to citizenship. When you think of all the immigrants who have fought in virtually every war the United States has engaged in, it is unconscionable that we would not have a statutory method of expediting citizenship for that service. Let’s see if Congresswoman Stefanik gets on board.

The Wall Street Journal recently reported that despite Omicron the economic recovery appeared strong as GDP grew by 6.9% in the 4th quarter and over 5.5% in 2021. This, in part, was the result of companies making significant efforts to bolster inventories as they came to the end of 2021. This is certainly a pleasant surprise, and belies some of the negative information being constantly broadcast by the national news.

In a burst of hypocrisy, Senator McConnell and many Republicans are saying we need to go slow with the next Supreme Court appointment, and we don’t want to appoint a radical. I suggest that they take a look at the process they used for Justice Barrett and at Justices Kavanaugh, Barrett and Gorsuch in terms of radical positions. We will know whether or not they are radicals in short order when the decision on Roe v. Wade is issued. For McConnell to make that assertion, in my mind, just totally dissed any credibility he might have had. I am also awaiting our Congresswoman’s commentary on the Supreme Court selection. I am sure she will be just as disingenuous and hypocritical as Mr. McConnell.

I had to say I was most amazed at our Congresswoman’s commentary about the mask mandate, and her saying that as a member of the education committee in Congress that she would take New York State’s Education Department to task. She also alluded to the Supreme Court making a decision which indicated to me she was not aware that the Supreme Court in New York is the lowest trial court. It is amazing how peoples desire for a result will color their ability to accurately report the facts.

The US trade deficit in goods widened to a record high in December as imports increased for a 5th straight month, and strong domestic demand, suggesting that trade likely remained a drag on economic growth in the fourth quarter. As we noted above, imports are helping to replenish depleted inventories, and in part, explain the increase in the trade deficit. Obviously, the economy remains somewhat confused in terms of what direction it is going to go in terms of inflation, the labor market, etc. The Covid virus has truly dealt us a bad hand across the board.

A recent article in the National Hard Farmer indicated that trade wars have cost farmers $27 billion in losses, which was initially generated by Mr. Trump in 2018, with his imposition of Section 232 National Security Tariffs on steel and aluminum. The impact on farmers was felt because of the reduction in exports in 2018 through the end of 2019, and these numbers don’t include 2020 and 2021, which also saw lower levels of exports of many farm commodities.

Kevin Brady, a senior member of Congress who, as I understand it, is retiring at the end of this term asserted that he had not had a single opportunity to sit down with the President or Speaker Pelosi to discuss a wide variety of issues. He thinks if those discussions actually happened that retirement security could be addressed, which is also a priority of Richard Neal the Chairman of the House Ways and Means Committee of which Congressman Brady is the ranking member. He further suggests trade could also be addressed, that unfortunately, is far more complicated, due to the move by Republicans away free trade and into protectionism. He also raised the specter of legislation regarding making America medically independent from China, which, again, this seems somewhat unrealistic, because no matter how that is done it will cost consumers more.

On the economic front, a few facts.

Wages grew at the fasts pace in 21 years, good for employees, but adds to inflation. Employers paid 4% more on wages year over year.

Inflation continues to run hot in case you didn’t notice – while consumers spending dropped in December. The personal consumption expenditures index rose 5.8% for the year, the fastest pace since 1982.

Boris Johnson the British PM is struggling with a new scandal – partying during the pandemic while other Brits were in lockdown. The Teflon suit he has been wearing may be losing its sheen.

Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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