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10 Charts Show Trump's Economy Is Losing Steam – Forbes

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Between the U.S. Bureau of Economic Analysis showing personal income declined month-to-month in October and November along with the U.S. Census Bureau estimating that retail spending fell in the same months, it appears that the economy is losing steam. Mastercard’s

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SpendingPulse survey is also estimating that holiday sales only increased 2% vs. the industry’s forecast of a 3.6% to 5.2% rise.

Even with the recently signed Covid-19 relief bill it may not be enough to keep the economy on track before enough of the vaccine is distributed and people are inoculated. It should also be kept in mind that a large percentage of people who received stimulus money earlier this year either saved it all (almost 40%) or spent it all on essentials (almost 30%). Those whose jobs were not impacted tended to save or invest it while those who lost their jobs or saw their income reduced desperately needed it to make ends meet.

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While wages have risen, government payments have fallen

The U.S. Bureau of Economic Analysis estimates that after personal income fell 0.6% in October from September it dropped 1.1% from October to November. While income (which includes government payments) has risen 2.0% since February before the coronavirus led to the economy being shut down, wages are down 0.4% since then.

Gregory Daco at Oxford Economics created this graph which shows a jump in Real Personal Income (the solid blue line) but that was due to a huge inflow of government stimulus payments. If those had not occurred the economy would have been in much worse shape since Real Personal Income Except for Transfers (the dotted blue line) is what consumers would have had to spend. The difference between the Real Personal Income and Real Consumer Spending shows a huge increase in Personal Savings.

To get a longer-term view this is a chart Daco created going back to 1960. You can see the abnormally large swings in income and spending in 2020 compared to previous downturns in the economy. The blue line representing spending has down-ticked the previous two months. It will be critical for it to rebound for the economy to get moving again.

Consumer spending is showing signs of weakness

November saw the first decline in overall consumer spending month-to-month after six months of growth. While Services has dropped from 69% to 66% of the economy, it having even a 0.2% decline month-to-month is impactful. And spending on Goods has also fallen for the past two months.

This chart by Daco helps to illustrate that Food Services and Transportation were the weakest sectors of the Services economy. Clothing and Footwear and Motor Vehicles and Parts were the weakest parts of the Goods economy.

Retail sales fell the last two months

The U.S. Census Bureau tracks retail sales. It estimates sales were essentially flat from September to October or down 0.1% but from October to November they fell 1.1%. They are up 4.1% from November 2019, but if the economy stays on the weak side this comparison number should drop.

Daco’s graph below shows that there were only three sub-sectors that showed an increase month-to-month and that core retail sales also fell in November.

Mastercard’s SpendingPulse analysis has holiday sales (November 1 to December 24) without autos and gas increasing 2.0% year over year and excluding only autos the increase was only 0.6%. These results would fall short of the National Retail Federation’s late November forecast.

The economic recovery may have stalled

This chart is from Oren Klachkin at Oxford Economics, and it tracks the economy in five geographic areas. While it shows the economy improved in the spring, it flattened over the summer and has downturned recently.

Consumer confidence has slipped

The most recent reading on consumer confidence showed declines, not a great signal going into the holiday spending season combined with increased coronavirus cases, hospitalizations and deaths. The Conference Board said, “the Consumer Confidence Index® declined in December, after decreasing in November. The Index now stands at 88.6 (1985=100), down from 92.9 in November. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased sharply from 105.9 to 90.3. However, the Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – increased from 84.3 in November to 87.5 this month.”

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Economy

China Wants Everyone to Trade In Their Old Cars, Fridges to Help Save Its Economy

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China’s world-beating electric vehicle industry, at the heart of growing trade tensions with the US and Europe, is set to receive a big boost from the government’s latest effort to accelerate growth.

That’s one takeaway from what Beijing has revealed about its plan for incentives that will encourage Chinese businesses and households to adopt cleaner technologies. It’s widely expected to be one of this year’s main stimulus programs, though question-marks remain — including how much the government will spend.

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German Business Outlook Hits One-Year High as Economy Heals

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German business sentiment improved to its highest level in a year — reinforcing recent signs that Europe’s largest economy is exiting two years of struggles.

An expectations gauge by the Ifo institute rose to 89.9. in April from a revised 87.7 the previous month. That exceeds the 88.9 median forecast in a Bloomberg survey. A measure of current conditions also advanced.

“Sentiment has improved at companies in Germany,” Ifo President Clemens Fuest said. “Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers.”

A stronger global economy and the prospect of looser monetary policy in the euro zone are helping drag Germany out of the malaise that set in following Russia’s attack on Ukraine. European Central Bank President Christine Lagarde said last week that the country may have “turned the corner,” while Chancellor Olaf Scholz has also expressed optimism, citing record employment and retreating inflation.

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There’s been a particular shift in the data in recent weeks, with the Bundesbank now estimating that output rose in the first quarter, having only a month ago foreseen a contraction that would have ushered in a first recession since the pandemic.

Even so, the start of the year “didn’t go great,” according to Fuest.

“What we’re seeing at the moment confirms the forecasts, which are saying that growth will be weak in Germany, but at least it won’t be negative,” he told Bloomberg Television. “So this is the stabilization we expected. It’s not a complete recovery. But at least it’s a start.”

Monthly purchasing managers’ surveys for April brought more cheer this week as Germany returned to expansion for the first time since June 2023. Weak spots remain, however — notably in industry, which is still mired in a slump that’s being offset by a surge in services activity.

“We see an improving worldwide economy,” Fuest said. “But this doesn’t seem to reach German manufacturing, which is puzzling in a way.”

Germany, which was the only Group of Seven economy to shrink last year and has been weighing on the wider region, helped private-sector output in the 20-nation euro area strengthen this month, S&P Global said.

–With assistance from Joel Rinneby, Kristian Siedenburg and Francine Lacqua.

(Updates with more comments from Fuest starting in sixth paragraph.)

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Parallel economy: How Russia is defying the West’s boycott

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When Moscow resident Zoya, 62, was planning a trip to Italy to visit her daughter last August, she saw the perfect opportunity to buy the Apple Watch she had long dreamed of owning.

Officially, Apple does not sell its products in Russia.

The California-based tech giant was one of the first companies to announce it would exit the country in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine on February 24, 2022.

But the week before her trip, Zoya made a surprise discovery while browsing Yandex.Market, one of several Russian answers to Amazon, where she regularly shops.

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Not only was the Apple Watch available for sale on the website, it was cheaper than in Italy.

Zoya bought the watch without a moment’s delay.

The serial code on the watch that was delivered to her home confirmed that it was manufactured by Apple in 2022 and intended for sale in the United States.

“In the store, they explained to me that these are genuine Apple products entering Russia through parallel imports,” Zoya, who asked to be only referred to by her first name, told Al Jazeera.

“I thought it was much easier to buy online than searching for a store in an unfamiliar country.”

Nearly 1,400 companies, including many of the most internationally recognisable brands, have since February 2022 announced that they would cease or dial back their operations in Russia in protest of Moscow’s military aggression against Ukraine.

But two years after the invasion, many of these companies’ products are still widely sold in Russia, in many cases in violation of Western-led sanctions, a months-long investigation by Al Jazeera has found.

Aided by the Russian government’s legalisation of parallel imports, Russian businesses have established a network of alternative supply chains to import restricted goods through third countries.

The companies that make the products have been either unwilling or unable to clamp down on these unofficial distribution networks.

 

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