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After years of monetary easing under former Fed chairman Ben Bernanke to boost the economy since the 2008 financial crisis, the Fed plans to modestly increase rates in December 2015. The broad measure of unemployment including part-timers and discouraged workers dropping out has fallen from a high of 17.1% to 9.9%. The economic recovery is still slow and inflation below 2% for a long period, letting the the Fed set a very gradual trajectory for raising rates to accomodate downward pressures on the economy. GDP growth is lower than in previous recoveries, and after tax incomes adjusted for inflation up 1.8% in this recovery compared to 3.3% in the three previous recoveries.

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So many Republican districts jobs depend upon the Clean Energy investments in the Inflation Reduction Act. Kasey Carpenter, Republican of Dalton, Gerogia says- “So much money has been spent building these facilities. The last thing you want to do is get it all built, and then jobs disappear.”  From August 2022 to December 2024 the private company investment in clean energy is four times greater in Republican Congressional districts than in Democratic districts. NYT provides visual graphs showing this. The investments being $118 billion Republican districts vs $35 billion in Democratic districts.These are investments under the Inflation Reduction Act one of the achievements of the Biden administration that are reflected in the strong economy in 2024. This allocation was for $390 billion for Clean Energy over 10 years. A similar situation is happening for the CHIPS and Science Act investments opf the Biden administration. Lael Brainard of the Biden administration says- "They are not going to want to undermine those jobs and those businesses that we know for the first time are really strong in so many districts around the country that have been left behind under trickle-down policies."   ...

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A music enthusiast who played in a rock band, before studying political science at the University of Hanover, and running for parliament, Lars Klingbeil comes from humble roots in Saxony. He led the campaign which brought the SPD Social Democrats to power in 2020 federal elections, and also into an election where the SPD secured only 16% of the vote a new low in 2025. Klingbeil comes as much of a surprise in the way his amiable manner and personality convinced the CDU leader Merz to give him the Finance Ministry as well as the support for major investments in the German economy. This was a goal the SPD failed to accomplish under Scholz with his Finance Minister from the FDP Christian Lindner blocking investment plans for 4 years. The frustration in the SPD is intense and Klingbeil and Merz coming together on borrowing and massive investments in infrastructure and defense is something of a miracle after the Merkel years and the constitutional brake she put in place on spending.  Right from the start the SPD and the CDU realized that this was their last chance as Merz put it to get things right before the far right or some other party took over. Problems that require investment- in crumbling infrastructure and obsolete transportation, lack of investment in IT, problems in childcare and in cost of living could not be postponed. Risks had to be taken, and the 28% of the vote CDU had needed the 17% of the vote of the SPD with the Greens 12%, total 57% of the 2025 vote, to act fast and decisively. ...

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The low number of confirmed cases and small number of deaths in India and Pakistan is being analyzed for what to expect in the coming months from June to August. Some experts see this as just the beginning that the peak will come later on. India has about 75,000 cases and Pakistan 35,000. Testing has lagged behind with only 1.5 tests per thousand people compared to 26 per thousand in the U.S.  one reason the confirmed case count is lower. Some confidence is being drawn from the deaths- 2415 in India and 737 in Pakistan. This is because only 2.2% of cases in India and 3.3% in Pakistan led to deaths, compared to 14.3% in UK and 5.5% in China, 6% in U.S., using John Hopkins database. One reason given is that only 6.4% of India's population and 4.3% of Pakistan's is over 65 years age. Compare mean age in Italy 46 years to 27 in India and 23 in Pakistan. And there is plenty of sunlight which appear to destroy the virus. Other factors that may influence the virus- taking of the tuberculosis vaccine and routine exposure to more pathogens in both countries. Prime minister Modi in India is taking no chances considering the size of India's population. He has put forward a $280 billion economic package and is moving in deliberate carefully prepared steps to lift lockdowns with the current phase No. 4 allowing more reopening. The shift now is to a more self reliant economy in industrial production making "local more vocal."  During the lockdown the large rail network and postal networks with their millions of employees, IT technology driven banking with Aadhar identification for direct deposit to hundreds of millions of the most needy citizens, and farmers, proved to be the most reliable and supportive. ...

