China trade deficit shrinks as deficit with EU hits record high

“the deficit in exports versus imports from China shrank to $345.6 billion, down about 18 percent from a record high level of $419.5 billion in 2018.

But the U.S. trade deficit in manufactured goods with all countries was relatively unchanged in 2019 at close to $1.048 trillion because importers turned to other nations after Trump hit China with tariffs ranging from 10 percent to 25 percent.

Some of the beneficiaries of that shift included Mexico, Vietnam, Taiwan, South Korea, Japan and members of the EU.

The trade deficit with the EU hit a record $177.9 billion in 2019, while the gap with Mexico was a record $101.8 billion”

“tariffs Trump has imposed on approximately $370 billion worth of Chinese goods have increased costs for U.S. manufacturers”

“That helps explain both the slowdown in U.S. manufacturing output and slight decline in the manufactured goods trade deficit in 2019”

“The U.S. usually runs a surplus in agricultural trade. However, that surplus shrank to $23 billion in 2019, from $26.5 billion in 2018, at least partly because of the retaliation that China and other countries on American exports imposed in response to Trump’s tariffs.”

“One bright spot in the trade report is the sharp drop in the oil and gas trade deficit, which fell to $29 billion in 2019, from $69.5 billion in 2018, because of increased U.S. production and exports.

The oil and gas trade deficit reached as high as $317 billion in 2008, but has fallen steadily over the past decade because of new production techniques.”

“Trump still is mistaken to believe that the trade deficit is driven primarily by unfair foreign trade practices or bad trade deals, economists point out. Instead, other factors, such as the size of the U.S. budget deficit and the strength of the U.S. economy play a much bigger role in dictating trade flows.

“The irony is the stronger the U.S. economy is compared to our major trading partners, like the European Union and China, the more likely it is the trade deficit will go up because we will have stronger demand,” Griswold said. “The vast majority of economists would say that’s perfectly fine, but it does put this administration in an awkward spot.””

New conservative climate plans are neither conservative nor climate plans

“Over the years, the terms “free market” and “limited government,” like so many conservative principles, have devolved into little more than rhetorical tics, bits of sloganeering that bear no resemblance to actual conservative governance.

What conservatives seem to have decided is that regulations, restrictions, or limitations — anything that might upset or inconvenience the corporations generating greenhouse gases — are the bad kind of big government and a bad way of picking winners and losers. Government subsidies, tax credits, and grants — anything that might benefit big corporations — is the good kind of big government and a good way of picking winners and losers.”

“There are plenty of models that show we will need carbon capture (both industrial and natural) to supplement other efforts to reduce emissions. We probably can’t hit our mid-century targets without it.

But there is no model in the world showing emissions falling fast enough with nothing but carbon capture, with fossil fuels continuing their current headlong expansion.

The fossil fuels that remain behind after deep decarbonization, the ones that still need their emissions captured and buried, will be a small vestige of the current fossil fuel regime. That is what every credible model shows. That is the cold, hard truth at the heart of the climate dilemma: There is no avoiding the imperative to reduce fossil fuel combustion and the social and economic disruptions that come with it.

Current Republican efforts to feign climate policy conspicuously fail to grapple with that truth.”

The real state of the union

“If you didn’t know American politics had been turned upside down by Trump’s election win, nothing in the macroeconomic data would suggest that anything at all happened in January 2017”

“That’s not to deny Trump any credit. He made a sensible selection for Federal Reserve chair and has presided over a healthy dose of fiscal stimulus, and his trade policies haven’t been as disruptive as the most alarmist critics warn. But at the same time, his tax cuts haven’t delivered the kind of investment boom he promised, and in general, all his record-setting economic numbers are continuations of previous trends.”

“Under Trump, we have seen a sharp slowdown in net immigration that has helped reduce US population growth to a trickle. The foreign-born share of the population, however, is not falling despite the immigration crackdown because American women are also having fewer babies.”

“The number of babies women say they’d ideally like to have isn’t declining; we are just seeing the gap between ideal fertility and actual fertility get bigger and bigger each year. According to surveys, the main reason is the high (and growing) cost of child care — a problem that a “good economy” alone doesn’t fix, since child care is so labor-intensive.”

Trump Campaigned on Saving Factory Jobs, but U.S. Manufacturing Just Went Through a Year-Long Recession

“although it is true that America’s economy has, on the whole, performed admirably well under Trump, with unemployment numbers hovering near historic lows, one of the notable dark spots over the last year has been manufacturing jobs—particularly those in the upper midwest.

Last week, the Federal Reserve reported that U.S. manufacturing was in a recession for all of 2019. This wasn’t slow growth; the sector actually became smaller. The slowdown was relatively mild, with factory production shrinking by about 1.3 percent. But it was the worst performance since 2015, the year that Trump started his presidential campaign.”

