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Confounding and confusing events 7/11/22

The US trade deficit narrowed in May as exports increased. Consumers continued to spend, yet the consumer confidence index dropped 4.5 points to a reading of 97, the lowest since February of 2021. Consumer results are likely simply a timing difference in terms of how people are spending versus how they are feeling, and likely reflects worry about the economy going forward. Unfortunately, we all share that.

The US is readying a complaint to be filed under the USMCA, arising out of Mexico’s energy plan. The US has pending a claim against Canada on its milk price supports, so the parties are at it under the framework of the USMCA. This is, in fact, good news because these three countries are utilizing a civil approach to resolve their disputes, far better than that undertaken by Russia with its neighbors; or the Palestinians and the Israelis. There is always a bright side.

In case you hadn’t heard, the Colorado Avalanche won the Stanley Cup beating the Tampa Bay Lightning. No Canadian team reached the finals. The Edmonton Oilers were eliminated by the Avalanche and were the last Canadian team participating in the Stanley Cup finals. Obviously, lots of Canadians played in the final series.

The Commerce Department recently reported that PCE (Personal Consumption Expenditures) index was 6.5% through May, while CPI inflation measures were at 8.6%. These are two different measures, and they appear to be going in opposite directions, which causes potential confusion and maybe another harbinger of a recession. It is also important to be aware that the PCI is the one utilized by the federal reserve, and the most recent reports show the largest wedge or gap between the two since 1980.

Jobless claims increased slightly but remain at historic low levels.

The US economy added 372,000 jobs in June which is very close to the prior 3-month average of 400,000 jobs, down from earlier in the year. The unemployment rate was 3.6% up slightly from its record lows earlier in the year. Demand for employees still out paces unemployed workers.

Bloomberg recently reported that American factories are again making “stuff”, as CEOs are taking production out of China for a wide variety of reasons, including the shutdowns, supply chain issues, and transportation costs in general. That should become a significant positive for the American economy. This onshoring of production means that even though the American economy maybe faltering, the fact that you bring back production of items that are necessary could very well sustain the economy going forward during the course of a recession.

The USMCA received plaudits from the North American Manufacturing Association and Republican Kevin Brady who is the minority member of the Ways and Means Committee. This is good news because it means that Republicans and Republican leaning organizations are now beginning to reengage with free trade. We also know that US, Canada and Mexico are utilizing the dispute resolution mechanisms as I pointed out earlier, which means we have returned to a level of civility in dealing with difficult issues, rather than the recent juvenile name calling practice.

The January 6th Committee continues to discover evidence and disclose at least some of it. There is growing frustration with AG Garland and exactly how he intends to utilize the information that is being developed. It is hard to tell if he is being tepid or is simply making sure he gathers the right pieces of evidence in order to be able to proceed. It also appears that in Georgia the investigation is moving forward particularly when one sees the issuance of seven subpoenas to Trump insiders. It has long been my view that if Trump is to be indited and successfully prosecuted, that is the likely venue, because the evidence seems to be irrefutable with Trump making the now famous telephone call looking for 11,000 plus votes. One has to note the silence of our Congresswoman as the evidence mounts out of the January 6th Commission, other than the rhetorical statements which apparently appear somewhat infrequently, at least in the local press. I wonder what that is about?

Treasury yields have produced an inverted yield curve (short term rates are higher than long term rates) which has been a harbinger of a recessions in the past.

Republican Congresswoman Mary Miller was reported saying that overruling Roe v. Wade represented a victory for white life. Let me repeat that “white life”. She also happens to be strong Trump supporter.

The US removed tariffs on Canadian solar products. A small step to reduce inflation, but an important one.

Wooly mammoths went extinct about 4,000 years ago on a small island off the eastern tip of Siberia with the main body of the mammoths going extinct 6,000 years earlier. Scientists attribute the final extinction to a smaller population resulting in inefficiency in purging the bad genes. We know that Americans are tending to congregate with likeminded individuals, so there is hope – it might take a while.

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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  • It appears that former President Trump wants to make the announcement of his 2024 Presidential bid outside of Governor Ron DeSantis’ home in Florida. I am glad to see that Mr. Trump continues his juvenile behavior, and I am sure Mr. DeSantis will find this to be a most amusing spectacle, or he may attempt to bar Mr. Trump from that area or ask the local municipalities to refuse Mr. Trump the necessary permits. In any event, will make for great TV.
  • The controversy involving Roe v. Wade seems to have died down just a little bit, as the public now awaits the actual decision by the Court. One of the areas of interest to me is the fact that there appears to be a belief on the part of the anti-abortion groups that striking constitutional protection for choice will cause abortions to cease, at least in red states. We need only to look to the war on drugs which has in large measure been a bust (excuse the pun), outlawing alcohol was also unsuccessful, and yet we seemed to be focused on criminalization without any realistic investment in aiding those who may need assistance in these circumstances. I am prochoice, and I once had a priest tell my father (an old-line Brooklyn Irish Catholic) when I was running for office that he saw me as prochoice and he knew very few people who were pro-abortion, but rather people were faced with complex choices in their lives.