Trump Imitates Putinism

Popular Economics Weekly

“Russian mathematician and Putin critic Andrey Piontkovsky characterized Putinism as "the highest and final stage of bandit capitalism in Russia; and also as a war, 'consolidation' of the nation on the ground of hatred against some ethnic group, attack on freedom of speech and information brainwashing, isolation from the outside world and further economic degradation". Wikipedia

Medium.com

The latest Ukrainian peace proposal was negotiated between President Trump and Vladimir Putin without Ukraine’s involvement. This is another example of Donald Trump’s attempt to curry favor with Vladimir Putin by literally allowing Putin to dictate the terms of the peace proposal.

Why has Trump turned into Putin’s messenger, whose policies mirror Putinism? Why has the oldest liberal democracy in the world, a nation of immigrants founded on the principle of every member’s inalienable right to be free become the “bandit capitalism” of Vladimir Putin, a dictator who allows no freedoms and kills his own people?

Late-stage capitalism doesn’t fully explain why Donald Trump, a real estate developer with no political experience, could convert a weakened American Democracy into a version of capitalism that concentrates power and wealth in the hands of his oligarchic supporters blatantly ignoring America’s founding principles and laws of the land.

But epidemiologic disease models studied by medical researchers can explain how capitalism could morph into Putinism and bandit capitalism. Such models have shown that there are predictable paths that all epidemics, pandemics, or other contagious disease outbreaks follow from beginning to end.

The body politic of countries and regions (i.e., “the people of a nation, state, or society considered collectively as an organized group of citizens) have endured political outbreaks with similar characteristics. Even civil wars fit this infectious disease model, because they originate internally—brother or sister against each other—and may last longer than years, and suddenly end in unexpected ways.

How do diseases infect? The Black Plague epidemics usually infected people that had been weakened by famines or dysfunctional governments, and the more recent Spanish Flu and COVID-19 pandemics as well that infected and killed millions.

When do such pandemics wane or disappear? They run a recognizable course from inception to a maximum infection rate, then subsided when disease-infected populations eventually found ways to cause their decline. It was quarantines in early times, and vaccines in modern times.

Trumpism, Putinism, and like autocracies or dictatorships have captured weakened political systems. In Russia it was breakup of communism and the Soviet Empire that fostered a Vladimir Putin. In Trump’s case, he took advantage of a democratizing order that had united to win World War II but no longer served many Americans.

Oligarchism, or the Gilded Age model has supported Trump’s version of bandit capitalism with his illegal tariffs that are creating the worst income inequality in the developed world. Trump is promoting a similar hatred of immigrants as Putin, also non-white ethnic and religious groups, attacks on freedom of speech in universities, and Depression-level tariffs that is isolating America from the “outer world”.

The AP just reported that President Donald Trump says he wants to “permanently pause migration” from poorer nations and is promising to seek to expel millions of immigrants from the United States by revoking their legal status. He is blaming immigrants for problems from crime to housing shortages as part of “social dysfunction” in America and demanding “REVERSE MIGRATION.”

He has also followed Putin’s strategy by weakening foreign alliances such as NATO, and breaking up long held foreign trade alliances, all to centralize his power.

But the MAGA movement itself may be in a late-stage decline, as it is slowly disintegrating from internal divisions, with the resignation of major leaders such as Marjorie Taylor Green, growing disputes over policies including tariffs and the treatment of immigrants.

And Donald Trump, its leader, is showing signs of declining health—with fewer public appearances (that also afflicted former president Biden), irrational outbursts and making sudden policy changes without explanation. The MAGA movement has blindly followed him, believing in totally irrational conspiracies until the conspiracies are debunked or and fade away (just as did the flu and COVID-19 pandemics).

The first Gilded Age was defeated by the election of President Teddy Roosevelt riding on the wave of a progressive movement that uncovered the corruption and concentrated wealth of the time.

Trump doesn’t even attempt to hide his blatant corruption nor his promotion of the disease of Putinism that is attempting to destroy American Democracy. So it will take constant vigilance to identify and combat such a widespread contagion, as we have defeated past diseases of the 'body politic', and bring Americans together once again in common purpose to preserve our democracy.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

 

Why Weaken U.S. Economy?