“the uncertainty and increased costs surrounding Trump’s trade war, which was billed as a way of supporting American factory jobs, has instead wreaked havoc on an export-heavy sector that relies on the global flow of goods to operate. Trump’s interventions were intended to prop up U.S. manufacturing. But they backfired, harming the people he claimed to help—who also happen to be some of the people who played a crucial part in his election.”

“Farming, another industry that Trump campaigned on helping, was so harmed by the trade war that the Trump administration ended up spending some $28 billion—more than double the price tag of President Obama’s auto bailout—to keep them afloat.”

“Trump’s attempts to prop up the manufacturing sector through tariffs and trade restrictions didn’t just fail to work; they actively harmed the people they were intended to help. So even as Trump has overseen an economy that has many bright spots, the sector and worker demographic he tried to boost ended up struggling.”

A new study finds increasing the minimum wage reduces suicides

“The newest of the papers, authored by John Kaufman, Leslie Salas-Hernández, Kelli Komro, and Melvin Livingston in the Journal of Epidemiology and Community Health, examined monthly data across the US from 1990 to 2015 and estimated that a $1 increase in the minimum wage led to a 3.4 to 5.9 percent decline in suicides among adults with a high school education or less. The authors also estimated that over the 26-year period, a $1 increase in each state’s minimum wage could have prevented 27,550 suicide deaths, or about 1,059 per year.

The paper has created a bit of a stir. But it’s just one of four studies in the past couple of years to find an association between higher minimum wages and lower death rates (specifically suicides).

If these findings hold up in subsequent research, they provide a new, persuasive rationale for raising the minimum wage.”

Capitalism is turning us into addicts

“Capitalism is great at making people want things they don’t need.

And of course this is what we should expect from a system that runs on production and consumption. Companies make and sell products and those products have to be consumed by as many people as possible — that’s what makes the whole thing work.

So it’s not surprising that businesses do everything they can to convince people to buy whatever they’re selling. But what happens when marketing becomes active manipulation? More precisely, what happens when companies use science and technology not only to refine our pleasures but to engineer addictive behaviors?”

“I’m not anti-capitalism, but I am calling attention to a certain species of capitalism that cultivates addictive behavior for profit.”

Can populist economics coexist with pro-immigrant policies?

““When we decide how much to redistribute, how progressive the tax should be, the thinking is: I’m putting some weight on everyone in the economy, measuring how much I value $1 given to Dylan, $1 given to Stefanie,” Stantcheva told me, laying out the model. “The weight we put mentally depends on many characteristics of those people: how poor they are, how hard they work, etc.”

Voters often put a lower weight on immigrants’ welfare, which means the more immigrants they think are getting money from the government, the less likely they are to support redistribution overall. But the picture is more complicated than that. Alesina and Stantcheva’s model also assumes that voters put a low weight on “freeloaders”: people they perceive to be cheating the welfare system, as opposed to the “deserving poor,” who are getting benefits they ought to be receiving. If voters think that a higher share of immigrants than natives are freeloaders, that will also reduce support for redistribution.

“Misperceptions and biases against immigrants can interact and reinforce each other,” Alesina and Stantcheva write. “If the bias against immigrants is already high … even a small over-estimation of the share of free-loaders among immigrants can tilt preferences towards less redistribution. Similarly, if the bias against immigrants is high (or if the perceived share of free-loaders is high), even a small overestimation of the share of immigrants can reduce support for redistribution.”

And what their survey work with Armando Miano finds is that these kinds of misperceptions are incredibly common, and especially common among people disposed negatively toward immigration.”

Trump signed a “phase one” trade deal with China. Here’s what’s in it — and what’s not.

“This “phase one” deal, which the US and China reached in December, will cool trade tensions between two economic superpowers that have rattled the globe.

But it stops short of the comprehensive trade and reform agreement the Trump administration wanted when it launched its trade war with China in 2018.

Instead, China has agreed to make purchases of about $200 billion worth of US goods over a two-year period, including almost doubling its agricultural purchases to $40 billion.

China also made concessions on intellectual property, currency, and access to financial services, and it’s promised to halt the practice of forcing companies to turn over their technology, according to the United States Trade Representative.

The US, in exchange, will call off and reduce some tariffs, though taxes on $360 billion in Chinese goods will stay in place.

President Donald Trump is selling this deal as an enormous win, but the administration did not get the structural changes to China’s economy that it wanted, including tackling things like Beijing’s huge subsidies to Chinese companies. It’s still not clear if China can or will totally fulfill this obligation to buy US products, and even if it does, the guarantee is only for two years.

Given all that, this partial trade deal might not be able to make up for the pain the trade war caused.”

“few experts think such a phase two is possible. It’s much more likely the US settled because this is all it could get out of China — and for Trump, it was worth it to have something he could brag about ahead of the 2020 election.”