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A jump in oil prices in August leads to US inflation moving up to 3.7% in August compared to 3.2% in July 2023.

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China's consumer prices declined by 0.3% in July. There are signs that the economy is slowing. A deflationary trend is taking shape with buyers declining to spend following layoffs at companies, higher unemployment and less growth. Expectations of falling prices could further sap demand worsening the debt situation in China. China's economy has grown in the last decade by assuming ever larger debt burden. The debt in 2022 was three times the GDP of China. Servicing this debt becomes harder when consumer demand is weak. The situation in the US is different with the central bank the US Fed increasing interest rates to lower inflation from 9% in 2022 to 3.2% in July, and expectations of a drop ion inflation with lower shelter costs in rest of 2023.

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Inflation is receding as an issue in the 2024 elections as the CPI index dropped below 3% in July as reported by the Labor Department. It was 2.9% lowest since 2021. Greg Ip says when Trump is saying bacon costs 5 times more now he needs to find another supermarket. That is the joke as Trump is really getting ripped off. Ip says bacon prices are up 18% since 2020 when Biden took office. Trump says at rallies grocery prices are up 70%, Ip says fact correction -up 21% since January 2021 not 70%. Trump says gas prices are $5.00 a gallon. Fact correction- gas prices are $3.75 a gallon and falling, says Ip. Trump wildly exaggerates. Trump says he will cut energy and electricity prices by 50% in 12-18 months. His answer "Drill Baby Drill." Experts cited by Greg Ip say even if new offshore and onshore leases are given, increase in supply is marginal and years away. Gas prices are determined by the world price determined by OPEC and Russia, says Ip.  Trump will increase inflation says this report because of tariffs he plans of 60% on imports from China and 10% from other places. That would increase inflation by 1.4 to 1.7% say analysts. Greg Ip of WSJ offers more clues. Inflation linked bonds see inflation dropping to 2.2% in 2025 instead of 2.6% predicted earlier. Jerome Powell at the US central bank the Fed and president Biden hav done their job well and are not letting up, continue to work on it diligently every day. ...

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US had jobs growth of 336,000 in September 2023. The unemployment rate remained at 3.8%. It is below 4% for 2 years and this is the 33rd month of jobs growth. As jobs growth takes place under president Biden, 13.9 million jobs created, the inflation rate is also declining. Americans had $4 trillion in checkable deposits (checking, savings and money market accounts) in 2023 compared to about $1 trillion in 2019. Hiring numbers were updated by the Labor Department showing 119,000 more jobs added in July and August 2023. 

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Under the Volcker Rule setup during the global financial crisis of 2008-2009, banks total investments in private equity, hedge funds and similar higher risk funds cannot exceed 3% of high quality capital. During the financial crisis investment banks were highly leveraged leading to the collapse of Bear Stearns and Lehman Brothers, and the precarious financial condition of other banks. Goldman has pared down about 60% of such investments. Remaining are $4.8 billion in private equity investments, $1.2 billion in real estate, and about $1.1 billion in both credit and hedge funds. Regulators have given the bank till July 2017 to comply. As banks recovered from the impact of the crisis, the tearing of the social fabric that happened with high unemployment in some groups especially older white men, has remained six years after the crisis- as evident in the U.S. election campaigns this year. As a result the mood has shifted for tighter regulation and both party platforms, Republican and Democratic, now call for reinstatement of the Glass Steagall Act, which separated commercial banking from investment banking as part of the lessons learned from the Great Depression. Volcker, was chairman of the U.S. Federal Reserve during the Carter administration, known for taking a tough line against inflation. He was the principal driver of the move to restrict banks from risky activity, and faced considerable opposition from banks during the 2009-2013 period when the rule was being formulated.  ...

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The squeeze on consumers and consumer spending in Britain as wage growth cannot keep up with the consumer price index from 2007 to 2013. A widening gap between average wages and the consumer price index. Basic items such as potatoes, milk, butter, ham, eggs, apples, pork and other food items have gone up much faster in price compared to wages. From 2007 to 2013 basic food staples such as butter are up 99%, potatoes 148%, apples 56%, ham and eggs 50%, milk 31%, pork sausage 37%. Gasoline up 40%. The gap between average wages and the consumer price index has steadily increased since 2010 when Cameron and the Conservatives took office and the austerity measures were introduced to cut the deficit. Upto that time wages kept up with the consumer price index except for a period during the 2008 financial crisis, according to information from the UK Office of National Statistics. Government figures show wages up 1.1% for the 2nd quarter of 2013, much less than half the rate of inflation of 2.8% in July. The household saving ratio is forecast to drop from 7% in 2012 to 3.5% in 2013, and Britons are dipping into savings to pay for basics, according to the National Institute for Economic and Social Research. The House of Commons library compiled data shows average hourly wages down by 5.5% in real terms in Britain since mid-2010. Weak consumer spending hurts economic recovery and hopes of cutting the deficit. In the Bank of England's minutes for the August meeting policy makers said consumption growth cannot occur without increase in household incomes. ...

