Decline was slower than expected as US gross domestic product grew at an annual rate of 2.1% between April and JuneUS economic growth slowed in the second quarter of 2019 as trade disputes and a global slowdown took their toll, the commerce department announced on Friday.Revised figures from previous quarters showed the US narrowly missed Donald Trump’s pledge to grow the economy by over 3% last year. The commerce department pegged growth at 2.9% in 2018.Related: Americans positive on economy but views deeply split by politics and wealthQ2 GDP Up 2.1% Not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck. Almost no inflation. USA is set to Zoom! Continue reading...
by Written by Andy Beckett, read by Lucy Scott and pr on (#4KZEP)
After decades of rightwing dominance, a transatlantic movement of leftwing economists is building a practical alternative to neoliberalism. By Andy Beckett• Read the text version here Continue reading...
Economists remain fixated on the need for 2% inflation. It’s time to move onThe Federal Reserve has some reasons to cut interest rates at its 31 July meeting, or subsequently if the US economy weakens. (There is also a case for holding rates steady, if growth remains as strong as it has been over the past year.) But one argument for easing is less persuasive: a perceived imperative to get US inflation up to or above 2%.The Fed set the 2% inflation target in January 2012 under its then chair, Ben Bernanke, after some other central banks had already done so. Japan followed suit a year later, shortly after the prime minister, Shinzo Abe, returned to power on the promise that monetary policy would raise inflation (Japan had previously suffered from falling prices).Related: Does setting inflation targets cloud our view of the economy? | Robert Shiller Continue reading...
His cabinet is stuffed with Thatcherite true believers who will hardly be inclined to undertake a vital reboot of the economySo farewell then, Project Fear. Out go the predictions of imminent economic catastrophe, in comes Mr Brightside and his vision of the sunny uplands that lie ahead. Before he became prime minister, Harold Wilson talked of how the Britain of the future would be forged in the white heat of the technological revolution. For Boris Johnson, it is full-fibre broadband.Little has changed since 1963. Then, as now, Britain was strong in science and rich in new ideas. Then, as now, it was less good than other countries at exploiting them. Wilson’s optimism drained away after he arrived in office, as Johnson’s may well also, and for the same reason: a sterling crisis. But for now the country will be love-bombed with the new prime minister’s can-do spirit.The causes of Brexit lie not in leftwing economic policies but in Thatcherism and austerity after 2010Related: How representative is Boris Johnson's new cabinet? Continue reading...
As trade talks are set to resume after a two-month halt, an aid package will see producers paid up to $150 per acreThe US government will pay American farmers hurt by the trade war with China between $15 and $150 per acre in an aid package totaling $16bn with farmers in the South poised to see higher rates than in the midwest.As US and Chinese negotiators prepare to meet face-to-face for the first time since talks on the dispute collapsed in May, the agriculture secretary, Sonny Perdue, said the package showed that Donald Trump knew farmers were “fighting the fightâ€.Related: Donald Trump's trade war hurting China more than US, says IMFRelated: Even Trump may ultimately retreat from the cost of the China trade war Continue reading...
Pew study finds richer, Republican Americans more likely to view economy positively than poorer Americans and DemocratsAmericans are more positive about the state of the US economy than they have been in nearly two decades, but their views are deeply divided by political leaning and income, according to a new survey.Pew Research Center’s latest report on people’s views of the US economy reveals a wide split of opinion on the state of the economy and who should get the credit for it. While a majority of the public (55%) describe national economic conditions as “excellent or goodâ€, those views vary wildly depending on political convictions and income.Related: US job growth rebounds as economy adds 224,000 jobs in June Continue reading...
Readers share their views on the Liberal Democrats in the week that Jo Swinson was elected as their new leaderJo Swinson asserts that Jeremy Corbyn can’t be trusted on Brexit (Report, 24 July). Maybe it’s worth asking whether she can be trusted on many of the things that contributed to the referendum outcome she wants to overturn. She voted for scrapping the education maintenance allowance and for increasing tuition fees; for reducing housing benefits; against letting benefits rise in line with inflation; against increasing taxes for those earning over £150,000; against taxes on bankers’ bonuses; for reducing corporation tax; against restricting NHS provision to private patients.Simply resetting the Brexit clock won’t address the disquiet that produced the leave victory. We need a government committed to, among other things, an economic model that distributes national wealth more appropriately – around the country, and across all sections of society. Corbyn has a long-standing commitment to tackling economic and social inequality and Jo Swinson condemns herself by turning her back on him.
