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David Blanchford of Dartmouth College and Adam Posen of the Peterson Institute of International Economics argue in a recent paper that the true indicator of unemployment in this economy -with a low participation rate and millions dropping out of the labor market unable to find work- is the wage growth. This is particularly true with the U.S. Labor Department report of 288,000 new jobs in 2014 and a 6.3% unemployment rate, yet wages flat for March and April 2014, and no improvement in the participation rate. Blanchford says one should look at the wage growth and consider the rest to be noise. The Yellen Fed is looking closely at the participation rate.

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The U.S. Agriculture Department lowered its forecast of corn yield per acre from 166 busherls per acre to 123.4 after a severe drought in the U.S. The projected corn harvest is expected to come in at 10.8 billion bushels, 13% smaller than the 12.4 billion bushels in 2011. The USDA forecast for corn price in August 2012 was raised at the upper end to $8.90 per bushel, up 39% from a month ago.

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Binyamin Applebaum cites different experts on how U.S. Fed policy could play out in 2017-2019. He cites Fed governor Dudley that there is increased uncertainty under the Trump administration, and other economists who say that aging population, lack of innovation, and steady growth under the Obama administration with falling unemployment, make it unlikely that growth will jump well above 2%. The Fed's own forecasts are for for under 2% growth in 2017 and 2018, and Applebaum says this is not expected to change by much. Janet Yellen does not see a huge stimulus as a positive, says Applebaum, because it would increase the deficit at the wrong time. He cites Yellen who prefers to see more fiscal space now that unemployment is down to 4.6%. Steady growth in the view of Fed officials has taken up much of the backlog of people looking for work since the 2008 crisis. Yellen sees some fiscal space as desirable with high debt to GDP ratio at 77 percent, so that the government could respond to some adverse event in the future. A Republican Congress is also averse to sudden increases in the deficit. See the link to views about the uncertainty of how things can play out in a separate article by Neil Irwin of NYT. ...

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Public sentiment shifts sharply against free trade in the March 2016 Michigan primary for the U.S. presidential election, with candidates saying trade agreements do not take into account the interests of American manufacturing workers making large gains. Between 1999 and 2010 public sentiment shifted against trade agreements for all age, education and income groups. A study by Autor, Hanson and Dorn showed loss of 5.6 million jobs in the last decade and large trade deficits, and demonstrated the effect by counties in the U.S. most hurt by trade policies.

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The Editorial Board of the Washington Post draws attention to the speculative bubble in housing in China, the policies for sale of land by local governments that fuel the bubble, the corrupt local officials, and GDP growth that reflects overinvestment in housing creating serious imbalances in the economy. The structure of the economic and political system which promote this overinvestment in real estate has also reduced the role of the Chinese consumer in GDP growth, and is preventing a rebalancing of the world economy.

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An index for consumer prices for the U.S. was up only 0.8% for the 12 months of 2014, according to the Bureau of Labor Statistics. This is well below the U.S. central bank's target of 2% inflation. It creates uncertainty about whether the U.S. Fed will raise interest rates in 2015.

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Saudi price cut in November 2014 to reverse market share decline in the U.S. The Saudi share of total U.S. oil consumption declined to 4.6% in August 2014 from 7% in August 2013, according to EIA. This brought NYMEX price to below $80 in early Nov. 2014.

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U.S. president Trump's statement calling for a list of goods for tariffs on $200 billion of Chinese goods leaves China without a clear response and facing new risks. The U.S. exports about $150 billion in goods to China so that China would have to impose penalties to respond at the same level. Placing restrictions on American firms on access to China's market, and imposing other penalties would have the effect of reinforcing the perception of unfair practices targeting American business and lead to hardening of U.S. response.  The U.S. sees itself as being in a better position with the U.S. economy experiencing a growth trend. China with large local government and bank debt faces a difficult situation. President Jinping's policy of reducing the risks of bad debt in the banking system involved sacrificing some growth to stabilize the system. China's GDP growth in 2017 was 6.9%, the target at 6.5%. Future targets and actual growth now look to be much lower.The trade war with the U.S. has the effect of dampening growth leading to calls for the central bank to loosen its monetary stance. In response to Trump's announcement the People's Bank of China pumped $31 billion into the nation's banks. China is studying Japan's response in the 1980's and 1990's when the U.S. took strong action against Japan's growing trade surplus. Japan responded by appreciating its currency and using stimulus to cushion the effect of lower exports on the economy. The stimulus led to the housing bubble and over time a period of low growth and stagnant economy. The large China stimulus in 2008-2009 has compounded the problems in the banking system. Not deleveraging and controlling financial risks in China's banking system because of the trade war would bring a new set of risks. ...