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Bubbles in the Chinese and Indian stock markets. And the catching a falling knife phenomenon, how far will certain stocks fall considering the risks in 2007 for the US economy, and its spillover effects into Europe and other places.

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Guardian's David Smith has short memories as he compares response at Obama's stops and visits in 2012 and compares that to Biden's as he visits Detroit and Atlanta in May 2024. In 2012 in the last weeks of the election Mitt Romney was much closer than is remembered today. Obama was at risk of being a one term president and depended on a strong turnout from Latino voters. Mariachi bands were called out in states where Hispanic vote was critical in these closing weeks. This is also just after the pandemic once in a century event that has affected younger people more than other groups, and after the dislocation and misinformation, the suppression of real information about the massive investment in the economy by president Biden for the first time in 50 years. Obama then lacked the kind of bipartisan support from all groups including Republicans and suburban voters that Biden now has that were never part of the Obama coalition. As shown by Nate Cohn in NYT what Biden is after are the disengaged younger voters and new voters in 2024 that have no awareness of the president's efforts to improve standards of living of the American people, who president Biden is working hard at campaign stop after campaign stop to reach about 6 months before the election. ...

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Rumelt argues that efforts to induce aconsumption led recovery won't work in 2011-2012 because of the high debt to income ratio of American households, reminiscent of the situtation in the 1930's as America went into World War II. It took a long period of over a decade to bring debt to income ratios down during the 1940's to 20% for America to once again stage a consumption based recovery. Since the solution of war time engagment and lower consumer spending due to wartime rationing is not a feasible solution today, a lot depends on stimulating investment. Rumelt does not say how this would happen in practice as corporations invest to increase production in a consumer based economy. Corporations can invest on increasing production for growing emerging markets such as India, China and Brazil, and this is happening today. But this does not increase growth in the U.S. economy, except in the limited sense that some of the high end development work takes place in the U.S. Policies that stimulate investment would set the stage for a future recovery. ...

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Lingling Wei on Chinese policy on trade with the US in the WSJ and China seeking a visit by DJT to Beijing instead of APEC side meeting in South Korea. A meeting in Washington DC is seen as risky after the Zelensky meeting with DJT took an unexpected turn, and the idea of meeting in Beijing gives more opportunity for getting an organized result and show China's standing in the world of nations. This happens after XI met Putin in Beijing on Victory Day celebrations for World War II where Russian and Chinese losses were far larger than European or US losses. China's huge losses in the millions have not received much attention in the US or Europe. This is also true for losses by the Philippines, Indonesia and India from decisions made during wartime by colonial powers and the Imperial Japanese Army. A meeting of Xi and DJT in Beijing from China's point of view may also show China is ready to work with the US in trade and the economy where it has huge interests in a stable transition to where Chinese industry does not overproduce what it cannot sell and seeks a diversified market shifting away from concentration in the US. Both Xi and DJT are playing to a domestic and international audience to show they are wise leaders willing to engage and at the same time protecting their national interests. The issues of support for Ukraine and fentanyl sources in China remain unresolved. ...

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Higher prices of gasoline in the first quarter of average $3.92 in April 2012, are offset by higher fuel economy of cars at about 24.1 mpg compared to 20.8 in 2008. Natural gas prices have fallen and this reduces household utility bills, acting as another offset. The U.S. consumer held up in the 1st quarter of 2012, with real spending up by 2.3%, according to Macroeconomc Advisors.

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US National Intelligence report due after the November elections confirms much of the British Ambassador's cable to the French from Afghanistan. Its a situation in a downward spiral the draft report says and the deterioration is accelerated by rampant corruption and the heroin trade which is now about half of Afghanistan's economy. The government "has lost all trust" according to the British Ambassador Cowper-Coles report.