 Answering Kennedy’s Call

“On February 28, the same day that President Donald Trump and Vice President J.D. Vance took the side of Russian president Vladimir Putin against Ukraine president Volodymyr Zelensky in the Oval Office, Martin Matishak of The Record, a cybersecurity news publication, broke the story that Defense Secretary Pete Hegseth has ordered U.S. Cyber Command to stop all planning against Russia, including offensive digital actions.”@heathercoxrichardson, Historian, Letters from An American

Reuters

What became clear in last week’s disastrous Oval Office meet with Vladimir Zelenskyy, and Trump’s abrupt switch to Putin’s side of the peace negotiations, is that Trump and Putin are engaging in a very consequential protection racket that could bring down the U.S. economy as well.

They have come to rely on each other to stay in power. Russia’s huge cyber-attack machine helped Trump eke out his two election victories, and Putin wants Trump to hand him Ukraine to justify to the Russian people their horrific losses, and his hold on power.

Outrageous as that may seem, there is no other explanation for Trump’s actions in weakening the major federal agencies that protect our national security and growing isolation from our allies, and persisting in a tariff war that is alienating our closest allies.

Trump has jumped into their extortion racket with both feet. It’s a quid pro quo between two thugs, as happens between mafia bosses. Trump can hand Ukraine to Putin by withdrawing America’s support, and Putin will continue his unrelenting attacks on our national security infrastructure, weakening U.S. power and influence.

We can now see how they are doing it. Musk’s DOGE cuts are gutting the watchdogs that would uncover their protection racket, whether it’s by downsizing the FBI, CIA, NEC, CISA and other watchdogs (e.g., illegally firing 11 agency Inspector Generals), or reorganizing agencies in such a way that they function much more poorly.

The CISA, Cybersecurity & Infrastructure Security Agency, is especially important for our national defense. Former FBI Director Christopher Hays warned in pre-election congressional testimony to be especially concerned with the penetration of our cyber networks.

Wray noted that hostile nation-states, such as China, Russia, Iran, and the Democratic People’s Republic of Korea, are increasingly using “cyber operations” to meet their strategic goals and undermine the United States. These adversaries are “growing stealthier,” he said, and are always devising fresh methods to make their cyber operations more far-reaching and impactful.

“We’re seeing hostile nation states become moraggressive in their efforts to steal our secrets and our innovation, target our critical infrastructure, export their aggression to our shores and front and center is China,” Wray said at last year’s Boston Cyber Security Conference.

And why would Trump and his loyal followers want to take away our protections from such attacks? The answer is even more frightening. So that we align our priorities with Putin’s Russia, of all countries.

Professor Richardson reports, “Shortly after the election, a newspaper reporter asked Nikolai Patrushev, who is close to Putin, if Trump’s election would mean “positive changes from Russia’s point of view.” Patrushev answered: “To achieve success in the elections, Donald Trump relied on certain forces to which he has corresponding obligations. And as a responsible person, he will be obliged to fulfill them.”

It's becoming obvious that President Trump wants the USA to be run under the same one-man rules as Putin’s Russia, where the only laws are Putin’s laws, enforced by terror. He can murder his dissenters, whereas Trump will attempt to silence his opposition by weakening our election laws as well.

Professor Richardson reported that “On February 20, Steven Lee Myers, Julian E. Barnes, and Sheera Frenkel of the New York Times reported that the Trump administration is firing or reassigning officials at the FBI and CISA who had worked on protecting elections. That includes those trying to stop foreign propaganda and disinformation and those combating cyberattacks and attempts to disrupt voting systems.’

In fact, Putin may not need to hack Democratic Party emails, as he did in past elections. Musk’s DOGE hackers can do it for him in the upcoming 2026 midterm elections as they continue to penetrate the federal government’s closely guarded personnel networks.

We could see a WikiLeaks scandal all over again, if state elections officials aren’t careful. Trump/Musk have already attempted to remove Ellen Weintraub, the Democrat head of the Federal Election Commission that rules on election finance laws, without nominating a successor who must be confirmed by the Senate before she can step down.

But there is an even more immediate worry, the direction of our economy. Trump’s announcements of tariffs on Mexico, Canada, and Mexico caused the DOW to drop 800 points once again, and immediate retaliation. He is also threatening the EU. It is almost a kneejerk reaction as happened one week ago. Markets don’t like tariffs levied with no other reason than to collect import taxes to fill the gaping hole of our budget deficit and ballooning national debt.