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Krugman points out the risks for the U.S. economy as the U.S. loses export competitiveness with the euro reaching parity with the dollar. The huge shift from $1.50 to the dollar at one point to parity gives Europe a sudden strong boost. Europe needs the boost to escape a deflationary trap, and there is little that can be done for capital flows and exchange rates, says Krugman. He points out that many Federal Reserve governors were clueless of the impact this could have on U.S. growth, sanguinely assuming the U.S. would boost growth in 2015. Better says Krugman for the Fed to be very careful about raising rates at a time when wage growth is sluggish, and inflation low.

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A NYT report on Donald Trump's long standing relationship with his lawyer Roy Cohn,  who was also an advisor to Senator Joseph McCarthy. The report says Roy Cohn used aggressive legal tactics in lawsuits and influenced Trump's style of doing business in his real estate dealings. It is a detailed report of Roy Cohn's influence on Trump, which the reporters say has influenced the way  Trump ran his 2016 election campaign. It shows Cohn as protecting Trump in lawsuits, and Cohn's sense that Trump would someday play a big role in New York's real estate business, as Cohn's first meeting with Trump started when Trump was beginning his career in the early 70's. 

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Thomas Friedman of the NYT points out the three aces held by Donald Trump in the U.S. election campaign of 2016. He could move to the centre in a campaign against Hillary Clinton and voters could give him a pass saying he only meant to start a conversation on immigration with his comment on the wall, that his comments on Muslims read carefully only means he would tighten controls on some countries, that he was acting in the way he said in his book "The Art of the Deal." A terrorist attack could change the atmosphere in the election and benefit Trump. And he could set a barrage of ads against Hillary bringing anti-Hillary Republicans back to his side after the divisions in a Republican convention. On the opposite side of this is Trump's penchant for making wild statements that could lead to a break with his support base, especially women who are shifting away according to some recent polls in mid March. Another vulnerability says Friedman is the rough way in which minorities are treated at Trump rallies, which could backfire with a serious incident resulting in hugely negative media coverage....

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A proposal by U.S president Obama to increase the minimum wage to $9.00 per hour from $7.25 to reduce poverty and inequality. This was announced in the State of the Union address of 2013.

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Saying that these countries had significantly cut imports from Iran, the U.S. government gave exemptions from the sanctions on Iran to 10 European countries and Japan. Exemptions were given to Belgium, Britain, Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland and Spain. This leaves 11 countries facing possible sanctions including China, India and S. Korea, with negotiations underway with these three major importers. The sanctions law passed by the U.S. Congress gives the government room to avoid damage to global oil markets and U.S. allies.

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Hillary Clinton narrowly loses the Michigan primary to Bernie Sanders in March 2016, as the Sanders campaign focusses on Clinton's support for trade agreements that hurt American workers and lead to loss of manufacturing jobs. About three fifths of voters in the Michigan primary considered this a major issue. Many less educated younger workers see their job prospects diminish and wages drop with free trade that hurts American manufacturing jobs. Bill Clinton signed the NAFTA agreement with Mexico, and as a member of the Obama administration Clinton supported the Trans Pacific Trade Agreement, later opposing TPP when she left the cabinet. Sentiment against trade that hurts manufacturing jobs in the U.S. is strongest in midwestern states such as Michigan, Ohio and Illinois. This was also a major issue benefitting the Liberals under Justin Trudeau who won in Canada's industrial Ontario province which has suffered hollowing out and loss of manufacturing jobs under the Conservative Harper administration. In the U.S. the issue goes back to the Clinton Administration for two decades. New jobs created by Apple, Google, and other tech companies pale in comparison with the industrial jobs created in another era that benefitted working class families. This issue and high unemployment or under employment, lower wages for working class families, was a major issue in the 2016 U.S. presidential election campaign. Widening wealth disparities, and lack of upward mobility, high tution and healthcare costs for ordinary families, dominated the campaign in the U.S....

