Opinion: Next recession will hit during Trump’s first two years

Not so much the man in the oval office, more the timing. Recessions seem to have a cyclical nature – they come around every 8-10 years. So, since the last recession began in 2007 and ended in 2009, we are due for a recession. Again, it is not necessarily Trump’s fault that this is likely going to happen, but he could play into it. Based on his actions in office, Trump could either cause the recession to come sooner than expected, let it happen completely naturally, or preserve the economy and push off the recession we expect. The article moves from focusing on the looming recession’s relationship with Trump to looking at the impact this recession could have on the global economy. Countries are vulnerable right now – many economies rely on exports too heavily. This recession could possibly be one for the ages. Will Trump play a role in how this plays out? We’ll just have to wait and see.

http://www.marketwatch.com/story/next-recession-will-hit-during-trumps-first-two-years-2017-05-01

Analysis:

Recessions happen. That’s an economic principle. But a few very important men and women have a strong say in when and how badly these recessions will affect us. Donald Trump is one of those people, and with that man in office for the next four years, who knows what’s going to happen. This article does not place blame on Trump for the next recession, it simply states that a recession will likely happen in the next couple of years since we are due for one. The recession will hit the world hard. The author points out that we may see impressive expansion in the next couple of years, but sooner or later, the economy will take a turn for the worse and dive bomb.

 

Can Trump deliver 4% economic growth?

Donald Trump, the 45th President of the United States, has promised 3% to 4% economic growth in the long run during his term as POTUS. With controversial plans to cut the deficit and a sluggish, unproductive economy, it does not look like this promise will come to fruition. Although Trump was only in office for two thirds of the quarter and has yet to pass his economic agenda, the economy grew only 0.7% in the first quarter this year. This is far below the average of about 2%. Will Trump be able to deliver on his promises? Only time will tell. With that being said though, Trump seems to know what he is doing on the economic front, and he has a strong plan. If things work out the way he plans, we may end up being surprised with what the controversial figure can really do.

https://www.usatoday.com/story/money/2017/05/01/can-trump-deliver-4-economic-growth/101048654/

Analysis:

Although Trump’s first quarter in office did not show well, I think things may be looking up for the future. Trump’s strong ideas on bringing business back to America and his daunting plan to cut the deficit could improve the US economy, that, frankly,  needs to play some catch up as other world powers have showed significant growth. By focusing on productivity and efficiency, Trump’s actions could help leave the economy in a better state than it was when he took the reigns. Some economists have projected that, through tax cuts to promote consumption and infrastructure repair, the economy could be up to as much as 2.8% growth by the end of 2018.  While this may seem minute, it is a significant step in the right direction that would benefit us all.

A.I. ‘won’t take over the world’ but it is a threat to jobs, said Michael Bloomberg

With Artificial Intelligence (A.I.) becoming more and more advanced, there is a strong possibility that technology will step further and further in to the job world, taking jobs away from humans. The question is not “will A.I. take over the business world,” rather it is “when will A.I. take over the business world.” Michael Bloomberg, one of the most successful businessmen this country has ever seen, realizes that the threat is imminent. Technology is moving so fast that humans can’t keep up – it’s not in our biological make up to compute the amount of information a computer can. Bloomberg hopes that we find a healthy medium between Artificial Intelligence and human labor in the years to come, to help keep people employed. Companies often use humans to build relationships with customers, and A.I. can be used to target those customers. Dynamics like this could help keep people in the work force, whilst utilizing technology and artificial intelligence to the best of our ability.

http://www.cnbc.com/2017/05/02/michael-bloomberg-ai-is-a-threat-to-jobs.html

Analysis:

If Michael Bloomberg is concerned that A.I. will take over the labor force, I think that should be a good indicator that we too, as a population, should share the same concern. Artificial Intelligence is being used in every way imaginable, and every day researchers come up with more and more ideas. A computer can do almost everything better than a human. Barring a few highly skilled tasks, computers could easily take the job of a human and do it ten times more efficiently. So I think it is safe to say that we should be worried, and people need to recognize the magnitude of the issues this technological revolution could present us. The unemployment rate could increase rapidly, but the economy could still show significant output and growth. This is a very interesting economic situation – one that I’m sure not many people predicted decades ago.

6 in 10 Americans don’t have $500 in savings

Shockingly, only 41% of Americans have more than $500 in savings. That means, to the majority of the country, if they were stuck with an unexpectedly large bill for some reason, they would have no way of paying it. There is some good news though. Data shows that millennials aged 18-29 are most apt have a more healthy savings account – 47% have more than $500 tucked in their back pocket. With all of the money being pumped into the economy from the period of quantitative easing, this is very surprising to me, and extremely concerning for the state of our nation! The full article can be found here:

http://money.cnn.com/2017/01/12/pf/americans-lack-of-savings/

Analysis:

This article had me thinking about the massive amounts of money pumped into the economy after the recession during the period of quantitative easing. We talked about this a lot in class. You would think that if $4 trillion entered the economy, more than 40% of Americans would have more than $500 in their savings account. Where did all of this money go, and when are we going to see its effects in inflation, spending, etc.? I get that quantitative easing doesn’t fill up wallets directly, but you would think that some of it would find its way to the people by now.