Reuters just reported that a private survey showed American factory activity last month edged closer to stagnation—slowing growth combined with faster inflation—as new orders and employment contracted. A gauge of prices paid for materials jumped to the highest since June 2022. So how should investors react to all this smoke on the horizon?

It looks like Trump wants to ally with a country and economy that is one-ninth the size of the European Union when economic growth is more dependent on allies we can trust than ever before.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Does Trump Want Another War?

 Answering Kennedy’s Call

“I’m not sure most Americans appreciate the monumental damage President Trump is doing to the post-World War II order that is the wellspring of American global leadership and affluence.” NYTimes Nicholas Kristof

USAToday

There is a growing outcry over the “monumental damage” emanating from the bromance of two ‘straight’ (and white) men on a tear of petty vindictiveness settling old scores, which can have far greater consequences.

It is tearing apart our closest alliances that protect Americans and other democratic countries from the depredations of autocrats and dictators, such as Vladimir Putin, who must imagine himself Czar Ivan the Terrible killing hundreds of thousands of his own people in attempting to conquer Ukraine to make it a part of a new Russian Empire (350,000 dead Russians at last count, per NBC’s Morning Joe).

“We have Trump and his oligarchy of ignorant shoe shiners vandalizing the network of organizations, agreements and values—largely put in place by America since the Second World War—which have given most of us, including America, on the whole an extraordinary degree of peace and prosperity.” Chris Patten, former UK Tory Chairman cited by Nicholas Kristof.

The level of ineptitude that Elon Musk’s DOGE team shows is breathtaking, as are the attempts to hide it.

“All in all, what we’ve just witnessed is a stunning display of incompetence, dismissal of critical federal workers by people with no idea of what they do and why it matters. Musk and Trump have, of course, apologized and promised to do better in the future.” Nobel Laureate Paul Krugman

Why the petty vindictiveness of our Bromancers? In a frightening insight by Timothy Snyder, Author of On Freedom, they are really ‘straight’ men trying to appear strong. But that can only be done by weakening the strong that actually stand in their way.

“Trump is a strongman in the sense that he makes others weak. He is strong in a relative sense; as Musk destroys institutions, what remains is Trump’s presence. But other sorts of power meaning vanish, as Musk takes apart the departments of the American government that deal with money, weapons, and intelligence. And then the United States has no actual tools to deal with the rest of the world.”

Dr. Snyder explained what he meant in a recent New Yorker article. Trump and Putin are both fascists, which by definition means masters of propaganda that twist words such as ‘communism’, or ‘deep state’ into meanings that feed their MAGA followers’ paranoid fantasies.

Hitler’s Goebbels, and Russia’s Stalin were masters of such propaganda that led to World War Two. It is detailed in Snyder’s bestselling book, “Bloodlands,” which describes the hideous period in the 1930s and ’40s when as many as 14 million people perished at the hands of Hitler and Stalin, with Ukraine a “particularly awful” mass grave.

And Trump is using the same fascist vocabulary today in branding Ukraine’s Zelensky the dictator, when it is Vladimir Putin.

That is why Trump and Musk’s actions threaten world peace and our own domestic order. They accomplish it by weakening the military alliances that have protected us such as NATO, while eliminating whole government departments that protect our health and safety and more environmental catastrophes, while weakening the FBI and DOJ that protect Americans from domestic and foreign terrorists.

In fact, settling old scores is an attempt to protect themselves from their own mistakes (i.e., Trump’s convictions, Musk-Tesla’s auto-drive accidents) by putting the blame on others. That is why Trump says he does not know what Musk is doing, when asked. He can therefore blame Musk or his lieutenants when said mistakes are uncovered.

Both Democrats and Republicans must now find a way now to counter Trump and Musk’s biggest mistake of all, their preoccupation with vengeance to and masks their own weaknesses that could lead to another war.

It is weakening our own strength and ability to stand up to Russia and China, where a larger war is most likely to start—because they have become emboldened by our growing weakness.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Bully Mentality--III

 ANSWERING the KENNEDYS' CALL

Why has the bullying behavior of one political party intimidated some of our most powerful men? Reports say that billionaires like Bill Gates, Warren Buffett, and JP Morgan’s Jamie Diman won’t publicly endorse Kamala Harris, even though they have donated to her campaign and say privately they will vote for her?