Outgoing president says outlook is worsening and inflation is well below targetThe European Central Bank has given a clear signal that it will join the US Federal Reserve in seeking to boost global growth as it expressed concern about flagging levels of activity and undershooting inflation in the eurozone.Financial markets were left fully braced for a cut in interest rates from the ECB in September, together with a resumption of money creation under its quantitative easing programme. Continue reading...
CBI calls figures ‘hugely concerning’ amid Brexit uncertainty on the high streetBritain’s retailers have recorded the longest period of falling sales for almost eight years, fuelling mounting concern for the economy ahead of Brexit.The Confederation of British Industry said retail sales across the country had dropped for a third month running in July, marking the longest period for sliding sales since 2011.Related: High street suffers 'summer slump' as Brexit and wet weather bite Continue reading...
Much of modern China’s epic growth was driven by private enterprise – but under Xi Jinping, the Communist party has returned to being the ultimate authority in business as well as politics. By Richard McGregorWhen Xi Jinping took power in 2012, he extolled the importance of the state economy at every turn, while all around him watched as China’s high-speed economy was driven by private entrepreneurs. Since then, Xi has engineered an unmistakable shift in policy. At the time he took office, private firms were responsible for about 50% of all investment in China and about 75% of economic output. But as Nicholas Lardy, a US economist who has long studied the Chinese economy, concluded in a recent study, “Since 2012, private, market-driven growth has given way to a resurgence of the role of the state.â€From the Mao era onwards, Chinese state firms have always had a predominant role in the economy, and the Communist party has always maintained direct control over state firms. For more than a decade, the party has also tried to ensure it played a role inside private businesses. But in his first term in office, Xi has overseen a sea change in how the party approaches the economy, dramatically strengthening the party’s role in both government and private businesses.Related: Inside China's audacious global propaganda campaign Continue reading...
ASX200 heads towards pre-GFC record, but weak economic growth spells a ‘potentially dangerous’ situationA lot has changed since November 2007. Back then, John Howard was still prime minister, you could buy a nice house in Sydney for less than $500,000 and no one had ever heard of Instagram.It was also the month when Australia’s benchmark stock market index, the ASX200, reached an all-time high of 6,828.7. With the full extent of the US subprime crisis still hidden, all seemed set fair for the local market to continue growing on the back of the mining boom and strong banks.Related: Reserve Bank interest rates cut to historic low of 1% – as it happened Continue reading...
From nationwide full-fibre broadband to 20,000 extra police officers, here’s what 10 of his plans might costTaxes will be cut and public spending increased if Boris Johnson makes good on the pledges he has made in recent weeks while campaigning to be prime minister.In a marked reversal of the fiscal restraint enforced over the past nine years, Johnson has committed himself to a multibillion pound programme of measures paid for by extra government borrowing.A cabinet reshuffleRelated: Fishy figures: Boris Johnson's public service pledges are fantasy economics | Richard Vize Continue reading...
Brexit uncertainty and impact of Iran sanctions also likely to slow world growth, says FundDonald Trump’s claim that his protectionist measures are hurting China more than the US has received support from the International Monetary Fund in new forecasts showing how a fresh slowdown in the global economy has been concentrated in emerging economies.The Washington-based IMF said the outlook was gloomier than it envisaged three months ago due to the tit-for-tat tariff war between the world’s two biggest economies, Brexit uncertainty and the impact of sanctions against Iran on oil prices. Continue reading...
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Brexit fears and slow global growth have hit output in manufacturing sectorA double whammy of Brexit uncertainty and a slowdown in global trade has seen order books in Britain’s factories shrink at their fastest pace since the financial crisis, the CBI has said.Urging the next prime minister, confirmed on Tuesday as Boris Johnson, to strike a deal with the EU, the employers’ organisation said industrial output also fell in the latest quarter, for the first time since the spring of 2016.Related: Weary firms gear up to hit the Brexit pause button – for a second time Continue reading...
Leaving without deal will ‘throw concrete’ in wheels of British-EU trade, says economistThe mounting risk of no-deal Brexit may have pushed the UK economy into a recession already, one of the country’s foremost economic forecasters has warned.Sounding the alarm before the expected elevation of Boris Johnson to Downing Street this week, the National Institute of Economic and Social Research (NIESR) said there was a one in four chance the country is in a recession currently.Related: Trump calls for US interest rate cut; fears of UK Brexit recession – business live Continue reading...
Star listing of domestic tech firms is seen as an attempt to bypass US markets in trade warChina’s tech industry has received a vote of confidence from domestic investors after shares in Shanghai’s new Nasdaq-style stock exchange rose by up to 520% on their debut.The launch of the Star listing of domestic tech firms is seen as China’s answer to the US’s premier tech index, and an attempt to sidestep American markets in Beijing’s long-running trade war with Washington. Continue reading...
