Friday, April 16, 2021

Strong Retail Sales Continue 2020's Recovery

 Financial FAQs


Sales at U.S. retailers rose 9.8 percent in March, the government said Thursday, in part because of the additional $1,400 stimulus checks for consumers from the federal government that is accelerating economic growth.

This confirms the 2020’s economic recovery has begun, as more businesses open and consumers grow confident that the worst of the pandemic is over. The sales gain was the second largest on record, exceeded only by an 18 percent spike last May when the U.S. lockdown was first lifted.

Stock market indexes also reached new highs, which does bring back hints of the original roaring 1920’s—excessive exuberance in the financial markets and eight years of prosperity—but then came the 1930s when outmoded economic verities (and few regulations) turned it into the Great Depression.

However, I would compare this recovery to that after World War Two, which necessitated programs enabling government to invest heavily in the future—in infrastructure, education, and housing, as is being proposed today.

We achieved much higher annual GDP growth rates post-WWII, as high as 14 percent (see below graph dating from 1948), which can happen again with the right public and private investments.


Retail sales revved up 15 percent in March at car dealers even as automakers struggled to procure enough computer chips to maintain production, per MarketWatch’s Jeffry Bartash. Auto sales account for about 20 percent of all retail sales.

Sales at gas stations also rose nearly 11 percent, reflecting rising oil prices and more Americans taking to the road as government coronavirus restrictions are lifted. If autos and gas are set aside, retail sales still jumped 8.2 percent.

Almost every major retail group shared in the benefits of the federal aid payments. Receipts leaped 13.4 percent for bars and restaurants, 18 percent for clothing stores, 23.5 percent for sporting goods and other recreational items.

What about COVID-19 and future viruses that must be vanquished to continue this recovery? Better public health care spending is also needed and is contained in the just passed American Jobs Act. Hospitalization rates have plateaued at too high a level. The current 7-day average is 36,941, up from 36,257 reported yesterday, and well above the post-summer surge low of 23,000.

So we do need post-WWII-size investments in the future to create a real recovery.

Harlan Green © 2021

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Wednesday, April 14, 2021

Equitable Wealth = Equitable Growth

 Answering the Kennedys’ Call

We must cure the record income inequality if we are to re-unite the United States into a country that serves Americans in both red and blue states.

The current disunity is a result of whole swaths of the country losing out on economic opportunity. Our modern, tech-based capitalism has raced ahead, rewarding those that can keep up.

The wealth is distributed in a highly unequal fashion, says the Center for Equitable Growth, a progressive think tank, with the wealthiest 1 percent of families in the United States holding about 40 percent of all wealth and the bottom 90 percent of families holding less than one-quarter of all wealth.

The result has been that the top 20 percent of America’s educated class are winning the race with educational opportunities that have enabled them to take advantage of modern technologies.

And what happens to people who feel left behind—in education, good jobs, and adequate housing? They find a way to protest, and Donald Trump became their voice of protest.

They protest against immigrants because they believe their jobs have been stolen. They protest against open borders because they see those jobs fleeing to other countries with cheaper wages.

They are so angry they will believe any theory confirming their suspicions that the educated elites with the best jobs are abridging their freedoms.

That is why President Biden’s plan to return US to full employment by the end of 2022 is so important.

The just passed $1.9 trillion American Rescue Plan will boost benefits of lower and middle income consumers, raising incomes for the poorest 20 percent of families by an average of 20 percent, according to the Tax Policy Center's analysis, and create 7 million jobs by the end of 2021 while top earners would see their income rise less than 1 percent, according to the CBO.

The proposed $2 trillion plus infrastructure bill will create more good jobs by requiring the development of universal broadband, such as 5G networks that China is already building on a grand scale, a major issue in rural communities.

Documents suggest it will also include nearly $1 trillion in spending on the construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and improvements to the electric grid and other parts of the power sector, all requiring higher paying jobs.

“I think a package that consists of investments in people, investments in infrastructure, will help to create good jobs in the American economy,” testified Treasury Secretary Janet Yellen in congressional hearings recently, “and changes in the tax structure will help to pay for those programs (and also reduce income inequality).”

The investments in people is even more important to lift the spirits of the 13 million that still have no jobs or would like full time jobs, including greater access to Obamacare and Medicaid, aid that the Trump administration had been drastically reducing.

Bringing back trust in government will do the most to boost public spirits. And that means spending on programs that make life easier for most Americans.

There is no easy path to a greater equality of opportunity in the richest country in the world, because we must first restore our faith in each other with programs that benefit all Americans.

Harlan Green © 2021

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Saturday, April 3, 2021

March Employment Augers Roaring 2020's

Popular Economics Weekly

It may be difficult for the naysayers that believe too much aid is going into social programs to find fault with the March unemployment report that added 916,000 new nonfarm payroll jobs. It looks like March economic data augers a recovery that may lead to a decade of robust growth in the overall economy.

Companies are already hiring en masse, in spite of a winter that froze Texas and the record floods and tornadoes that have devastated much of the south.

Almost all business sectors are hiring, including a huge jump in the U.S. ISM’s Manufacturing Index to a 38-year high of 64.7, which means some 65 percent of manufacturing businesses surveyed were expanding.

Much of the hiring has come because happy consumers with an additional $1400 checks in their pockets are dining out and traveling more, but also because the housing market is booming—prompting 110,000 new construction hires in March.

The 916,000 new payroll jobs are just the beginning of this hiring boom that must bring back 10 million jobs to return to pre-pandemic levels. That is why Biden’s $3 trillion infrastructure spending will be needed as well.

So thank goodness for the $5 trillion in recovery aid already raised by congress that is encouraging even restaurants and other leisure servicers to hire 280,000 new workers, Education and Health 101,000, and Government 136,000 workers that is just the beginning of what is needed to make this decade this into a roaring 2020's decade.

The official unemployment rate, meanwhile, slipped to 6 percent from 6.2 percent, the Labor Department said Friday. Yet the official rate doesn’t capture nearly 4 million people who lost their jobs last year and weren’t counted in the numbers because they left the labor force.

It is also why Consumer confidence surged in March to a one-year high as more Americans were vaccinated and states began to open up for business. The index of consumer confidence shot up to 109.7 this month from a revised 90.4 in February, the Conference Board said Tuesday.

Confidence may be rising because some 3 million vaccines now administered per day may have 70 percent of American adults vaccinated by July, say the experts.

But new variants of COVID-19 are beginning to pop up, which has epidemiologists worried because it’s causing a plateauing of the infection rates at an unacceptably high level, according to the CDC.

According to the CDC, 153.6 million doses have been administered. 21.7 percent of the population over 18 is fully vaccinated, and 38.4 percent of the population over 18 has had at least one dose (99.6 million people have had at least one dose).

Infection rates have plateaued because too many variants Of COVID-19 are popping up in some states. Winning the race between the spreading variants and administering enough vaccinations to stop their spread is the key to a robust recovery.

“I think a package that consists of investments in people, investments in infrastructure, will help to create good jobs in the American economy,” testified Treasury Secretary Janet Yellen in congressional hearings last week, “and changes in the tax structure will help to pay for those programs.”

Yellen and Fed Chair Jerome Powell said there was no problem with any inflationary bulges that might occur with so much spending because it was spending that would boost productivity as well as employment, generating even more growth.

Harlan Green © 2021

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