Timothy Snyder in his latest book, On Freedom, tells us what is necessary to actively preserve and expand freedom, rather than remain quiet, which is the choice for American voters in this Presidential election. One must put their body, not just their money, on the line to successfully oppose authoritarians, as Ukraine’s President Volodymyr Zelens’kyi has done in opposing Putin’s invasion of his land.

Snyder meant one must take a public stand, however dangerous it might seem, because freedom itself is on the line. When Snyder asked Zelens’kyi why he didn’t flee when Russian first invaded the Ukraine as many thought he would do, Zelens’kyi replied, “I could not have done otherwise.”

“He was in the company of others who were also taking risks,” said Snyder. “He understood the situation, he said, because of what it meant to represent others. A president, he said, was only the first grain of sand in a turning hourglass.”

Reuters-January 6

The news that some of our wealthiest men won’t publicly endorse Harris highlights the stakes in this Presidential race, and how fearful even powerful men can be before someone who threatens retaliation, including bodily harm, against anyone who opposes him.

These men don’t understand what underlies the bully mentality of one political party that has no regard for election outcomes. Trump’s own niece has called Trump a coward, and in fact bullies do pick on the weakest who will stand down when opposed by those who stand up to them, say psychologists and psychiatrists.

I first wrote about a certain political party’s Bully Mentality in 2012. “Why do Americans have such a problem with bullies? Whether in schools, in politics, or on Internet social media? The result has been teenage suicides, horrendous school shootings by students who felt bullied or belittled, and now a whole political party that opposes anything that smacks of aiding the poorest, seniors, and less educated.”

Donald Trump’s threats of retaliation have only intensified so close to November 5. Trump aides such as General John Kelley, his Chief of Staff, says he is acting like a fascist who openly supports Russian’s Putin in his Ukraine invasion and has said he wanted “Generals like Hitler had” to put down demonstrations.

The real lessons Americans should take from such tactics of a wannabe dictator was first spelled out in Timothy Snyder’s best-seller On Tyranny:

• #1) “Don’t obey in advance—Most of the power of authoritarianism is freely given. In times like these, individuals think ahead about what a more repressive government will want, and then offer themselves without being asked.”
• #2) “Defend Institutions—It is institutions that help us to preserve decency. So choose an institution you care about—a court, a newspaper, a law, a labor union—and take its side.”
• #3) “Above all believe in truth,” as without truth there is no trust, and without trust there are no effective laws, which leads to tyranny.

Candidate Donald Trump, has made a point of blatant lying, meaning he wants his followers to believe whatever he says rather than objective facts such as global warming, or size of the audience that attended his inauguration.

What better example is there of real freedom and the preservation of our democracy than President Zelens’kyi and the Ukrainian people who are literally putting their own bodies on the line in opposing the Russian bully next door; for those Americans who remain silent?

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why the Inflation Confusion?

 Popular Economics Weekly

Most pundits (and propagandists) don’t know who to blame for ‘sticky’ inflation, so they blame those who haven’t caused it—such as the current administration or the Federal Reserve.

But the sudden rise in prices was caused by supply shortages and empty shelves from the COVID pandemic and lockdowns that followed. And this happened in all countries. Now add to this several wars that have disrupted more supply chains, including a developing cold war with China, and global warming which is causing massive droughts and floods that have disrupted food supplies and displaced whole populations.

Leading economists, such as Nobelist Paul Krugman, have said the Fed with its policy tools can’t bring down prices in most sectors, just slow the rise in prices, which it has done so that inflation is now rising much more slowly.

It would take another full-blown recession and the loss of millions of jobs to cause prices to return to pre-pandemic levels, as has happened in every other recession portrayed in the FRED graph from 2000 (gray bars are recessions).

FREDcpi

It happened during the brief pandemic recession, for instance, when retail CPI inflation fell to zero percent in May 2020 and everyone out of work before rising to 9% in June 2022, and the earlier Great Recession when retail price inflation fell to a negative -2% in 2009, with the loss of more than 8 million jobs.

The worldwide pandemic lockdowns and supply chain stoppages were the most obvious cause of the supply shortages that brought on inflation rise to 9% in 2022, and steady decline of inflation since then as supply chains opened again to bring it down to the present seasonally adjusted 3.5% inflation rate.