Trump’s decision to kill TPP leaves door open for China

The Trans-Pacific Partnership, also known as the TPP, has been a controversial topic of conversation throughout its entire existence. One of Donald Trump’s first actions as President of the United States has been to do away with the trade deal completely. This article speaks about the potential consequences of this action. With the TPP breaking up, China has the opportunity to rewrite trade rules and work them to their advantage. Many people have been very critical of this motion, including the author of this article. It gives China extreme leverage for trade deals in the future and could potentially give China the reigns to the global economy. The full article can be found here:

http://money.cnn.com/2017/01/23/news/economy/tpp-trump-china/

Analysis:

When we discussed the TPP in class, I believe opinions were mixed. Now that it is no longer in existence, those in favor of getting rid of it will get to see the outcome they desired. On a global scale, this article claims that disbanding the TPP gave a lot of power to China, and will let them create terms of trade that will greatly benefit them all over the world. Giving China power could be detrimental to the US economy in the long run, but we will have to wait and see. Breaking up the trade group, in Trump’s opinion, will give the United States opportunities to strengthen trading deals with nations in a one-on-one situation. Trump feels we can get more out of deals this way, because we will have more leverage. There was a great sacrifice for this leverage though, and that was giving up leverage to China. The Chinese are already beginning to create partnerships in Asia and Australia, inviting Latin American countries to join, and purposefully excluding the United States. Only time will tell, but this move could have very positive results, very negative results, or a mix of both.

 

China posts worst export fall since 2009 as fears of U.S. trade war loom – Reuters

This article is about China’s poor economic performance in the past year. Exports have dropped 7.7% this year and that number could grow with Donald Trump in office. The POTUS has made it clear that he is anti-China throughout his campaign, and if he acts on his promises, he could decrease Chinese exports significantly. By imposing stiff tariffs on Chinese imported goods, companies may soon have to relocate factories away from China to steer away from the possibility of greatly increased prices. The full article can be found here:

http://www.reuters.com/article/us-china-economy-trade-idUSKBN14X0FD

Analysis:

This deals with imports/exports, a fundamental concept in macroeconomics. China’s exports have decreased in the last few years, but this dip is the largest since the global crisis in 2009. This could also be worsened by the political institution in the United States, whose imports from China will likely decrease after the rumored tariff on Chinese imported goods Trump has promised to impose. This is a very good time to look at the affect a government can have on the global economy, especially with a figure as controversial as Donald Trump who is more than capable of making moves nobody could ever expect. China could potentially lose a large portion of their exports, as the US is one of their most important trading partners. Everything seems to be at the hands of Trump, and his decisions in actions in the coming months could have an extreme effect on the global economy.

Ford CEO: Main reason for canceling Mexico plant was market demand, not Trump – CNBC

With Donald Trump in the Oval Office, everything seems to have something to do with him. This is not the case this time though, according to Ford CEO Mark Fields when asked about the cancellation of a $1.6 Billion plant scheduled to be constructed in Mexico in the next year. Trump has mentioned a 20% tariff on all imports from Mexico as a method of payment for his famous wall, and this could potentially shut down factories all over the country. The full article can be found here:

http://www.cnbc.com/2017/01/03/ford-ceo-main-reason-for-canceling-mexico-plant-was-market-demand-not-trump.html

Analysis:

This is an interesting topic. It deals with market demand, but it also deals with the effects of a political institution on an economy. First of all, Fields, the CEO of Ford, doesn’t think that there will be a strong enough demand for the potentially more expensive cars made in Mexico. It simply will not be worth it if there is a tariff on goods imported from Mexico – why not just produce them in America and avoid the tariff? It just makes much more sense for the Ford factories to be in tariff-free countries, so Fields claims that is why the project was cancelled. Along with that, this is a perfect example of a political institution having an impact on the global economy. Not so much looking from the inclusive/extractive lens, but focusing more on how a transfer of powers can cause economic disruptions. By Trump stepping into office, and bringing his ideas and policies, Mexico could really suffer and lose one of its major export partners – the US.

College Football’s Top Teams Are Built on Crippling Debt -Bloomberg

This article is about a huge problem across all of the NCAA’s top football programs: debt. Whether it be from building extravagant facilities, hiring expensive coaches, or taking costly trips, many of the country’s elite college football programs are deep in debt. Media deals provide the schools with a hefty sum of cash, but even so, the schools still find themselves facing a very unbalanced budget. The full article can be found here:

https://www.bloomberg.com/news/features/2017-01-04/college-football-s-top-teams-are-built-on-crippling-debt

Analysis:

This event deals with debt, a topic we covered in class. While we focused more on national debt and how a government should deal with it, it still applies. I find it very interesting that some of the most seemingly profitable institutions can rack up so much debt over the years. Major spending on new stadiums, workout facilities, team apparel, and additions to personnel have proved to add up to a substantial debt. Similar to the class discussing solutions to resolving the national debt and whether or not we should worry about it, different schools have different opinions when it comes to dealing (or not dealing) with their debts. It’s interesting to me how so many schools feel no need to deal with the staggering debt at their hands. The University of California football team is currently $18 million in debt, and that number is growing. Their athletic director is not worried about paying the debt off any time soon. He has said that he hopes they can pay off their debt by 2057. He hopes. That is crazy to me. It is very similar, though, to the US government’s approach with the national debt. They are not planning on making any