Unconventional policies may have staved off short-term economic collapse but they may not foster long-term growthIn recent years, central banks have made a large policy wager. They bet that the protracted use of unconventional and experimental measures would provide an effective bridge to more comprehensive measures that would generate high inclusive growth and minimise the risk of financial instability.But central banks have repeatedly had to double down, in the process becoming increasingly aware of the growing risks to their credibility, effectiveness and political autonomy. Ironically, central bankers may now get a response from other policymaking entities, which, instead of helping to normalise their operations, would make their task a lot tougher.Related: The ECB must heed calls to review its policy framework | Stefan Gerlach Continue reading...
Protecting people against the chaos wreaked by automation should be a priority. But populists would rather talk about tradeThis week’s nightmare is the arrival of Boris Johnson; the autumn brings the Brexit watershed. Soon after, the 2020 US election takes shape, compounding the sense that politics everywhere is in a state of complete unpredictability. All that is clear, perhaps, is that the forces gathered around Brexit, Donald Trump and the various brands of European populism still think things are going their way.For some people, everything comes down to the failures of neoliberalism and its inbuilt globalisation, and the long aftershocks from the crash of 2008. Others, with very good reason, focus on racism and bigotry, and the spectacle of white men who are apparently convinced that their time at the top is about to come to a close and therefore lashing out. There are also people who seem to think that any sober, cause-and-effect explanations of a global crisis are impossible amid the mess: they tend to take refuge in rather specious ideas about “collective derangement†and national nervous breakdowns.The ongoing transformation of production and consumption by computing power is everywhereRelated: Automation threatens 1.5 million workers in Britain, says ONS Continue reading...
Does a doctor in England’s capital really work three times harder than one in Merthyr Tydfil?Britain’s regional divide is well known and well documented. The richer bits of the country tend to be clustered below a line drawn from the Wash to the Severn estuary, while London is so different from everywhere else that it may as well be its own city-state.There is also another divide: between the big cities and the smaller towns. The north-west may be less prosperous than the south-east but on average people are better off in Manchester than they are in Blackpool.There is a demand for solicitors in Bodmin just as there is in Barking Continue reading...
Is the economy to blame? Sure. But there’s something else behind the trucking industry’s woes: mismanagementTimes are good right? Economic growth is strong. Unemployment is low. Business and consumer confidence remains high. It’s pretty easy to say that most small business owners are doing pretty well this year. Except if you’re in the trucking business.That’s according to a number of recent reports that cover the freight industry. They are not great. Continue reading...
Fighting talk on Brexit from Jeremy Hunt and Boris Johnson has inevitably hit the value of sterlingSun, sea and sinking sterling. News of a fresh decline in the value of the pound was greeted with forbearance by travellers at Luton airport last week. The currency has been under pressure at various times since the referendum, having fallen by 14% against the euro since the vote, and it hit a six-month low of €1.105 last Wednesday in the wake of renewed pledges by Boris Johnson and Jeremy Hunt over pursuing a no-deal Brexit.Against the US dollar, sterling took even more of a battering last week, falling at one stage to below $1.24.After what one currency analyst described as a no-deal arms race between Johnson and Hunt, the only way for the pound was down Continue reading...
The Conservatives would use cash for tax cuts, while Labour plans investment. But the economic climate is chillyAs the next Tory leader, and possibly a general election, loom, the UK electorate must consider one fundamental economic question: does it want a huge increase in government borrowing?Both Boris Johnson and Jeremy Hunt are ready to break out of the austerity straitjacket and spend huge sums. Not just to blast their way through the chaos that will follow leaving the European Union on 31 October, but also to inflate spending on a long shopping list of items, from social care to defence.Labour may find that, following decades of neglect, pouring financial fertiliser on the regions has little effectRelated: Jeremy Corbyn's spending plan for public services backed by majority Continue reading...
Allegra Madgwick challenges the idea that the prime minister is a feminist champion, Hester Doherty questions how she stood up for domestic abuse victims, and Judy Stober thinks we are too kind. Plus letters from Les Bright, Mark Lewinski, Kip Bennett and Tony ColeThe question of whether Theresa May is a feminist champion posed by Martha Gill in her opinion piece (Journal, 15 July), surely depends on what sort of feminism you are talking about. As a socialist feminist, the idea that one of the great movements of human liberation in our times could be reduced to getting a few more female Tory MPs into parliament is truly depressing.Gill acknowledges that Tory austerity policies have been terrible for working-class women, but makes no mention of how the scandals of Windrush, Grenfell and the hostile policy towards asylum seekers and immigrants, which can be directly traced to May’s time at the Home Office, show class politics at its most brutal and demonstrate indifference to the lives of the most vulnerable women. Continue reading...