It’s not easy for discontented consumers to blame the worst pandemic in 100 years for the sticky inflation figures because the COVID pandemic was such an unusual event that the trauma of one million US deaths has been quickly forgotten.

And it’s just as difficult to for consumers to imagine how the Middle East and Ukraine wars can disrupt oil and food supplies, as well as that due to global warming.

What is the best answer to this dilemma of higher prices and looming supply shortages? Faster economic growth, which the Biden administration with some bipartisan assist is doing with its New, New Deal Bidenomic policies that have employed millions.

The CHIPS Act is bringing back manufacturing jobs, the Inflation Reduction Act is countering global warming by funding alternative energy sources to fossil fuels, the Infrastructure and Jobs Act is spending $1 trillion to fix our infrastructure and projected to create more than 2 million jobs over the next decade.

But it requires consumers to think of its future benefits to know that we are in a better place, and can positively answer the question, are we better off today than four years ago?

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Inflation Not The Real Problem

 Financial FAQs

FREDcpiinflation

Inflation is falling again with national gas prices below $4 per gallon while food prices are also beginning to decline.

The NY Times’ Paul Krugman just pointed out that food prices should continue to decline per the UN’s Food and Agricultural Index.

“The FAO Food Price Index* (FFPI) averaged 140.9 points in July 2022, down 13.3 points (8.6 percent) from June,” said the FAO, “marking the fourth consecutive monthly decline. Nevertheless, it remained 16.4 points (13.1 percent) above its value in the corresponding month last year. The July decline was the steepest monthly fall in the value of the index since October 2008, led by significant drops in vegetable oil and cereal indices, while those of sugar, dairy and meat also fell but to a lesser extent.”

FAO.org

Therefore, the Fed should not be focusing on bringing it back to a 2 percent inflation rate with more draconian rate increases that have only prevailed since the Great Recession and busted housing bubble.

The above FRED graph dating from 1950 shows both the annual consumer price index at 8.5 percent and ‘sticky’ CPI price without food and energy at 5.6 percent in July, down slightly from June.

During our most prosperous times since 1980 it ranged between 2.5 to 5 percent, per the above FRED graph. That’s because profits rose in tandem with rising prices, thus encouraging businesses to hire more workers and expand further.

Since 1980 we have never had a prolonged supply problem, in other words, with retail inflation trending down ever since—until the current post-pandemic era of a Ukraine-Russia war and recovering supply chains, that is.

Why? Because there was never a shortage of supply due to modern technology’s ability to increase productivity that could flood markets with goods and services. Asia with China could produce things more quickly and cheaply that US.

Yes, all that money now raised from the government aid coursing through the economy is causing a temporary inflation problem, but much of it will be invested in future growth—like the infrastructure and inflation reduction act bills just passed.

President Biden’s $1.2 trillion infrastructure bill includes funding allocations of $89.9 billion to improve public transit, $65 billion toward better internet connectivity and access, and money for 500,000 electric vehicle charging stations, which could help address charging “deserts;” areas where it isn’t currently available.

“The infrastructure bill widely focuses on improving passenger and freight transportation, for instance, so steel and material suppliers, including companies that produce materials for buses, trains, bridges, rail, or related equipment, could see heavy activity. Makers of products supporting things like 5G infrastructure and EV stations, too, will see improved demand,” said a Forbes Magazine article on its effects.

And while there will be little inflation reduction in The Inflation Reduction Act bill just passed, the White House says the package will address inflation in two key ways: by lowering energy and health care costs for families and by helping to bring down the deficit.

"And that's why even Democrats and Republicans, former Treasury secretaries, economists across the board have said that this bill will make a positive impact on inflation while also tackling some of the biggest and long-standing issues facing our country, like prescription drugs and like tackling climate change," said Brian Deese, director of the National Economic Council, in an interview this week with NPR's Morning Edition.

As important in bringing down oil prices is that oil and gas drilling is at a 7-year high. U.S. crude oil prices have dipped below $90 per barrel of late, and who knows how much lower oil prices may decline as more alternative energy sources financed by those two bills come on line to replace the need for fossil fuels?

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Higher Inflation Doesn't Mean Stagflation

 Financial FAQs

The current headlines would have us believe the bipartisan $1.9 trillion American Rescue Plan and $1.2 trillion American Infrastructure Investment and Jobs Act approved overwhelmingly by both Democrats and Republicans in 2021 will cause prolonged inflation and perhaps lead to a recession.

