Neil Irwin distills the various US economic indicators of recent weeks, relative to the presidential race:
Here’s an interpretation of the available data over the last several months that incorporates all these realities. You probably won’t hear it on the campaign trail, but if a candidate’s job was to provide nuance rather than get elected, this is what could be said:
The United States economy is creating jobs at a rapid pace; most people who say they want a job are able to find one, and employers are having a hard enough time finding workers that they’re having to pay higher wages. But large segments of the population, especially those without advanced education, left the labor force during the last several years, and relatively few of them are being pulled back in by this improving job market. Fixing that will be an important goal of the next president. Meanwhile, for reasons that aren’t fully understood, economic output is growing much slower than job creation, which will mean lower living standards in the future if that continues. That should be another big worry for whoever occupies the Oval Office in January.
What’s left unsaid: the biggest threat to the US economy is the slowdown in the global economy, particularly in China, Japan, and Western Europe. While the central banks are employing techniques to decrease the impact of falling demand for goods and services and to counter deflation. But tools like quantitative easing – where the central banks buy bonds or stocks to introduce new money into the financial markets – is leading to a run up of stocks worldwide.
If some event comes along that leads to investor panic – such as the failure of China’s attempts to prop up overinvestment in infrastructure projects – then we could see a stock market drop back to the actual asset values of companies, and not the overinflated values they now command.
But it is unclear what recourse world leaders have at this point. And the US could definitely benefit from massive infrastructure development, unlike China, which has overbuilt. We’re likely to see a major infrastructure push from Clinton, considering how cheap it is to borrow now, which would likely heat up the US economy considerably, and lead to deeper job creation than we are seeing at present.
from Stowe Boyd http://www.stoweboyd.com/post/148543160682