Highest June deficit for four years shows economic slowdown is feeding throughPledges by Boris Johnson and Jeremy Hunt to cut taxes and increase spending have come just as the UK’s public finances have shown a marked deterioration, according to the latest official figures.In what analysts called a “reality check†for the two Conservative prime ministerial contenders, the Office for National Statistics said the government needed to borrow £7.2bn last month – more than double the £3.3bn in the same month a year ago.The government's finances are measured each month by the Office for National Statistics (ONS). Tax receipts make up the vast majority of government income, while spending on welfare and services make up most of its outgoings.Related: Fishy figures: Boris Johnson's public service pledges are fantasy economics | Richard Vize Continue reading...
One troy ounce reaches $1,452.60 amid increased US-Iran tensionsGold prices have hit their highest levels in six years as investors brace for an interest rate cut by the US Federal Reserve and seek a safe haven amid tensions between Washington and Tehran.The price of one troy ounce of gold peaked at $1,452.60 on Friday morning, the highest point since May 2013, with fears over the Persian Gulf standoff also driving up the price of a commodity that is viewed as a market refuge during geopolitical crises.Related: UK's June budget deficit hits four-year high in blow to next PM - business live Continue reading...
The chancellor has said he fears the cost of a no-deal Brexit to the British economy. Speaking at the G7 in France, Hammond said that a report published by the Office for Budget Responsibility showed that even the most benign version of no deal 'would be a very significant hit to the UK economy'. The OBR revealed that it would plunge Britain into a recession
Office for Budget Responsibility believes economy would shrink by 2% by end of 2020A no-deal Brexit would plunge Britain into a recession that would shrink the economy by 2%, push unemployment above 5% and send house prices tumbling by around 10%, according to the government’s independent forecasting body.In an assessment of the impact of Britain leaving the EU without a deal at the end of October, the Office for Budget Responsibility said the result would be a year-long downturn that would increase borrowing by £30bn a year.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...
World leaders to back call to help rural poor and women access mobile bankingWorld leaders are to pledge to shape the technological revolution sweeping through Africa by acting to lift the threat of 400 million predominantly rural women being excluded from digital financial services.G7 finance ministers meeting in France are to endorse a paper from the Gates Foundation saying there is a serious risk that digital technology and mobile banking will bypass millions of women in Africa, leaving them disempowered for a generation.Related: Millions more have a bank account, but what is the impact on global poverty? Continue reading...
Fear of ‘hardline’ Boris Johnson and Jeremy Hunt could push sterling down to mid-80s levels, says Morgan StanleyThe pound’s fall to a two-year low against the dollar could be the start of a no-deal Brexit inspired wave of selling that would push sterling towards a one-for-one exchange rate against the US currency, a leading investment bank has warned.Morgan Stanley said the nervousness in financial markets over the hardline approach adopted by both Boris Johnson and Jeremy Hunt risked pushing the pound down from its current level of $1.24 to the lowest level since it almost reached parity in the mid-1980s. Continue reading...
It is the biggest plunge since the 7.0% annual drop recorded in August 2009, says ONSHouse prices in London have fallen at their fastest pace since the financial crash a decade ago as the capital bears the brunt of the nationwide torpor in the property market.Amid a dearth of potential buyers, the cost of a home in London was 4.4% lower in May than a year earlier, according to the latest official snapshot of the market from the Office for National Statistics. Continue reading...
Sterling falls by a cent against dollar after Tory leadership candidates’ backstop remarksThe pound has fallen to its lowest level in more than two years after pledges by both Boris Johnson and Jeremy Hunt to ditch a key part of the UK-EU withdrawal agreement intensified City fears over a no-deal Brexit.Sterling fell by a cent against the US dollar after a Sun and Talkradio debate in which both the contenders to replace Theresa May in Downing Street said they would not accept a Northern Ireland backstop in its current form. Continue reading...
