Posted on 01/22/2016 2:08:09 PM PST by Kaslin
Are we headed for a recession? Much of the major economic data suggest we're moving in that direction.
That was the fear behind this month's global sell-off in the stock market. Clearly our economy is slowing down, and economists are forecasting that fourth-quarter growth in 2015 will be down significantly. Maybe around 1 percent, certainly less than the anemic 2 percent growth rate we've been experiencing throughout Barack Obama's failed presidency.
That would move the U.S. economy into near-recession territory if it continues its slide in the first three months of this year. All the telltale signs are there. Consumers aren't buying like they used to, even with rock-bottom oil prices and a gas tank of regular costing less than $2 a gallon.
Yet retail sales fell in December at the height of the Christmas buying season. A New York Times headline last week put it this way: "Retail Sales Were Lackluster in December, Signaling Fragile Economy."
Domestic manufacturing is similarly weak, unsold inventories are piling up, reducing new orders; and the stock market has been in a free-fall since the year began. All because of China's economic slowdown, or so the forecasters tell us. But that slowdown still leaves China growing at around a 4 to 5 percent rate, a level Obama has never achieved in the past seven years of his presidency.
Something else is going on here that "reflect(s) wider shifts in the habits and fortunes of many American consumers," writes Times' economic analyst Hiroko Tabuchi.
In his State of the Union address, the president painted an exaggerated picture of the economy, job creation and a slight rise in incomes.
But Tabuchi says, "Much of the wage gain has come at the top end of the wage distribution, leaving many middle-income Americans feeling less than well-off. And burned by the Great Recession, many households have increased their savings, while paring back (credit card) borrowing."
"What does this mean then?" asks The Washington Post's economic blogger, Matt O'Brien. "Not that markets think there will be a recession, but that the recovery is still so fragile that there could be one."
It doesn't take a degree in political science to know that a weaker economy in a presidential election year will hurt the Democrats and especially Hillary Clinton, whose liberal agenda is a carbon copy of Obama's economic policies.
Clearly, the Republicans will have a political advantage in November, even if the economy is teetering on the edge of a recession, let alone falling into one.
First and foremost, all of the GOP candidates agree on one pro-growth, pro-job policy to get our economy growing again: tax cuts.
Donald Trump has proposed cutting the corporate tax rate, the highest in the industrialized world, which would dramatically boost our economy. And all of the GOP candidates are behind a long-stalled plan to cleanse the loophole-ridden tax code of corporate welfare and apply the increased revenue into lowering tax rates.
But some of Trump's prescriptions for our economy are outdated, and he's failed to point out that it's undergone major changes in recent decades.
Earlier in the campaign, Trump told voters that foreign car companies were taking advantage of our trade laws, declaring that "their ships are lined up" on the West Coast and hurting our own manufacturing base.
But the fact of the matter is that our biggest overseas competitors are making their products here and creating millions of American jobs. Japan's Toyota, for example, has built 10 manufacturing plants in the United States, making Camrys, Avalons and other car and truck models in places like Indiana, Kentucky, Texas and Mississippi.
Toyota has been in the U.S. for 58 years and is providing 365,000 U.S. jobs, producing 1.3 million vehicles, and is purchasing $32.9 billion worth of parts and materials.
In 2011, "Honda built more cars at its Alabama, Indiana and Ohio facilities than it did in Japan," according to data from Automotive News and the Japan Automobile Manufacturers Association. BMW, Mercedes and Volkswagen have four passenger vehicle assembly plants here, too, and others are following suit.
In 2011, British-based Rolls-Royce started making engine parts in Virginia and shipping them to Europe and Asia. In that same year, a German company, Siemens, began making power-plant turbines in Charlotte, North Carolina.
USA Today reports "the long-jilted USA is becoming a manufacturing hotbed for dozens of foreign companies in aerospace, energy, chemicals and other manufacturing industries."
Between 2007 and 2012, "foreign investment in U.S. manufacturing totaled $493 billion, versus $270 billion in the previous six years, according to the Organization for International Investment," writes Paul Davidson.
Even so, you still hear the politicians denounce policies that ship jobs overseas, when the trend is foreign firms shipping jobs into the U.S., the world's largest economy.
But Trump has called for a 25 percent tariff on Chinese goods coming into our country, which most economists say would lead to a destructive trade war.
That would hurt American consumers in their wallet and the stores, like Walmart, that sell their products. "In a trade war, everybody loses," says Nicholas Lardy, senior fellow at the Peterson Institute for International Economics. Besides, he says, "Most of the stuff we're buying from China" hasn't been made in the U.S. for decades.
Raising tariffs will hurt our economy, as they did in the 1930s and Great Depression.
The GOP is promoting the right prescription that has always strengthened our country. Reform our tax code, cut the rates, including the capital gains rate on investment, and watch our economy soar.
For the GOPe 0.0001% its always, CAPITAL GAINS TAX, CAPITAL GAINS TAX, CAPITAL GAINS TAX. How about, STOP TURNING OUR COUNTRY INTO MEXICO.
cutting taxes will stimulate the economy yes yes yes
but
i can’t help observing the article author’s comment about “going into a recession” — where the HELL has he been, anyway!? we have a hundred million working-age Americans unemployed (and many millions more stuck in part-time situations due to Obamacare employer taxes on full-time jobs)
No, no, no, no, no. You absolutely positively have to cut spending first. We cannot continue down the path of printing up new money to finance government spending. It steals from us all. Taxes need to be raised on people who currently pay no taxes so that they will have a vested interest on how government operates. Right now, the taxpaying class is in the minority, making it a slave class to the non-taxpayers. Expand the taxpaying class. Make everyone who works pay taxes. And then take away voting rights from those who don't. Then and only then will this nation begin to prosper again.
Or, blow up some oil wells in the middle east.
Tax reform not cuts. Mindless tax cuts on the rich won’t stimulate anything. Writer is blabbing out of a 1982 playbook.
Like antibiotics, I fear tax cuts have lost their effectiveness.
Plenty of capital, but no place to invest profitably....more small bizs closing than opening every year.
Slash government regulation at every turn and level would be better than tax cut.
Control predatory trade and immigration practices....beat up on someone other than American middle class for a change.
Cutting taxes is going to help struggling businesses huh?
How clueless are they? The only thing that is going to help any business is to get the government out of their business.
I simply love to hear the phrase “ free trade “ because there is no such thing while the government is in the back seat driving it.
What antibiotics have lost their effectiveness?
But Trump has called for a 25 percent tariff on Chinese goods coming into our country, which most economists say would lead to a destructive trade war.
Earth to mainstream Establishment, WE ALREADY ARE IN A DESTRUCTIVE TRADE WAR NOW.
The 1982 play book work fantastically. Revenues in the 1980’s went thru the roof. Almost doubling.
Build the wall. Halt Muslim immigration. Defund socialists collectives, foreign and domestic. Depopulate socialists/totalitarians/criminals/scumbags from your life. Prison for members of CONgre$$, past and present GOPe/’Rats/elites (socialists).
The Results of Legal Plunder
It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.
“The Law” - Frederic Bastiat
It’s easy to
live - free - republic
We need to put up tariffs until the trade imbalance with Asian countries goes to zero. Especially with China. We need to hit them when they are teetering. The economics of trade is form of international warfare.
If you really want to fix the economy, elect Trump. Bring back the jobs and the industries and put people back to work.
Trump plans to cut taxes too. But he has a comprehensive plan to rebuild our economy.
I like tax cuts as much as the next guy. But in an environment where you would be insane to start a business due to the myriad of rules and legal pitfalls, its not too hard to figure out why the economy is in the dumps. It’s not just the taxes.
The politicians love tax cuts because their cronies benefit. Cutting the power of life and death over business they wield through regulatory fiat? Notsomuch.
But slashing regs would reduce the politicians power.And that aint happening.
Exactly. Trump understands this and is ready to fight for America. Cruz voted for the TPP bill indicating he has no clue about the economy.
Exactly. Trump understands this and is ready to fight for America. Cruz voted for the TPP bill indicating he has no clue about the economy.
That depends on which side of the Laffer curve inflection point you are on to start with. I think, and a lot pf economist agree, we are way to the right of the Laffer curve. So cutting income taxes would INCREASE revenues. Just like in the 60's and 80's. It is just common sense.
tax REFORM . . . AND roll back mountains of regulation
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