Jobs

Job creation had a poor May and wage growth was tepid.

One data point doesn't make a trend but it really isn't inconsistent with what we've been seeing.  We have headwinds in exports and imports thanks to the ongoing trade wars and prospective tariffs on Mexico.

Tariffs have no cost the average tax payer more than the modest tax break they received from the tax bill.  Not that it was that big a tax break.

Will there be a recession?

There's a fairly good chance of one since much of the economy is really built on sand.  The jobs of the future are in renewable resources, improved health care facilities and measure to combat climate change.

Those jobs would pay well no and be an investment in the future.

This administration wants to drill, dig and pollute.

Not a recipe for success.

D-Day

Seventy-five years ago on the beaches of Normandy the allied invasion of Europe started.  They faced various levels of resistance.

Thousands would die but ultimately they were able to establish beachheads and start the march to Berlin.

To the extent that any war can be a justified war, the destruction of NAZI Germany seems a good candidate.  

We should remember the cost of rooting it out once it was allowed to get deeply established.

We see some of its ideas taking hold again, both here and in Europe.

We can't let that happen.

Nonsensical Comments

So the dontard believes that using other peoples money to prop up defense to unneeded levels makes up for being a draft dodger?

Of course it doesn't and no one believes it does.

Its just one of the many stupid things he says on a regular basis.  Climate change is a Chinese hoax.

Everything that doesn't look good is exactly where he wants to be.

Didn't see all the protesters in Britain, just large crowds of supporters.

On and on he goes and the fact that anyone buys into any of it is hard to defend.

Still we have a network here that tries to.

Economic Thoughts.

The economy is a very complex system but often a single factor can impact it significantly.

Some of that is simply mathematical but some of it is also based on psychological factors.

Everyone is always trying to predict how something impacts the overall economy, because the most successful strategy is to be ahead of the crowd, but not so far ahead as to go broke waiting for them to catch up to where you are.

So what about this economy?

In many ways it is considered robust, but is it?

Three areas that are still weak are manufacturing, mining and farming.

In 2004 there were over 13 million workers in manufacturing. This dropped to less than 11 million during the financial crisis and has been slowly improving since. However, the latest numbers show us still down over a million workers.  Considering population growth there are less manufacturing jobs available.  Still we have grown from the lowest point and we see that data claimed as a measure of an improved economy.

The big increase in employment has been in service jobs and generally they don't pay as well as manufacturing.

So the average American is having more trouble paying bills and saving for the future, even if fully employed.

This is one of the reason that we see so much income and wealth inequality, since the workers continue to get a smaller share of the pie as they are forced into lower paying jobs.

It wouldn't take much, maybe some increased cost because of tariffs to make the whole thing tumble.

Time will tell.

Paying for Tarifs

Manufacturers need to sell their products to stay in business.  Products that are essentially equal compete based on price.  Tariffs on a particular nation increase the price of that nations product.  If the tariff increases the price higher than its competition it won't get sold.  Manufacturers will reduce the price if at all possible to sell it.  It should be noted that the replacement item, is by definition more expensive than the original item, costing the buyers more.

The sentence above is a simplistic explanation as to who pays for tariffs.  What should be noted is that its always paid either fully or partially by the buyer, but the manufacturer or producer may lose profits.

In a simple example take an item that sells for $100.  First, the tariff is applied on the value of the imported item, not the final sale price.  So say that item when imported costs the importer $50 (the rest of the price includes the sellers costs and profit).  If it is hit with a 25% tariff the tariff would be $12.50.  If passed along completely to the consumer it would result in a final price of $112.50, not $125.

Now if a product is available that can be sold for less than $112.50 it will get more sales.  Assume the replacement product costs $105.  In that cast the manufacturer either reduces his price so he can match that price or accepts less sales.  In our example, and I apologize for the math, the $6250 of the imported item would have to be reduced to no more than $55 all things being equal.  With a 25% tariff, the price of the imported item would have to be reduced to $44.  So to stay competitive the manufacturer would absorb $6 in costs which could be viewed as paying part of the tariff.  However the tariff instead of being $12.50 is now $11 which is still passed on to the consumer, even thought the ultimate price increase was only $5.

In many scenarios the actual outcome is that the competitor sees and opportunity to raise its price from the $105 price point to say $110, make more profit and still capture more market share.

For all of you non-math lovers, the simple answer is that tariffs cause higher prices which consumers pay.  It may impact the place of manufacture or it may not, but it impacts our wallets.

Breaking Rules

One of the things that was that was part of the "American" way was good sportsmanship.  The idea that you try as hard as possible to defeat an opponent, but at the end you follow the rules and treat the opposition with respect.

It might actually be something we borrowed from the Brits, who tend to exemplify it.

While it clearly is something that originated in the playing fields it was something that we treasured, at least we used to.

We even have rules for how to fight wars, the Geneva conventions

Americans mostly expect that you will abided by the rules, although sometimes a little cheating is acceptable, unless you get caught.

The question though, is caught by who?

In politics the rules are enforced by the voters, or at least they are supposed to be.  Yes the parties and the legislative bodies, as well as the courts get involved, but ultimately it is the voters who decide what is and what is not acceptable.

They are falling down on the job.

We saw a significant change in how the rules are followed in 2016, and saw bullying and lying as well as involvement of a foreign power end up with the help of a not representative electoral college, give us a rule breaking President.

In some parts of the country it was felt that following the rules wasn't working especially in States where manufacturing had declined and those good paying high benefit jobs also vanished.

Still, they wanted the rules to be broken to change that and ended up with a reverse Robin Hood, taking from them and giving to the rich.

More Senseless gun Violence

So this last attack was in Virginia beach.

Twelve dead for no reason except one man's anger and easy availability of guns.

Watching the survivors describe the incident, you can tell it was life changing for them, coming so close to death and knowing the victims.

Imagine it changes their whole opinion on the issue.

They saw incidents on the news but they didn't think it could happen to them.

Maybe its a mistake for the news to not show the truly horrendous violence to avoid offending viewers.  Better to be offended than dead.

If these shooting were being done by a terrorist group we would have an all out campaign to stop them.

Maybe we need to realize the terror is real even if the people doing it aren't joined in some plot.

They simply all own guns.