For Schumpeter it was the creation that caused the economy to advance, the destruction was a regrettable consequence, writes Michael Heaslip; while Susanne MacGregor says Schumpeter would have seen the crises relished by Brexiters as a political choicesJoseph Schumpeter might have regretted describing the process of economic development as “creative destruction†had he known that disaster capitalists would misinterpret its meaning and invert cause and effect (Darroch’s fate is a taste of the chaos to come, Simon Jenkins, 12 July). Schumpeter described a process of innovation creating new market conditions which destroyed the old: where are the farriers, loco firemen, telephonists and typists now? For Schumpeter it was the creation that caused the economy to advance; the destruction was a regrettable consequence, not a cause of the innovation. “Destructive creation†would have put the emphasis on the substantive element of the process.You can’t make an omelette without breaking eggs. But you must have a plan to create the omelette; you can’t just break some eggs and trust that an omelette will then appear as if by magic – unless of course, you live in the looking-glass world of Brexit.
The incoming European Central Bank chief must call for an end to the eurozone’s suicidal fiscal rules, which have now run out of roadChristine Lagarde was a key member of the infamous troika – Greece’s official creditors – who crushed our people’s resistance to perpetual debt bondage. The other key figure alongside the International Monetary Fund’s then managing director was Mario Draghi, president of the European Central Bank, who played a central role in that drama by engineering the closure of Greece’s banks. Now, four years later, Lagarde has been anointed to succeed Draghi at the helm of the ECB.Despite her role, and the dealings we had when I was Greece’s finance minister, not once did I feel animosity towards her. I found her intelligent, cordial, respectful. She even acknowledged, in private at least, that Greece had been given a raw deal and that my campaign to cut our public debt was right and proper. Lagarde’s priority was holding the troika’s line and minimising any challenge to its collective authority.Forced to choose between Berlin’s favouritism and the interests of her institution, she unfailingly opted for the formerRelated: Easy money won’t solve Christine Lagarde’s economic problems | Phillip Inman Continue reading...
Chinese economic growth falls to slowest pace since 1992 – but is expanding faster than the USDonald Trump has claimed that his tariff battle with China is working after official data from Beijing showed growth in the world’s second biggest economy dropping to its slowest pace since 1992.The US president said the impact of his protectionist measures had been to cause an exodus of companies from China, as Beijing announced that its annual rate of expansion had slowed from 6.4% to 6.2% in the second quarter of 2019.Related: Trump fact check: is the Chinese economy really 'going down the tubes'? Continue reading...
Footfall drops to seven-year low for June prompting fears UK economy is at a standstillShoppers deserted UK high streets during June as the washout weather and continuing Brexit uncertainty helped drive store visits down to a seven-year low for the month.The “summer slump†took a particularly heavy toll on high streets, with shopping centres also badly affected, according to the British Retail Consortium’s (BRC) monthly footfall tracker for the period from 26 May to 29 June.What's the problem? Continue reading...
The BoE governor stands more chance than the ex-chancellor but the likely choice may just be a Bulgarian womanEver since he set his departure date from the Bank of England, there has been speculation about what Mark Carney will do next. There are not that many bigger jobs around than his current one but one of them has become available after the news of Christine Lagarde’s planned departure from the International Monetary Fund for the European Central Bank.Carney would certainly like a move to Washington, not least because the other job he has had his eye on – prime minister of Canada – is currently occupied by Justin Trudeau. Asked at a Bank press conference whether he is interested, Carney replied he had lots of admiration for Lagarde and that the proper processes should be followed. What he pointedly didn’t say was “noâ€.Christine Lagarde’s nomination to run the European Central Bank has prompted speculation over who could replace her as managing director of the International Monetary Fund.Related: Labour sounds alarm over George Osborne's ambitions to run IMF - business live Continue reading...
The economy expanded just 0.3% in May, and a slump awaitsOne swallow doesn’t make a summer, so the old saying goes. For the warm middle months of the year, the British economy looked remarkably frosty, chilled by fears over a no-deal Brexit, until the Office for National Statistics reported a surprisingly strong month for growth in May.The figures, released last week, were a glimmer of hope that Britain might yet shrug off the worst of the Brexit cold, which has laid the economy low over recent months as companies put their investment plans on ice. Continue reading...
The favourite for Downing Street has aggravated the uncertainty that is undermining confidence and hitting sterlingWimbledon fortnight brings back happy memories of growing up in that pleasant suburb. But the recent news that the leading pretender to the Conservative throne was told by his girlfriend to “get out of my flat†stirs a particular memory: of the number of offenders brought before the courts who would be described in the Wimbledon Borough News as being “of no fixed abodeâ€.It was therefore a stroke of genius for Private Eye to put a picture of Alexander “Boris†Johnson outside No 10 Downing Street with the caption “I really need somewhere to live.â€His budgetary plans are so wild that he undermines any Conservative arguments about the budgetary dangers of a Labour government Continue reading...