What the twin 2021 bills have done instead is create record employment, with full employment achieved 26 months after the COVID recession, vs. the 76 months it took to reach full employment after the Great Recession, which was because congress shortchanged the prior recovery with too little aid.

EPI.org

Former Fed Chair Ben Bernanke said on Fareed Zakaria’s GPS Sunday that he doubts that the current inflation surge might turn into another stagflationary episode. The 1970’s stagflation was caused by 14 years of high inflation, whereas we are suffering from just 6 months of higher inflation, after 40 years with very low inflation since the 1970s.

A recurrence of the stagflation of the 1970s is only possible if rising interest rates engineered by the Fed cause a prolonged slowdown in business activity and consumers spending. The 1970’s inflationary spiral was caused by policies that enabled workers to push up wages every time there was a spike in inflation. 

Workers’ salaries today are barely keeping up with inflation and declining, rather than staying ahead of it, which means that wages, some two-thirds of product costs, won't be part of the inflation equation this time.

The rate of inflation over the past year, based on the more reliable PCE Index, slowed to 6.3 percent in April from a 40-year high of 6.6 percent in March, the first decline in a year and a half.

May’s U.S. CPI surge of 8.6 percent was concentrated in three categories: airfares, used car prices and shelter costs, all in the service industries. Most of the inflation to date is in the goods sector. Surging shelter costs will be the most worrisome trend and that the Fed will watch most closely.

Higher inflation is occurring all over the world from the same factors, which signals that it’s mostly about rising food and energy prices affected by panicky traders worried about food and energy shortages. For example, Russia’s inflation rate is currently18 percent, Turkey’s 70 percent and the EU inflation rate is 8 percent.

The Russian invasion of Ukraine and the sanctions that it triggered account for more than a third of the 40-year high CPI annual inflation of 8.6 percent, according to Mark Zandi, chief economist at Moody’s Analytics, as reported by MarketWatch.

The real question is whether longer term inflation is embedded in consumers’ expectations as happened in the 1970s. But that would mean the so-called ‘supply-shocks’ from COVID, China, and the Ukraine war that are the main cause of the current inflation rate don’t eventually subside.Why wouldn't they?

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What Recession--Part II?

 Financial FAQs

Orders for U.S. durable goods—long-lasting goods such as computers and cars rose in March, and business investment rebounded after the first decline in a year, signaling that the U.S. economic activity is still on a growth path, despite the Ukraine invasion and record inflation. Who knows what will happen with energy prices?

Orders advanced for the sixth time in the last seven months. What’s more, the initially reported 2.2 percent decline in new orders in February was revised to show a smaller 1.7 percent drop, the government said Tuesday.

Businesses are investing more (see graph) because they are upbeat about future growth.

FREDBusinessinvestment

And inflation may be peaking with the Federal Reserve’s preferred inflation gauge—the PCE index. Over the past 12 months, the personal consumption price index has climbed 6.6 percent, up from 6.4 percent in February, the government said Friday. That’s the steepest increase since 1981.

Yet a narrower measure of inflation that omits volatile food and energy costs, known as the core PCE, rose by just 0.3 percent in March for the second month in a row. That matched the Wall Street forecast. What’s more, the rate of core inflation in the past year slipped to 5.2 percent from 5.3 percent, marking the first month-to-month decline in more than a year.

This is huge folks. It’s almost as if U.S. businesses don’t see problems ahead with energy shortages because of a prolonged Ukrainian war—for the U.S. economy, at least. Business investment has increased 10 percent in the past year and there’s little evidence that companies are sharply cutting back.

And consumers’ strong demand for durable goods is a sign they are not so pessimistic. While some data from the Conference Board’s consumer confidence survey showed a dip in consumer confidence this month, households were eager to buy big-ticket items like motor vehicles, television sets and clothing dryers within six months.

Consumers were also inclined to buy a house, despite surging mortgage rates and record home prices.

“Consumer confidence fell slightly in April, after a modest increase in March,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index declined, but remains quite high, suggesting the economy continued to expand in early Q2. Expectations, while still weak, did not deteriorate further amid high prices, especially at the gas pump, and the war in Ukraine. Vacation intentions cooled but intentions to buy big-ticket items like automobiles and many appliances rose somewhat.”

