Yet he [President Trump] was quick to remind them [farmers] that he’s tried to salve their pain. “I sometimes see where these horrible dishonest reporters will say that ‘oh jeez, the farmers are upset.’ Well, they can’t be too upset, because I gave them $12 billion and I gave them $16 billion this year,” said Trump, who then added, “I hope you like me even better than you did in ’16.”
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At $28 billion so far, the farm rescue is more than twice as expensive as the 2009 bailout of Detroit’s Big Three automakers, which cost taxpayers $12 billion [Actually the money was repaid**]. And farmers expect the money to keep flowing: In an August survey by Purdue University and the CME Group, 58% said they anticipate another round of trade aid next year.*
But what about manufacturing, an industry that is in a depression caused by some degree from the tariff war? Admittedly the GM strike did not help but the decline is broader than that.
U.S. industrial production plunged in October at the fastest rate in a year-and-a-half, further underscoring the nation’s manufacturing downturn at a precarious time in its ongoing trade negotiations with China.***
The decline was much worse than expected due to a six-week work stoppage at General Motors that likely cost the auto manufacturer $3 billion. But even if we control for the GM strike, America’s productive economy has been in a downward spiral for decades.***
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Overall, manufacturing production has declined in three of the last four months.***
Didn't President Trump say he would bring back manufacturing to the U.S.?***
From tax cuts to relaxed regulations to tariffs, each of President Trump’s economic initiatives is based on a promise: to set off a wave of investment and bring back jobs that the president says the United States has lost to foreign countries.***
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Researchers at A. T. Kearney said last month that Mr. Trump’s trade policies, including tariffs, had pushed factory activity not to the United States but to low-cost Asian countries other than China, like Vietnam.***
As seen in the figure, a decline in manufacturing began as far back as 2017.****
Among the G-20 countries—which represent approximately 74% of global gross domestic product—as of November 2019, around 70% have a PMI registering below 50, the benchmark for expansion. The ISM index treaded into contraction during four straight months in late 2019 in the United States as well as in Europe, which, after Canada and Mexico, is the largest regional market for the U.S. industrial sector. The European market remains compromised by weakness in German manufacturing.****
Though there seems to be a lot of optimism about the economy in 2020, CEOs do not share it****
I keep hearing that consumers are in great shape, but I don't know about that because consumer debt is at an all-time high (See Figure below***).
By the end of the third quarter, debt-laden Americans owed a staggering $13.95 trillion, according to the New York Federal Reserve Bank. That puts household debt $1.3 trillion higher than the 2008 peak.***
A lot of consumers are dipping into their 401Ks which is not recommended and that seems hazardous to me. (https://www.investopedia.com/articles/retirement/06/eightreasons401k.asp
* https://www.bloomberg.com/news/articles/2019-09-19/farmers-say-trump-s-28-billion-bailout-isn-t-a-solution
** https://www.politifact.com/truth-o-meter/statements/2015/jan/22/barack-obama/obama-says-automakers-have-paid-back-all-loans-it-/
*** https://www.ccn.com/manufacturing-recession-puts-u-s-economy-on-track-for-worst-quarter-under-president-trump/
https://www.nytimes.com/2019/08/13/business/economy/donald-trump-jobs-created.html
**** https://rsmus.com/what-we-do/industries/industrial-products/5-manufacturing-trends-to-watch-in-2020.html
https://www.cnbc.com/2020/01/02/ceos-still-consider-recession-to-be-the-biggest-business-risk-in-2020.html
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