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Krugman questions whether the assumptions behind the austerity policies are true- that they would inspire confidence in economic recovery, or that in the absence of austerity policies borrowing costs would go through the roof. The recent events in Holland with the collapse of the government in the Netherlands- when a party leader supporting the government said he did not want to hurt pensioners in the Netherlands just to satisfy German opinion- and the mood in France with economic anxiety vote going to Marie Le Pen and Francois Hollande in the first round of presidential elections, shows that very little confidence has been created. High unemployment and economic anxiety are leading to a reappraisal of austerity cuts that depress the economy and reduce tax revenues, but Krugman says no changes are taking place to correct these policies. This is true for Spain with its high unemployment, and Britain which now has two quarters of negative growth.

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In this Agenda column Simon Nixon takes on the U.S. Treasury's criticism of Germany for its current account surplus of 7% of GDP in 2012, and not doing enough for the economies of southern Europe. The German government called it "incomprehensible." Nixon says it is better for the German economy to remain strong and to boost competitiveness and consumer spending in Spain, Portugal, Italy and Greece. He says the low eurozone inflation of annualized 0.7% for September 2013, which prompted the ECB to cut rates by 0.25%, is healthy to the extent that consumer prices are declining to adjust to a decline in wages. The reduction in labor costs is a way to restore lost competitiveness, just as Germany did in the last decade. The criticism is considered by many economists to be misdirected, and seen as "incomprehensible" by Germans, as Germans ask what would the U.S. have them do- provide stimulus when the government debt to GDP ratio is currently 82%, increase wages and how would this help Southern Europeans. Focussing on Germany's current account surplus says Nixon, is obscuring the larger issues of increasing consumer and business confidence and spending in the eurozone, and increasing bank lending. The new ECB bank resolution arrangements and other changes including deposit insurance if done right should help the recapitalization and restructuring needed for restoring bank lending to support recovery. Spain is furthest along in regaining competitiveness, with changes in Portugal, Italy and Greece also supporting a gradual return to growth....

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For the first time in decades the U.S. trade deficit with China is falling significantly. China's exports to the U.S. dropped 12.5% to $296 billion in 2019 from $323 billion in 2018, according to Chinese customs data. Actually China's trade surplus with the U.S would have fallen even more had not the U.S. exports to China declined by 21%. With the Phase 1 trade deal negotiated recently U.S. exports to China will increase significantly, while 25% tariff on $250 billion in Chinese goods still in place limits China's exports. This means in 2021 and 2022 and years ahead China's surplus should shrink much faster achieving one of the principal goals of Mr. Trump and his trade negotiator Mr. Lighthizer. Mr. Lighthizer was chosen by Mr. Trump for having accomplished a similar goal decades back in the eighties with Japan's surplus. Even though China has not stated this in writing, American officials have said China will increase purchases of American goods and services by at least $200 billion over the next 2 years from 2017 levels. China and the U.S. have essentially agreed that the two economies so tightly intertwined works to the detriment of the U.S. with the Chinese surplus creating tensions. China will now have the European Union as the largest trading partner followed by south east Asian countries, and other regions. China decided that its priority is technological development and was unwilling to meet U.S. demands to reduce its efforts for technological competition and access to western technologies. Instead opting for shifting it economy away from dependence on exports to the U.S. in a gradual way. The other demand of the U.S. for stopping state subsidies is also a concession China is not willing to make as it sees it as an economic feature of its business model that is working and a competitive advantage.  This leaves the U.S. with a limited win so that trade and resulting jobs can be brought into favoring the U.S. a key Trump goal, and not a win in the technological competition with China which will continue. ...

