The United States added 1.76 million Jobs in July 2020, compared to a consensus estimate of 1.48 million. Unemployment fell to 10.2% vs 10.6% expected. It is true that the rate of job creation is slowing down and labor force participation rate remains at 61.4%, but we need to compare the figures with the rest of the world, where we are witnessing a worrying “jobless recovery”.
Continue reading The Jobless Recovery
The United States is showing resiliency and strength compared with other leading economies worldwide. The impact of the Covid-19 forced shutdown crisis is lower in the United States than in Japan, Germany, France, the average of the European Union 27 and the Euro-Area countries.
The recovery is also stronger and more sustainable. This does not mean that the economic impact is small. Recession is severe and its impact on jobs and growth cannot be underestimated, but it is important to show how other economies with larger government spending plans and important entitlement programs are showing a much weaker performance.
Continue reading The U.S. Economy Is Stronger Than The Eurozone
The dramatic economic decline due to the Covid-19 crisis and the unprecedented recovery spending plans approved by President Trump will drive the fiscal 2020 United States budget deficit to a record $3.8 trillion, or 18.7% of U.S. gross domestic product, according to the Committee for a Responsible Federal Budget (CRFB). According to the same estimates, the fiscal 2021 deficit would reach $2.1 trillion in 2021, and average $1.3 trillion through 2025 as the economy recovers from the impact of the forced shutdowns.
To finance this staggering fiscal effort, the Democratic Party leader, Joe Biden, is announcing a massive tax hike that will neither help the economy nor reduce the deficit.
Continue reading The United States Will Not Recover Raising Taxes Or Printing MoneyThis paper was published in the Thomson Reuters Journal of Business Accounting and Finance Perspectives in June 2020.
By Dr. Daniel Lacalle
(Author of “Freedom Or Equality”, “Escape from the Central Bank Trap”, “The Energy World Is Flat” and “Life In The Financial Markets”)
Keywords: Aggregate Demand, Aggregate Supply, Covid-19, Coronavirus, Fiscal Policy, Monetary Stimulus, Central Banks, Government, Crisis, Recovery, Demand-Side, Supply-Side.
JEL Classification: E52, E58, H68, H25, H30, H51