Confounding and confusing events 9/14/23
Recent reports indicate that the Medicare budget has leveled off at a range no one anticipated. Analysts had projected that by 2023 the cost per beneficiary would be $22,006.00, when in fact, it has leveled off at $12,459.00 which is slightly under the per beneficiary cost in 2011. In terms of impact on the U.S. budget, this will have an enormous positive impact, even if the reasons for it are not understood. This is the kind of outcome that frequently happens when budget forecasting is utilized, in other words, it’s wrong for reasons that may or may not be obvious to the experts. In any event, this is good news for all of us.
There has been much in the news about the sentences handed down as the result of January 6th rioter’s convictions. Much of the rhetoric coming from the far right has been the claimed disparity between those involved in the riot and those involved in the Black Lives Matter protests. The facts of the matter is that many who were involved in the serious acts in the Black Lives Matter protests have in fact been prosecuted and sentenced to severe terms for the crimes for which they were convicted, almost exclusively at the State level. In addition, there were many, many more people arrested, indicted, and convicted as a result of Black Lives Matter riots than there was in the January 6th riots. In addition, there is no comparison between an attempt to disrupt the transfer of power (seditious conspiracy) and the destruction of property. I am not condoning the destruction of property, but that is something that has happened many times over the years, in many communities and under many circumstances, we had only one attempt to overthrow the government.
The recent reports from the labor market indicate that while hiring remains steady, the unemployment rate is rising and the number of unfilled jobs is decreasing. This is certainly something that we all could have anticipated but it must be understood in the context of a continuing robust economy. This is a result of a shrinking labor pool, for a variety of reasons, and the reshoring of manufacturing jobs as well the changes in the nature of those jobs, that is what we are manufacturing. The Chinse economy is slowing and potentially going into recession. Let’s hope the Fed sees this, understands it, and acts appropriately.
Scientists have recently discovered that nearly 99% of the human population 800,000 years ago was wiped out with only 1,280 individuals capable of reproducing remaining alive. They also believe that this “bottle-neck” lasted 117,000 years which clearly slowed the growth of the human population as well as it is dispersal. The factors leading to this included a generally colder climate, an Ice Age, as well as narrowing genetic diversity. This also resulted in a gap in the African and Eurasian fossil records, which can only be explained by the “bottle-neck.” This also represented a period in which severe drought persisted, food sources dwindled, and animals like mammoths, mastodons, and giant sloths went extinct. Interesting discovery about our ancestors.
The Wall Street Journal recently reported record spending on manufacturing construction which appears as evidence of a “Made in the U.S.” rebound. Some of this is aided by the Green Energy Incentives as well as concerns about foreign supply chains. This is evidenced by the fact that China has seen its exports decrease in the range of 20%, but also when analyzing the number of catastrophic natural disasters into this process, one can see why we would be seeing a growth in U.S. manufacturing, which reached $108 billion in 2022. Spending on manufacturing related construction exceeded that spent to build schools, healthcare centers or office buildings. This is good for the American economy, American workers and is a story Democrats should be telling whether or not it can be directly related to Mr. Biden, at the very least, he set the table.
A recent headline from the AP, “The economy is booming, but America disagrees” is problematic. All signs lead to a very strong economy with GDP growing for four consecutive quarters, hyperinflation has been eliminated and we are moving back towards the Fed’s 2% target, unemployment remains near record lows, and there are more than 9 million jobs still available. The Michigan survey of consumers is 39% higher than it was a year ago at 71.6%. It appears that the constant harping of politicians, particularly Republicans, has taken a toll on the American psyche, and even though consumers are still spending, their attitudes belie their actions. We can also note that in 2023 wage growth is starting to exceed inflation, but that may take some time to catch up, as well as to prove to the American people that this is something that is on track, not just an occasional blip. It appears a major concern of Americans is housing, and developing a housing policy that will allow those Americans who want to purchase a home to do so at a reasonable cost would go a long way to relieving our angst.
The reaction in China to its central bank rate cut has been to see both stocks and the Chinese currency sink as the real estate market continues to wobble. This is another sign of China’s economic instability, and how that plays out both in terms of internal and external political reactions is something we truly need to watch.
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.
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