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Gordon Brown, former prime minister of Britain from 2007 to 2010, chaired the April 2009 G-20 meeting that came up with ways to tackle the global financial crisis. Brown also led the way by recapitalizing British banks, a step the U.S. followed. He comments on the volatility in financial markets in August 2007 following the S&P credit downgrade of the U.S.. Brown gives an incomplete grade to the tasks the 2009 G-20 set out to accomplish. He points to three goals the G-20 had set in the middle of the financial crisis in April 2009. The first was to prevent a recession from becoming a depression. The other two were to establish a financial stability regime, and a compact for growth. These two became paper promises says Brown. Brown sees the best approach to prevent a lost decade is for U.S. and Europe trading their way out of a downturn as the Asian market absorbs more industrial goods from Europe and the U.S. This includes policies that would keep commodity prices low and ways of coping with currency shocks. Analysts have pointed to an export led recovery as one of the solutions the U.S. was hoping to achieve with a lower value of the dollar. This has had only limited success because of deep structural problems- high consumer indebtedness, bad debt at the banks, weak housing sector following the mortgage crisis, and a rising U.S. deficit- which will take some time to clear. Brown does not come to grips with these underlying imbalances built up during the boom years of the last decade, both in Britain and in the U.S., during which he was the finance minister of Britain....

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German effort to be actively involved in African countries and in aid and investment to Africa, is one of the lessons learned from the migration crisis. Anglea Merkel cisits south Africa and Angola in an effort to improve ties with these countries and the rest of Africa. South Africa gets two thirds of all German investments in Africa. It is also an important ally in Compact with Africa launched in 2017, and better ties with the election of Ramaphosa in South Africa. Angola is moving to restore better ties under a new government of president Joao Lourenco with its focus on the economy.

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China's GDP growth rate slowed to 7% in the 1st quarter of 2015, compared to 7.3% in the 4th quarter of 2014. China's Office of National Statistics reported industrial production growth at 5.65% year over year in March 2015, and fixed asset investment in the 1st quarter at 13.5%. The statistics agency reported unemployment at stable level of 5.1% for the 1st quarter 2015. Experts say the low unemployment is the one positive sign in the economy, easing pressures on economic policymakers to take action considering the high debt levels in the economy. As a result China can pursue selective monetary easing efforts and smaller, selective, better targeted stimulus.

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Is this a sign of things to come, after all the Japanese economy has seen sagging consumption for years with a two tier economy with full time workers and parttime workers with no benefits. The parttime labor force increased from 4.13 to 4.79 million according to the Labor Department and its the highest since 1993. Now people are doing this not by choice but for economic reasons. And employers like Kroger are doing this so that they can hire more parttimers with no benefits and pay benefits to fewer employees. There are also computerized scheduling systems for parttimers that are becoming popular with retail stores that use a lot of partimers.

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Japanese prime minister, Yoshihiko Noda, of the Democratic Party of Japan, is pressing forward with a plan to increase Japan's 5% consumption tax to 10% by 2015. Noda told reporters in Tokyo: "There is no waiting in responding to this question" of how to strengthen the social security system. Adding that Japan is "faced with an aging society and a declining birthrate unprecedented in the history of humankind and we cannot sidestep the challenge." In theory the Liberal Democratic party supports this, but in reality the LDP sees a chance to force a new election. Japan has a lower consumption tax rate compared to other OECD countries. It was last increased in 1997. Polls show both parties are deeply unpopular- the LDP has 17% support from voters, the DPJ has 16%, and over 50% support no party. An increase in the consumption tax comes with its own risks for the Japanese economy, as Japanese exporters have been hit hard by the yen's rapid rise in the last year. At 76-77 yen to the dollar Japanese automakers find making compact cars in Japan unprofitable. A chip maker Elpida recently filed for bankruptcy, with its CEO saying he never imagined the yen at this level. Another difficulty maybe the size of the increase in the consumption tax, effectively doubling it at a time when European markets for Japanese exports are showing a marked slowdown....

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The mood in Ohio may bring a Democrat to the Presidency in 2008. The economy is really hurting in Ohio.

