Warren and issues dominate in Ohio DNC debate

Tuesday night’s CNN debate in Westerville, Ohio was another chance to hear the remaining twelve Democratic candidates to appeal for the nomination for president, and while the night provided few of the gotcha moments that have come to define success for television viewers, it did provide the opportunity for some well-crafted responses to the issues facing the United States.

Most were domestic, and many centered on some of the “bread and butter issues” that face all Americans, the night proved that Elizabeth Warren was now the co-equal of favored candidate, Joe Biden, Barack Obama’s vice president, and that fact was not lost on Pete Buttigieg and Amy Klobuchar who are hoping to make the November debate, and their sharply worded attacks on Warren show that she is the one to beat.

The debates also showed a vigorous sounding Bernie Sanders after his recent heart attack and that he was in fighting mode as the creator of Medicare For All.

Buttigieg seemed much stronger, even in fighting mode, to some - despite having $23.4 million cash in the bank - needed to define himself in starker terms, although rightly questioning the buy-back programs of assault weapons from fellow candidate Beto O’Rourke, and the program’s tattered edges, he stepped out with a remark to the latter about not needing a lecture on being courageous, a remark that came out of left field, and that some viewers thought might have been a homophobic remark, about not being manly, as the openly gay candidate handles slights, both perceived and real, but also one of desperation to define himself as a military man, fighting for the remains of the lower middle class who tend to dominate in the volunteer service, in his native Indiana.

Whatever the reason behind the remark it made him sound petulant, but he was on surer ground, as he and others ganged up on Warren on the cost of her health care program which she has not given an exact revenue stream.

Some Warren critics felt that she was evasive and indeed, Mayor Pete, as he calls himself, used the term, rightly sidestepped the question of exact costs, in the limited time slot and also wise, as hitting a moving target can be like shooting apples in a barrel, to use an old country term.

Vague is a term that has been used to describe her program, yet this early in the game, giving concrete numbers only adds to being on the edge, giving Warren points for being ahead of the others.

What proved to be welcoming was the absence of a barrage of attacks on President Trump, and a focus on issues, even though many American election historians have noted that elections are not won by issues.

One salient aspect of the debate that has largely gone acknowledged, by some observers, is how the dial has moved from the old-school centrist position of the Clinton and Obama presidencies to the new exigencies, created in part by Trump, that has moved the country, in no small measure, to the progressive left of Sanders and Warren, but also significantly is now challenged by those seeking a step back to an often hazy middle, by Biden and Buttigieg.

The one issue that galvanizes the change is health care, and when Mayor Pete challenged Warren in a saber-rattling moment to give a specific price tag for her health care program, she responded by saying, in part, “"My view on this and what I have committed to is, costs will go down for hard-working middle-class families," Warren said, again stressing that taxes on "the wealth and big corporations" would fulfill the bulk of the financing before pledging that she would "not sign a bill into law that does not lower costs for middle class families."

While she can be derided for being evasive, it’s also good statecraft, to avoid being shot down in a limited time frame, to respond, on what is her central issue in her years in the Senate, and also her professional career; and if that was not clear, then her mentioning of the creation of the Consumer Financial Protection Bureau, underscored her point.

"Following the financial crash of 2008, I had an idea for a consumer agency that would keep giant banks from cheating people," Warren recalled. "And all of the Washington insiders and strategic geniuses said, don't even try because you will never get it passed."

Getting ahead of the pack, from a former debating pro, as she was in her native Oklahoma high school, Warren countered the haranguing by saying, “"I'm really shocked at the notion that anyone thinks I'm punitive," Warren said. "Look, I don't have a beef with billionaires," before reprising an argument that she's been making for years: that the wealthiest Americans owed a financial -- and moral -- debt to the country that helped facilitate their success,” reported CNN.

Biden, as avuncular as ever, despite some blow out moments, telling Warren that he got her votes got befuddles about the war in Syria, that he mislabeled as Iraq; leading many to think that might be a severe liability, outside of the all forgiving community of black voters.

Rounding the evening was Kamala Harris whose appeal for reproduction rights for women, brought a round of applause, after an intro by Corey Booker, shows that her fire for social issues is more her game, giving pause that she might be a cabinet member in a Warren administration.

While the issues may not matter for much of the electorate, it gives some support to those that care about the issues to see them front and center. Of course, the proof of the pudding is in the eating, and no one has sat down to dinner, at least just yet.

Wages low, hopes high, say some in September Report

The September jobs report came roaring in with something between a roar and a whimper, delighting some economists and bankers, while others claimed with some uncertainty that the report was anything but a clarion call for a robust US economy. But, then a wise woman once said that the truth lies somewhere in the middle, and the midpoint was where most clear-eyed observers see the report, as others alternate between squeals of delight and gnashing of teeth.

Overall, Friday's report from the Labor Department, showed that the economy added 136,000 jobs, from an expected, 163,000, and that the banner unemployment rate fell to 3.5 from 3.7, (it had been hovering near 4 percent for several previous months) giving joy to some, but still remains an echo of what happened in earlier economic recoveries, despite the half-century high.

The fly in the ointment is still wages, which dipped to 2.9 percent from 3.2 percent, creating a dilemma for increased consumer spending, despite some bankers seeing this trend as robust.

Nevertheless, there has been welcome news with an increase in labor force participation, not been seen in several months, and “which held steady at 63.2%. The total labor force increased by 117,000, while the employment-to-population ratio increased one-tenth of a point to 61%.”

The largest job gains were in professional services, and healthcare operations reported some of the major US staffing firms.

