Tuesday, December 6, 2016
Ahead of the bell this Tuesday morning, we see new reads on the Trade Balance and Q3 Productivity. October’s trade was squarely in the negative once again, indicating a trade deficit, at -$42.06 billion. The final take on Q3 Productivity is 3.1%, lower than the 3.3-3.4% expected.
The U.S. has been running a tab with its global trading partners since Alexander Hamilton was running the country’s finances. And for most of this young century our imports have been significantly cheaper than our exports. Incoming Commerce Secretary, billionaire Wall Street mogul Wilbur Ross, has expressed his opinion that imports have created a big drag on our trade deficit, which helps set the table for increasing tariffs on our imports once the Trump administration takes the reins of government.
The narrative is that exports — once U.S. companies increase production domestically in a meaningful way — will more than make up the difference, and put a large dent in our trade deficit in the coming years. Doing this would for sure provide a boost to the U.S., but the inner-workings of creating new trade policy in the world’s largest economy is far more complex than flipping a couple switches. So there will be plenty for Ross and President Trump to hash out.
Though the productivity read wasn’t as strong as analysts had been looking for, the 3.1% figure was the largest in the past two years. Unit labor costs raised 0.7% for October. Since September 2014, we’ve actually seen three negative turns in productivity, so a stronger move to the positive is a good sign.
Again, this is a measure of the U.S. economy being paid special attention by the incoming Trump administration. With increased (deficit) spending invested in infrastructure works projects — putting thousands of Americans to work in these sorts of jobs — along with creating more slack in government regulations — another thing Trump and his supporters look primed to attack — we may see significant gains in productivity, which would be another plus for the domestic economy.
Further, a sea change of workforce participants continues: as more millennials enter the U.S. labor force, more baby boomers retire. So the exchange of experienced workers with inexperienced ones continue to get absorbed by the system, and as time goes on those younger workers gain experience. This points to another potential improvement in U.S. production.
Mark Vickery
Senior Editor
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Image: Bigstock
Deficit and Productivity as Obama Era Wraps
Tuesday, December 6, 2016
Ahead of the bell this Tuesday morning, we see new reads on the Trade Balance and Q3 Productivity. October’s trade was squarely in the negative once again, indicating a trade deficit, at -$42.06 billion. The final take on Q3 Productivity is 3.1%, lower than the 3.3-3.4% expected.
The U.S. has been running a tab with its global trading partners since Alexander Hamilton was running the country’s finances. And for most of this young century our imports have been significantly cheaper than our exports. Incoming Commerce Secretary, billionaire Wall Street mogul Wilbur Ross, has expressed his opinion that imports have created a big drag on our trade deficit, which helps set the table for increasing tariffs on our imports once the Trump administration takes the reins of government.
The narrative is that exports — once U.S. companies increase production domestically in a meaningful way — will more than make up the difference, and put a large dent in our trade deficit in the coming years. Doing this would for sure provide a boost to the U.S., but the inner-workings of creating new trade policy in the world’s largest economy is far more complex than flipping a couple switches. So there will be plenty for Ross and President Trump to hash out.
Though the productivity read wasn’t as strong as analysts had been looking for, the 3.1% figure was the largest in the past two years. Unit labor costs raised 0.7% for October. Since September 2014, we’ve actually seen three negative turns in productivity, so a stronger move to the positive is a good sign.
Again, this is a measure of the U.S. economy being paid special attention by the incoming Trump administration. With increased (deficit) spending invested in infrastructure works projects — putting thousands of Americans to work in these sorts of jobs — along with creating more slack in government regulations — another thing Trump and his supporters look primed to attack — we may see significant gains in productivity, which would be another plus for the domestic economy.
Further, a sea change of workforce participants continues: as more millennials enter the U.S. labor force, more baby boomers retire. So the exchange of experienced workers with inexperienced ones continue to get absorbed by the system, and as time goes on those younger workers gain experience. This points to another potential improvement in U.S. production.
Mark Vickery
Senior Editor
Click here to follow this author>>