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A study by the National Employment Law Project shows most of the job creation in the economic recovery to 2014 in the U.S. is replacing the better paying jobs with lower paying jobs in fast food retail and similiar low paying industries.

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A slight shift in American opinion favoring a deal with Iran is shown in a WSJ/NBC poll in July 2015 compared to the poll in April 2015. Support for reaching a nuclear deal with Iran remains stable at 36% in both polls, the opposed drops by 6 percentage points to 17% from 23%, and the percentage of people who say they do not know enough to formulate an opinion goes up to 46% from 40%. The intricacies of a nuclear technology deal and the sites involved lead to a high percentage of don't know enough to give an opinion. Factors hindering a deal include inspection of military sites, and Iranian intentions. Factors favoring reaching a deal now is the risk that this would mean Iran would go back into isolation and the opportunity to work with moderates might be lost. The Rouhani administration was an effort by voters to elect a government that could ease or remove sanctions to improve the economy and living conditions- its failure would lead to Iran losing an opportunity to open up to the world. The pressure from the U.S. Congress and Israel served to push for a verifiable and effective agreement to control development of nuclear technology for weapons systems. Behavioural factors involved are the very young population in Iran which has no memories about the period before the revolution in 1979- 70% of the population of 74 million are people under the age of 35. This group is eager for ties to the outside and could change Iran's outlook and policies int the future towards moderation. Risks in not reaching a deal also include the possibility of the Saudis developing nuclear technology and nuclear proliferation. Winners from a deal because of the flow of Iranian oil to world markets and a period of extended low oil prices are the U.S., Europe, China and India. Germany gains new markets to replace the growth in the Russian market after sanctions. Lifting of an arms embargo, an added risk in the last days of the talks, would be mitigated by making the lifting of that embargo very gradual....

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U.S. Federal Reserve chairman Bernanke, says the Fed will keep interest rates low till unemployment reaches 6.5%, as long as inflation remains at about 2%. If unemployment reaches 6.5%, and this is because more people are dropping out of the labor market, he will take this into account. If unemployment stays high the Fed indicated in its statement that it would tolerate a higher inflation of 2.5%, as long as the longer term outlook was for inflation to be at 2%. Bernanke said this doesn't mean monetary policy is on autopilot, because the Fed will watch conditions carefully and will leave room for flexibility- keeping an eye out for new asset bubbles that could develop, and monitoring labor market conditions and inflationary pressures and inflation expectations. If inflation falls well below 2%, or unemployment rate falls mainly because of people dropping out of the labor market, the Fed may continue to keep interest rates low. This policy was announced as U.S. fiscal cliff deficit negotiations continued in Dec. 2012 with one scenario being considered by both political parties being going over the Jan. 1 deadline before coming to an agreement. Bernanke pointed to this, saying "this is a major risk factor right now." The Fed's activist policy in economic policy has given financial markets and business a measure of stability not provided by government and Congress. Fed policy is to buy $40 billion of mortgage securities, and $45 billion of long term Treasury securities for each month in 2013. It will fund the purchases by adding reserves to the banking system, which is to say that it will print money to buy more bonds. This is a major decision by the Fed in that the Fed has shied away from unemployment targets in the past. Bernanke described this action as a new"automatic stabilizer" in the U.S. financial system- if unemployment rises investors know this pushes the Fed's interest rate increases further down the road and would drive interest rates down, if unemployment drops sooner than expected, investors anticipating Fed's rate increases would drive long term interest rates up, to keep stable growth....

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Van Dam says its not that great being a worker in the U.S. because it is hard for the unemployed resulting from competing with workers in other countries with lower wages, and for those who are unemployed harder because worker collective bargaining is weakened over 3 decades. He cites a 296 page OECD report showing very little government support for unemployed and at risk American workers. It says this has contributed to higher income inequality and larger share of lower income people than almost any other advanced a nation. Only Spain and Greece are shown as having more households earning less than half the median income- showing large numbers of people are poor or close to being poor. In the U.S. an average of 1 in 5 lose their jobs each year, and 23% of workers 15 to 64 are in their job less than a year in 2016. The job churn hurts workers because of firing and layoffs being frequent, more than is healthy for a economy. The U.S. and Mexico are the only two countries not requiring advance notice before firings. And fewer than half of workers find a job within a year in the U.S. Two in three families with a displaced worker fall in poverty for some time. Unemployed workers with typically 26 weeks support get less support than any other country in the study. Only 12% of workers in U.S. are covered by collective bargaining. ...