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Israel's ambassador to the U.S., Michael Oren, describes Iran's efforts to make weapons grade nuclear material, escalating the enrichment process from 3.5% to 20%. He says Iran now has 225 pounds of 20% uranium and 11,000 pounds of 3.5%, enough for 5 nuclear bombs, and points out that 20% uranium can be enhanced to weapons grade in weeks. During the initial negotiations the P5+1 nations demanded suspension of enrichment acitivites at a time when the enrichment process was at 3.5%, and transfer of stockpiles abroad. As negotiations dragged on Iran escalated to 20% enrichment. current demands of the P5+1 are for cessation of 20% enrichment and removal of the 20% stockpile, and closing the facility at Qom, as a first step. This has been rejected by Iran. In this op-ed Oren says Israel alerted the world about the Iranian nuclear program 20 years ago, and as this has continued to what it is today, Israel's view is that much of that time was wasted and the window for international efforts to cease and dismantle Iran's nuclear program is almost shut. ...

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Denning says that because of the enormous repercusions on Iran's economy of a war in the Persian Gulf, a more likely scenario is not the cutoff of supplies of Iranian oil altogether but a smaller list of buyers for Iranian oil, making Iran sell the oil at a discount. Saudi Arabia's and Libya's added production would bring more oil to the market. The impact will be larger on Europe because of the decline in the value of the euro, with Brent crude on a 12 month average basis costing 14% more now than in the peak price in 2008. By comparison in dollar terms the comparable figure is 4% higher for the U.S. At a price of Brent crude of $120 in 2012, according to Citigroup, energy costs would take up 9% of world GDP, putting pressure on a economic recovery in Europe and the U.S.

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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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A Wall Street Journal/NBC poll conducted in September 2010 shows a big change in public opinion in the US towards outsourcing of production and on free trade agreements. Poll respondents were asked "Do you think free-trade agreements have helped or hurt the US?" The response in 1999 was close to 30% for those who said hurt and those saying helped. By 2005 the curves diverged seriously with more people saying that it hurt and fewer saying it helped. In 2010 this swing is sharp with about 50% saying it hurts the US and only about 10% saying it helps. When asked "Do you agree or disagree that outsourcing of production and manufacturing work to foreign countries is a reason the U.S. economy is struggling and more people are not being hired?" the response is overwhelmingly agreeing that this is bad for the U.S. job situation. The answers are the same across party affiliation, in fact higher for Republicans than Democrats 90% to 84%, higher by income level with 93% for those making over $75,000 agreeing and 86% for those making less than 75,000 agreeing, 93% of professionals and managers agree compared to 89% white collar and 83% blue collar agreeing. This shows all segments of society agree that that the manner in which free trade and outsourcing of production is taking place is not helping the U.S., and this time the highly educated segments are leading the way. Bill McInturff, the Republican pollster who helped do the survey points to the big change in the way well educated and upper income people perceive free trade agreements. In 1999 only 24% of this group making over $75,000 said free trade hurt the U.S., now 50% of this group says it hurts the US. This is sure to lead to big changes in U.S. trade and currency issues with China and other countries. ...

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Dan Balz says former prime minister Blair's policies in Britain (1997-2007) closely followed the policies of moving to centrist positions of U.S. president Clinton, with Blair's election in 1997 following Clinton's wins in 1992 and 1996. Clinton followed the Reagan years and Blair the Thatcher years in government, in modifying the early postwar ideas about the economy. The election of Corbyn by 59.5% of the vote of Labor party members, exceeds the 57% achieved by Blair in 1994. The opposing candidates did very poorly. Yvette Cooper, who most resembled Blair's positions was seen as waffling on issues by not taking clear positions. She lost badly with 4.5% of the vote, showing that something significantly has changed with the the deep recession following the 2008 financial crisis, and the recovery through years of austerity policies under Cameron's Conservative government. Balz's view is that this is likely to bring up the same debate in the Democratic party- Corbyn proposes a national investment bank for large investments in education, health services and infrastructure, and a reversal of Labor policies introducing fees for college education to increase opportunity. Sanders has not proposed a national investment bank, but says he would invest in education ( including reversing the spiralling education costs), health services, infrastructure, and other areas. Hillary Clinton has made the issue of upward mobility for the middle and working class a central issue in her campaign, but lacks the authenticity claimed by Sanders, who has tapped into anti-establishment feeling following the lack of recovery in wages under 7 years of the Democratic party government in the U.S. In this context Jeb Bush has also stated at the 2013 CPAC conference that social and economic mobility is the central issue of our times, only he would approach it by giving business incentives to increase business investment to create jobs and increase wages; and by adopting a tax code that would be also fair to the middle and working class....