“What I’m hearing is different from what I’m seeing,” said Tom Gimbel, chief executive of LaSalle Network, a staffing firm in Chicago.  With so much uncertainty, some chief executives say they are afraid of having too much capital invested in their business,” he said to the New York Times.

The New York Times also noted that, “The report capped a week of otherwise disappointing economic news. Manufacturing activity in the United States fell for the second month in a row, while the World Trade Organization predicted that the growth in global trade would slacken significantly. A key measure of activity in the services sector — which accounts for two-thirds of the country’s output — also cooled.”

It is this cooling that worries many observers, who have cautiously given support to a steady economy, but one that still faces fissures from global concerns, such as the ongoing trade war, and tariffs with China.

“Today’s data don’t change the fundamental economic picture,” said Eric Winograd, senior U.S. economist at AllianceBernstein. “The labor market is still strong, adding more than enough jobs each month to absorb new entrants to the labor force. But even with a strong labor market, wage growth remains muted, limiting the risk that labor market tightness will push inflation meaningfully higher. The question that matters most for the economy is how long the labor market can stay strong given the ongoing slowdown in growth,” to CNBC.

As we have noted before, the aftershocks of the Trumpian battle with China has disrupted the global chain supply that has become the norm for modern day manufacturing and this threat, shows the slack that the WTO has reported.

There are some, however, that argue globalization has begun to weaken from its glory days when it was first married to reliable and affordable communications,(created by the internet), and that its threads are beginning to unravel, albeit aided by President Trump’s actions, and, according to the OECD, “Global trade growth has fallen from 5.5% in 2017 to 2.1%,” said The Economist in a special report, this summer, citing the onrush of local design, with Europe’s data-privacy laws, and now further hobbled by cross-border investment, and that  “soaring wages and environmental costs are leading to a decline in the “cheap China” sourcing model.”

When we circle back to wages, especially, it  makes it hard to see September, as a sunshine report, and, as some have noted, “The tightening labor market, though, failed to lift wages; the 12-month growth rate fell to 2.9 percent from 3.2 percent in August.”

Last year’s average of 223,000 jobs “were created each month, thanks in part to the temporary pick-me-up delivered by tax cuts and increased government spending. The average for the first nine months of this year is 161, 000,” said the Times, making this a spotty month.

This takes us to the Federal Reserve, in the face of another possible rate cut, which some want and others don’t; and, once again reflects a split on the Fed’s feelings on what can, or can’t be done, say some watchers.

“While not everyone fully shares economic opportunities and the economy faces some risks, over all it is — as I like to say — in a good place.” and “Our job is to keep it there as long as possible,” says the chair, Jerome Powell, ahead of its October meeting, at the end of this month.

Closer to the truth, say some, and leading the pack is “Carl Tannenbaum, chief economist at Northern Trust, [who] described the latest report as reassuring. “All of us have been on edge a little bit with declines on readings in the service sector, fearing that the trade problems would jump the fence from heavy to lighter industries,” he told the Times.

Taking us even closer to the mirror, is “Torsten Slok, chief economist at Deutsche Bank Securities, [who] was unconvinced that the clipped pace of hiring was the natural byproduct of an economy at full capacity. “The problem with that story is that wage growth dropped quite significantly,” he said. “Trade uncertainty is why we’re seeing a jobs slowdown and why the wage numbers are slowing.”

“Last spring, manufacturers were adding as many as 25,000 jobs a month. In recent months, the average trickled to a few thousand, and in September, the sector lost 2,000 jobs.”

“Mr. Trump has repeatedly placed manufacturing at the center of his economic strategy. Nonetheless, that sector is suffering the most from prolonged trade tensions. Companies in the business of making goods — as opposed to those that deliver services like hospitals and restaurants — are much more dependent on sales to other countries and supply chains that wend around the globe, they noted.

In Illinois, farmers, a reliable source of support for President Trump has shrunk, in light of retaliatory actions by China of a 25 percent tariff on US soy, in July of 2018, and who later added another 5 percent Sept. 1.

Crain’s Chicago Business reported early last month that ‘US agriculture will have to be less reliant on China as a destination for soybeans and other agricultural products” in the future, Ray Young, chief financial officer of agricultural processing giant ADM, warned on July 16.”

“Illinois, which is the country's No. 1 soybean producer, shipped $1.29 billion worth of soybeans to China in 2017, representing about a quarter of its total sales for the crop. A year later, exports to China fell 91 percent to $116 million,” they added.

“For the approximately 75,000 farmers in Illinois, permanently losing market share in China could lead to dwindling bank accounts, shrinking credit lines and a rise in foreclosures and bankruptcies.”

Upping the ante, and not in favor of Illinois farmers, is this: “What soybeans the Chinese do need they're now purchasing from other countries, largely Brazil. Illinois and Iowa farmers used to hold an edge over Brazil because the quality of U.S. roads, rails and waterways held down transportation costs. But when China upped its Brazilian imports last year, international investors financed improvements to Brazil's infrastructure.”

"That's permanent," Mike Doherty, senior economist at the Illinois Farm Bureau says. "They're not going to tear those roads up. We've set ourselves up for future loss of our market share. . . .They're selling more and more of their crop to China, and we're selling less and less. That's really the bottom line on it."

Seeing that was a shock to some, and “When Mr. Slok saw that new export orders had declined recently,  “I almost fell out of my chair,” he said, “That can only be driven by trade,” to the Times.

“The economy is still doing O.K.,” he said. “But the uncertainty from the trade war continues to be a cloud. Manufacturing is certainly is trouble.”

That takes us back to the ever growing role of politics, and as The Economist noted in a July editorial, “The last danger is politics. As the economy has trodden a narrow path, the boundaries of economic policy have been blown wide apart, partly out of frustration at a decade of sluggish wages.”