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Supply chains are unraveling in many industries with the tariffs imposed by president Trump on imports from China, and renegotiated trade deals with South Korea and other countries. The growth in the value of foreign value added was possible with cuts in tariffs in the period after 1990 and the emergence of China as a low cost manufacturer with cheap labor. Foreign value added increased from 20% in 1990 to 30% in 2011. The impact on factory towns and communities in the U.S. of trade in which the U.S. manufacturing declined as it shifted to China resulted in the surge in support for president Trump. The tariffs war with China is an effort to correct this imbalance. The result is a shift in supply chains away from China in some industries and gradual shift in others. Rising wages in China had already resulted in early shifts and the the environmental costs adding to this trend. President Trump temporarily suspended a threatened imposition of duties of 25% on $325 billion of Chinese imports. A renegotiated Nafta agreement with Mexico for automobile production and determination of U.S. based content and wages was designed to reset the relationship with Mexico and the auto supply chain for production in Mexico. A threat of tariffs on European auto imports to the U.S. is set for a decision in November. The trade dispute between Japan and South Korea and threat of tariffs also shows the effect this is having in other countries. With the U.S. looking at its own interest in the global supply chain and its advantage or disadvantage, industries and companies are not free to make decisions based on which country offers the best arrangement and deal for manufacturing. Notions of competitive advantage in the tech race with China are affecting the way the U.S. and European nations are acting. ...

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Lawmakers in Congress finally get overwhelming bipartisan support behind a plan to help homeowners facing foreclosure. The rate of homeowners going into foreclosure is 8000 a day or 2,920,000 between now and the same time next year, with the burden falling more heavily in some regions or states like Nevada, Arizona, California and Florida, and in states where the economy is weak as in the auto industry states of Michigan, Ohio and Indiana. This took some time apparently as there was some hope a couple of months before that the economy would recover and taxpayer money need not be spent to rescue homeowners and lenders from their folly. Now the economy looks sure to go into a serious downturn and homeowner prices measured by the Case-Shiller index show a 16.5% drop in prices from this time last year. Lenders earlier had balked from reducing the size of the loans and balance owed by lenders as part of their contribution. Now with losses of 40-60% in foreclosure the new federally guaranteed mortgages which require reducing the loan money owed to 85% of current value are looking attractive. The new mortgages are 30 year fixed loans with a federal guarantee. Only borrowers wanting to stay in their primary home are eligible. Borrowers also have to pay hefty fees to save taxpayer money. Buyers who purchase unoccupied properties will get a $8000 refund tax credit. There is some concern that because the bill is fairly complicated homeowners and lenders would not make larger use of it....

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The warning light is again on for Greece in the beginning of 2012, as the rapidly deteriorating economy makes a 50% loss by private creditors insufficient to help it meet repayment or refinancing of bonds coming due in 2012. Additional funds will be needed from EU countries unwilling to do this. 14.5 billion euros in Greek bonds come due on March 20, 2012. Greece also faces a public increasingly resistant to austerity cuts. A vountary exchage of existing Greek bonds by private creditors for new bonds at 50% face value and maturing over a longer period will be done under English law. This will be harder to change in the future. Most of the existing bonds were issued under Greek law which can be altered by Greece's parliament.

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What will China look like in the future depends on Li Qiang as well as Xi Jinping. Li Qiang is a close associate of Xi Jinping, as his chief of staff in the early 2000's in Zhejiang province. At that time he interfaced with Chinese companies on investment and economic policies. This WSJ report looks at Li Qiang and how he could be a moderating influence on Xi and provide another perspective for business and economic policy in China. He is seen as having his own instincts on policy, believing in competition, yet deferring to president Xi on broader policy issues for the CCP and China. He replaces Li Keqiang who was sidelined by Mr. Xi as Xi formed his own team from his early days in the provincial governments in China. Some of these connections date back to the early days under Xi's father, Xi Zhongxun, who was one of the leaders in Yenan in the war against the Japanese and the encirclement efforts of the Nationalists against the Communist party local governments in the north during the 1930's. Xi's father was later one of the leaders in the 80's shaping the opening up of China to a market economy under premier Deng- a role not tackled by hardly any of China's leaders from the 1930's. In this sense both Xi's having taken on difficult roles in shaping China's recent history, with the younger Xi building his own team to chart a new path for China. ...