The Conference Board’s Index of Leading Economic Indicators (LEI) is another measure that is showing strong growth ahead, despite the growing pessimism among economists that those ‘headwinds’ we’ve talked about (interest rates, energy shortages, inflation, war, etc.) could slowdown growth or bring it to a screeching halt sometime next year.

The ten components of The Conference Board Leading Economic Index® for the U.S. cover a broad swath of economic activity, including: Average weekly hours in manufacturing; Average weekly initial claims for unemployment insurance; Manufacturers’ new orders for consumer goods and materials; ISM^® Index of New Orders; and even Building permits for new private housing units.

And all components continue to trend upward.

ConferenceBoard.org

“The US LEI rose again in March despite headwinds from the war in Ukraine,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “This broad-based improvement signals economic growth is likely to continue through 2022 despite volatile stock prices and weakening business and consumer expectations. The Conference Board projects 3.0 percent year-over-year US GDP growth in 2022, which is slower than the 5.6 percent pace of 2021, but still well above pre-covid trend.”

So, by investing in their future, businesses are betting on a better future for Americans.

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

A Soft Landing For Energy?

 Financial FAQs

eia.gov

Should Americans worry about the price of gas and oil in coming months because of Russia’s invasion of Ukraine? And might it ultimately cause a recession if energy prices remain elevated?

That is what some economists seem to believe, such as former Treasury Secretary Larry Summers.

Professor Summers in a recent Wash Post Op-ed, said “I believe the Fed has not internalized the magnitude of its errors over the past year, is operating with an inappropriate and dangerous framework, and needs to take far stronger action to support price stability than appears likely. The Fed’s current policy trajectory is likely to lead to stagflation, with average unemployment and inflation both averaging over 5 percent over the next few years — and ultimately to a major recession.”

Yet the current unemployment rate is 3.8 percent, and more that 1,747,000 jobs created over just the past three months, so it’s hard to imagine a recession is anywhere on the horizon, unless the Ukraine invasion turns into something more.

In fact, our current inflation surge is due to our very robust economic growth, more than 3 percent above the prepandemic level, and at a 40-year high.

The U.S. Energy Information Agency says we have plenty gas and oil reserves, in fact a surplus which we can export to the EU, if necessary, to help maintain the sanctions until Putin cries Uncle on his Tsarist fantasy of a greater Russian empire.

“After record-high U.S. energy production and consumption in 2018, energy production grew by nearly 6% in 2019 while energy consumption decreased by about 1%, with production exceeding consumption on an annual basis for the first time since 1957. Total energy production declined by about 5% in 2020 but was still about 3% greater than consumption: production equaled 95.75 quads and consumption equaled 92.94 quads.”

Unfortunately, we are still over dependent on fossil fuels: “petroleum, natural gas, and coal—accounted for about 79% of total U.S. primary energy production in 2020,” said the USEIA.

It is leading to prolonged inflation for American drivers and is worrying Fed Chair Jerome Powell in his latest congressional hearings. So he is now sounding more hawkish re the need to raise interest rates faster.

“We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” Powell said in a speech to the National Association for Business Economics.

So who is right, Summers or those who predict a prolonged trajectory of U.S. economic growth?

Nobelist Paul Krugman gets the last word in a recent NY Times Op-ed: “We recovered fast from the pandemic recession and seem to have avoided the long-term “scarring” effects that many feared. Most though not all of the inflation we’re experiencing reflects probably temporary global forces, and multiple indicators — consumer surveys, professional forecasters and financial markets — suggest that longer-term expectations of inflation remain “anchored,” that is, inflation isn’t getting entrenched in the economy.”

I believe we shouldn’t overlook the newfound unity of western, democratic nations that oppose Putin’s wars. How long can Putin and Russian citizens tolerate their economy reverting back to the size it was in 1980, as Daleep Singh, one sanctions expert interviewed on the TV news show Sixty Minutes put it?

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What is Our 'State of the Union?'

 Financial FAQs

 

CDC.gov

This is really all we need to know about Americans’ 'state of the union' that President Biden touted last Tuesday in his annual address. Just look how low COVID infection rates have fallen in the CDC’s most recent data graph.

