Economy

A Broken Century

David Brooks: “Most of us came of age in the last half of the 20th century and had our perceptions of “normal” formed in that era. It was, all things considered, an unusually happy period. No world wars, no Great Depressions, fewer civil wars, fewer plagues.”

“It’s looking like we’re not going to get to enjoy one of those times again. The 21st century is looking much nastier and bumpier: rising ethnic nationalism, falling faith in democracy, a dissolving world order.”

“At the bottom of all this, perhaps, is declining economic growth.”

Trump May Change the Way Trade Deficit Calculated

“The Trump administration is considering changing the way it calculates U.S. trade deficits, a shift that would make the country’s trade gap appear larger than it had in past years,” the Wall Street Journal reports.

“The leading idea under consideration would exclude from U.S. exports any goods first imported into the country, such as cars, and then transferred to a third country like Canada or Mexico unchanged… A larger trade deficit would give the Trump administration ammunition in arguing that trade deals need to be renegotiated, and might help boost political support for imposing tariffs.”

Trump Demotes the Council of Economic Advisers

The White House said that the chairman of the Council of Economic Advisers will no longer be part of the president’s cabinet, the Wall Street Journal reports.

“The diminished stature for the CEA, which was part of President Obama’s cabinet and has advised presidents for over seven decades on the economic impact of their policies, means Mr. Trump will likely rely more heavily on other advisers, such as Gary Cohn, the former Goldman Sachs president who is head of the National Economic Council, and Peter Navarro, the trade critic who is leading the National Trade Council.”

U.S. Adds Better-Than-Expected 227,000 Jobs

“U.S. employers hired briskly in January and more Americans joined the workforce, suggesting the labor market still has room to grow after years of expansion. Jobs outside of farms increased a seasonally adjusted 227,000 last month, the best gain since September,” the Wall Street Journal reports.

“Meanwhile, an increase in the share of Americans working or actively seeking work caused the unemployment rate to rise to 4.8% from 4.7% a month earlier. Economists predicted a gain of 174,000 jobs and a 4.7% jobless rate. The report also offered signs the labor market may not be as tight as thought.”

Trump Gambles on Bilateral Trade Deals

President Donald Trump “is betting big that he can harness U.S. strategic and economic heft to press other countries into one-on-one trade deals, a sharp reversal from recent U.S. policy to negotiate sprawling regional agreements that cover broad swaths of the global economy,” the Wall Street Journal reports.

“The strategy reflects the view of a confident deal maker that trading partners will come to the table ready to make enough concessions to Washington to justify meaningful bilateral deals — and that other economic blocs won’t seize the moment to expand and integrate further, crowding out the U.S.”

Trump Proposes 20% Tax on Mexican Imports

“President Trump plans to make Mexico pay for his border wall by imposing a 20 percent tax on all imports into the United States from Mexico, raising billions of dollars that would cover the cost of the new barrier,” the New York Times reports.

White House press secretary Sean Spicer “said the 20 percent tax on annual Mexican imports would raise $10 billion a year and would easily pay for a border wall that is estimated to cost between $8 billion and $20 billion. The value of imported goods from Mexico in 2015 was $296 billion.”

However, the White House insisted a few hours later “that it was not endorsing the plan.”

Sen. Lindsey Graham (R-SC) on Twitter: “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad.”

Trump Withdraws U.S. From Trans-Pacific Partnership

President Trump formally pulled the U.S. out of the Trans-Pacific Partnership, the 12-nation trade agreement that was negotiated by Barack Obama and became a lightning rod for criticism in the 2016 election, the Wall Street Journal reports.

“The memorandum announcing Mr. Trump’s decision was largely symbolic, because congressional leaders and the Obama administration had signaled in November that no near-term vote would be held on the TPP.”

Flashback Quote of the Day

“It’s not like if you run a fast food company you’re hiring graduates of MIT or people that were gonna go work for Microsoft, you know. In the employment pool, you’re hiring the best of the worst. You know, it’s kind of the bottom of the pool. And at Hardee’s it was so bad, we were hiring the worst of the worst and hoping they would stay.”

— Labor Secretary nominee Andrew Puzder, quoted by CNN in 2011 speech.

Britain Will Leave the Single European Market

Prime Minister Theresa May says Britain will leave the EU’s single market — but will “seek greatest possible access to it” — as it exits the trade bloc, the New York Times reports.

May said she wanted Britain to be part of a customs union agreement with the other EU states, and remove as many trade barriers as possible. She did not provide details, but said she had an “open mind” on how to do it.

8 Billionaires Own the Same As Bottom Half

“Inequality is so stark that a small group of men own the same wealth as half the world, say campaigners ahead of the high-profile World Economic Forum in Davos,” Sky News reports.

“According to research by Oxfam, the eight billionaires, including Bill Gates who tops the list, have riches equivalent to the wealth of the world’s 3.6 billion poorest people.”

Most Economists Are Worried About Trump

Justin Wolfers was at the annual conference of economists last weekend in Chicago and notes the major theme was a sense of anxiety about the incoming Trump administration.

“Over three days of intense discussions, I didn’t encounter a single economist who expressed optimism that Mr. Trump’s administration would be good for the economy. The optimists were those who thought Mr. Trump would not have the energy to actually implement his agenda; the pessimists’ thoughts veered toward disaster.”

Republicans Grow More Skeptical of Free Trade

Pew Research: “About two-thirds of Republicans and Republican-leaning registered voters (68%) say free trade has been a bad thing for the U.S., while only 24% say it has been good for the country. These views, which have shifted starkly since May 2015, when 51% of Republican voters said free trade was a good thing for the U.S. and 39% said it was bad, came as President-elect Trump criticized free trade throughout the 2016 election cycle. Democrats, on the other hand, remain largely positive about free trade.”