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An August survey by Japan's Ministry of Economy, Trade and Industry, shows 40% of the country's manufacturers saying they would shift production and R&D facilities overseas if the yen remains at 85 to the dollar. It has dropped below that. Nissan will make 71% of its cars overseas in 2010, compared to 66% in 2009. Murata Manufacturing plans to double its foreign output to 30% by March 2013. By buying Dutch printer maker Oce NV in March, Canon Inc., saw its overseas output jump to 48% for the first half of 2010. Toyota is on track to produce 57% of its output overseas in 2010 , compared to 48% in 1995. The popular Prius will now be built at a plant in Bangkok, Thailand. Sony did 20% of its television manufacturing in Japan in 2010, it is aiming to do 50% in 2011. As a result Sony showed a profit for the April-June quarter, after 6 straight years of losses. Its also important to note that when inflation is taken into account the yen has not strengthened the way it appears, which reduces domestic pressures to dampen the yen's rise. Tohru Sasaki, head of foreign-exchange research at J.P. Morgan Chase & Co. in Tokyo, says that in inflation-adjusted terms, the yen is 30% below the rate it reached in April 1995. U.S. consumer prices have risen by 69% since 1990, in Japan the prices rose only 8.5% during the same period. In inflation adjusted terms the April 1995 exchange rate of 80 yen to the dollar would be 56 yen to the dollar today. Japan's exporters can also benefit from the fact that a large part of Japanese trade is denominated in yen- according to Japan's Ministry of Finance 48% of exports to Asia were paid for in yen in 2009. Like China and Germany, Japan remains highly dependent on exports for growth- which provide two thirds of its growth. The yen's strength increases the outflow of production facilities. In July 2010, 10.3 millon workers were employed in manufacturing in Japan, down from 12 million in 2002. Japan's unemployment rate was 5.6% in 2009....

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As the USA and Europe move into a deep and prolonged recession China loses some of its biggest export markets and faces a significant slowing down of its economy. China's leaders are pondering how to respond to the crisis which will affect China, and meet the challenges of lower living standards of a neglected rural countryside and farmers compared to the urban coastal areas. This is still where some 800 million of the Chinese people live by official count, so something needs to be done to improve prospects and help generate higher incomes and opportunities for people in the farming countryside. Making land use rights of farmers able to be bought or sold for the first time would generate additional income for farmers, and help consolidate farmland into larger plots, which can use technology and improvements for better yields to keep China self sufficient in agricultural production. Keeping the situation the way it has remained for the last two decades, where local party officials and local leaders controlled the land and where farmers rights were ignored leading to suppression of farmer's protests for illegal land seizures and corruption, may have made it easier for plants to be setup across China and attracted foreign investors. But it has not been good for China's farmers. Chinese party officials at the local level who realized the advantages to them by controlling land and making it easier to set up manufacturing plants with foreign investors may have steered state policy in this direction from the early days after Deng's opening to capitalism and trade. Now with a success in the urban coastal areas and in building infrastructure Chinese leaders in the central government must be faced with a difficult issue of how to move on from here with the loss of China's export markets for its heavily export dependent economy. The need to generate a domestic consumer driven economy must not be lost on the Chinese leadership in Beijing. Something that will keep China's economy moving in the new situation. This is the context in which land use rights may be extended from 30 to 70 years and able to be bought and sold to improve farm incomes and generate internal momentum in the rural areas where most of China's people live. It also offers a contrast to the situation India faces where even the Nano plant of Tata Motors had to be moved from W. Bengal state to Gujarat state over farmers rights to land which in that case was also used as an issue for political agitation. The move by China accelerated industrialization and setting up manufacturing plants as land was taken over by local officials for use with foreign investors but also ended up neglecting the countryside, and created too big a dependence on exports....