The CDC reported “As of February 23, 2022, the current 7-day moving average of daily new cases (75,208) decreased 37.7% compared with the previous 7-day moving average (120,761).”

Those Americans still holding back from work because they are caring for children or elderly parents, or for a myriad of other reasons due to fears from contagions, need no longer to do so. The Omicron variant has been tamed, and there are no other variants on the horizon at the moment.

The latest initial unemployment claim stats confirm that work is the best place to be now that the US economy is roaring again, wages are rising and almost 11 million job openings beckon.

 

FREDinitialclaims

New applications for unemployment benefits fell by 18,000 to a two-month low of 215,000 in the last week of February, pointing to a pickup in hiring and declining layoffs as the economy rebounded from an omicron-induced lull.

The 10-year FRED graph of initial unemployment claims shows just how normal the claims’ numbers have become. Initial jobless claims declined from a revised 233,000 in the prior week,  the Labor Department said Thursday.

Now that serious sanctions are in place, what will happen? Oil prices will surge

And inflation may be prolonged, which is another reason unemployed workers won’t remain on the sidelines much longer.

And what about the Russian Oligarchs support of Putin’s war with Ukraine? How much longer can they hold out? France just announced the first seizure of an Oligarch’s yacht In Marseille, and Treasury Secretary Yellen just announced she will be doing the same.i

“We have made it a priority to go after oligarchs or Russian elites who are key to President Putin’s corrupt power,” Yellen said. She added that Treasury, along with the Justice Department and U.S. allies, plans to “uncover, freeze and seize their wealth around the world.”

Inflation won’t recede soon with soaring oil prices, but that is also a sign that higher economic growth is in the cards for the New Year, as consumers and business continue to spend their excess savings.

Both Institute of Supply Management surveys for the U.S. service and manufacturing sectors are still in the mid-fifties, signaling that they could even go higher if it wasn’t for the supply and labor shortages.

So let’s see how long Putin’s oligarchs can hold out and support his killing of Ukrainians, which seems to be the only thing that could stop him? My guess is not for long.

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What Happens Now In 2022?

Financial FAQs

BEA.gov

We have a looming Cold War with Russia due to its invasion of the Ukraine, as well as inflation to worry about this year. What will it do to economic growth and jobs?

Inflation won’t recede soon with soaring oil prices, but higher economic growth is in the cards for the New Year. The Fed’s favorite indicator of consumption, the Personal Consumption Expenditure price index (PCE) gained 6.1 percent year-over-year in January, the largest gain since 1982, and consumer spending in January rose 2.1 percent month-over-month, better than the expected forecast of 1.5%.

“At least for now, consumers aren’t pulling back much on their spending in light of high inflation,” said one commentator.

Other indicators of growth aren’t slowing, either, according to the flash IHS Markit flash surveys of the manufacturing and service sectors. Both surveys have risen to the mid-50s, a strong sign of future growth in both sectors.

And Q4 GDP growth was revised slightly higher in its second estimate to 7 percent, the highest growth rate in 40 years. Job creation will also continue to grow as the Omicron variant recedes.

There is more good news on jobs. Initial jobless benefit claims fell by 17,000 to 232,000 in the week ended Feb. 19, the Labor Department said Thursday. The number of people already collecting jobless benefits fell by 112,000 to 1.48 million in the week ended Feb. 12. These so-called continuing claims are at their lowest level since March 1970, which means new job creation exceeds those being laid off or quitting.

The main issue is what all this does to continuing job growth, with the Omicron variant infections returning to pre-Omicron levels. The CDC news is also good on that front.

CDC.com

The CDC said, “as of February 16, 2022, the current 7-day moving average of daily new cases (121,665) decreased 43.0% compared with the previous 7-day moving average (213,625). A total of 78,060,327 COVID-19 cases have been reported in the United States as of February 16, 2022.

The elephant in the room that could cancel the good news is effects from the invasion of the Ukraine, of course, especially sanctions that might prolong the high inflation numbers.

Excluding volatile gas and vehicle sales, the PCE price index quoted above rose 5.2 percent, and consumers in the latest University of Michigan sentiment survey don’t see prolonged inflation.

So with the Omicron variant receding, the duration of higher inflation will depend on what is happening in the Ukraine. That will be hard to predict with a Russian dictator who seems to have lost touch with reality. Does he really want to start another Cold War with the Western world united against him?

I don't think so.

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen