While the future state of the nation’s economy is unknown, Justin Haskins, Executive Editor of The Heartland Institute, believes it’s going to be a disaster, and he’s placing blame on Team Biden. He feels the only hope of averting economic disaster is to put policies in place that would encourage, rather than discourage, able-bodied people to return to work, while reducing inflation-causing government spending programs. However, Haskins doesn’t believe the Biden administration is interested in pursuing either course.
Fox Business/Justin Haskins
Thanks to Team Biden, America could soon be on the verge of economic disaster
No one knows for sure what the state of the American economy will be one year from now, but the existing evidence all points in one direction: disaster.
During the widespread rollout of the COVID-19 vaccines, countless economic analysts predicted the remainder of 2021 would be marked by rapid economic growth. The most popular theory was that as the economy reopened, pent-up economic demand would lead to a surge of activity, driving expansion at a record pace.
However, despite extremely low levels of deaths related to COVID-19, new data from the federal government suggests the economy grew at a much slower pace than expected in the second quarter of 2021.
Many analysts were predicting 8.5% growth, but a report from the Commerce Department estimated gross domestic product improved by just 6.5%, a 26% difference. The Commerce Department also slightly revised down its estimates for first-quarter GDP growth, from 6.4% to 6.3%.
According to Paul Ashworth, the chief U.S. economist at Capital Economics, the economy’s disappointing performance is a strong sign that government “stimulus provided surprisingly little bang for its buck.”
The economy’s relatively slow growth is a clear indicator that the Biden administration’s economic strategy of increasing employment through government welfare and stimulus programs isn’t working as expected—which should worry policymakers, considering that the Biden administration’s plans to improve economic growth in the future also rely on this same flawed thinking.
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Yahoo Finance/Myles Udland
Demand is not the economy’s problem
A “peak” in economic activity sounds scarier than it really is. For some time, economists and strategists have been eyeing a peak in U.S. economic growth.
And manufacturing activity data released Monday suggests that time might be now — unless you look beyond the headline numbers.
The Institute for Supply Management’s manufacturing purchasing managers index (PMI) out Monday registered a reading of 59.5 for July, down from June’s reading of 60.6. This data shows the manufacturing sector grew last month, albeit it at a slower pace.
Any reading over 50 indicates the sector is growing while readings under 50 represent contraction. This report also marked the third straight month the ISM’s manufacturing PMI has dropped, after peaking at 64.7 in March.
But the headline index overlooks what the internals of this data make clear, which is that demand continues to overwhelm the supply side of the economy.
“The ISM Manufacturing PMI was very solid under the details,” said Neil Dutta, head of economics at Renaissance Macro Research. “Anyone that says anything to the contrary does not know what they are doing.”
In other words, debating whether or not the economy is at, approaching, or past its moment of “peak growth” for this economic recovery doesn’t help us understand what this data tells us. Firms cannot produce enough to fulfill customer orders, and inventories are being drawn down to fill the gap.
Keep reading, here.
Reuters via CNBC
North Korea wants U.S. to allow fuel, metal trade to restart talks, South Korea lawmakers say
North Korea wants international sanctions banning its metal exports and imports of refined fuel and other necessities lifted in order to restart denuclearization talks with the United States, South Korean lawmakers said on Tuesday.
The North has also demanded the easing of sanctions on its imports of luxury goods to be able to bring in fine liquors and suits, the lawmakers said after being briefed by South Korea’s main intelligence agency.
The briefing came a week after the two Koreas restored hotlines that North Korea suspended a year ago.
North Korean leader Kim Jong Un and South Korean President Moon Jae-in have shared a willingness to rebuild trust and improve ties since April, and Kim had asked to reconnect the hotlines, the lawmakers said.
They also said North Korea was in need of some 1 million tons of rice, as its economy was battered by the coronavirus pandemic and bad weather last year.
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