In and of itself, the report showed an unemployment rate of 4.2 percent, steady, slightly higher than previous months, but enough to give a measure of satisfaction, and against a background of interest rates holding steady at 4.25 to 4.5 percent created a background of sureness to those same observers.
There were some patterns that remained the same, ebbing and flowing, but fairly predictable in light of previous reports: government employment, swelling to 6,000; retail at 24,000 (in part ot the retreat of severe winter weather); 54,000 in health care; 23,000 for transportation and warehousing,all giving rise to a predictable report.
Wages were also up 0.3 percent with a year on year total of 3.8 percent year over year, and with current inflation, those would keep many heads above water, for the moment,
Trump weighed in, expressing joy, and in a post on social media, reported by The New York Times, saying in his characteristic all caps: GREAT JOB NUMBERS FAR BETTER THAN EXPECTED. IT’S ALREADY WORKING.”
This may have been premature but it is a typical response from the president, but like those prior months we see the main drivers leading in health care and social assistance, giving “a combined gain of 78,000”.
Revisions, which are a typical pattern by the BLS, now have January and February, net gains of 45,000, but perhaps Joe Brusuelas, chief economist at the consulting firm RSM,who told the Times, possibly the best remark, avoiding optimism, and said, “What we are really seeing is the calm before the storm.”
That storm came swiftly on April 2, Liberation Day, as the White House titled the announcements of tariffs pegged to the US trade imbalance of 10 to 50 percent across the board and a hefty 25 percent on all foreign cars, pending the following week.
Reactions across the US and abroad were swift and negative, as it threw the global economy into disarray, and the specter of a possible recession; and the net results will affect not not only the tariffs that are paid by US importers; but most importantly, passed onto American consumers in the form of higher prices.
Just beyond, but no less significant, is the threat to long standing alliances with foreign countries, further jeopardizing future interactions with global trade.
Adding tariffs on steel and aluminum will crush the American, Canadian and Mexican auto industry with higher prices, and an exchange of foreign parts, the result will be higher than average car prices, exceeding the average new US car price of $50,000.
While the Trump administration says its goal is to even the playing field and force foreign companies to make their products in the United States, that goal is hardly feasible, with tariff retaliation, and the near impossibility of suddenly reformatting global supply chains, which in the best case scenario could take years, and considerable expense.
There has been growth in some industries manufacturing in the US, under the Biden administration, yet that hasn't been mentioned by the Trump administration, as it steadfastly clings to its goals.
Considering the massive layoffs in the federal workforce, not reflected in this report since the BLS gathers its data points in the first two weeks of each month, it’s equally important to note that, while some are not technically fired, yet, due to being placed on administrative leave, caused by the Department of Government Efficiency, as a goal of firing even more federal workers.
After the initial decimation of the US Agency for International Development there are planned workforce reductions of 83,000 employees of the Department of Veteran Affairs by the end of September of this year; 20,000 for the Internal Revenue Service, and a possible 1,155 for the Environmental Protection Agency, among many others with a possible total of 40,000 workers, 80% of them living and working outside of Washington, DC, with a resulting devastation not only to working families, but their local economies.
While there has been rampant criticism of the influx of cheap Chinese goods to the US yet many of them principally clothes, from tee shirts to sweaters have actually been a gain for lower income families, and as an earlier report from the Times noted, “lower prices are in effect a pay increase, leaving consumers with more money to spend on goods and services.”
With widespread price increases, low income families, the poorest, will see a double whammy and Marketplace.org reported, “The Yale Budget Lab also estimated [among other cost increases] that Trump’s tariffs alone will slash disposable income in the poorest households by at least $,1700 a year. Simply put. The lowest income households spend more money on necessities.”
Furthermore, they added how higher grocery prices will affect the same households, noting that the top half of higher income households spend about “10% of their income on food,” but noted Tim Richards, an agribusiness professor at Arizona State University, “But, if you look at the lowest 20% of income earners, they spend 30% of their income on food.”
The national media has been awash in criticisms of the president, but even some conservatives have criticized the formula that the White House has used and as Axios has reported:
“The administration's calculation assigns a value of 0.25 to that variable, which in the math of price elasticity suggests most of the tariff impact does not hit the import price of an item as it enters the country.
But the AEI paper says they used the wrong value for import prices, and instead used the value for a retail price, or what happens to the final consumer price after the good is imported and distributed.
They argue, instead, that the right value is 0.945 — in other words, almost all of the tariff hits the import price of a good as it's brought into the country.
"It is inconsistent to multiply the elasticity of import demand with respect to import prices by the elasticity of retail prices with respect to tariffs," the authors write.
Supporting the formulaic errors, FactCheck.org discussing tariffs, expanded these assertions by claiming that the formula used on the chart that Trump held aloft in the Rose Garden, is self created,”Those listed numbers are simply not tariffs, but some other made up measure based on a formulaic trade deficit calculation,” noted Kimberly Clausing, a nonresident fellow at the Peterson Institute for International Economics, told us via email. “In almost every instance countries’ true trade barriers are far, far lower.”
What worries people most, not only in the US, but across the world is that these tariffs will create a global recession, and as we have seen the stock market drop in the thousands, not seen in 5 years, these fears are justified.
Paradoxically the president said on Monday, from Air Force One, that he doesn't want to see “anything go down,” but suggested that we have to take a little bad medicine to make things good.
Commerce Secretary Howard Lutnick has said that these tariffs and fiscal policies are “worth it” even if they cause a recession, reported the Times, and his position was seconded by Treasury Secretary Scott Bessent who added that the economy might need a ‘“detox period” after becoming dependent on government spending.”
Good, however, may be a relative term with many working families, and even the more affluent facing financial challenges that will affect retirement savings, children, or grandchildren’s education, among other things.
No comments:
Post a Comment