black321 wrote:
Yes... but the issue that Trump has created is that those on the higher end are shutting down their spending out of fear of an economic downturn.  There is a truck with a bomb broken down on the tracks ahead, and instead of slowing Trump thinks he can intimidate them to push it off the tracks.  It's not gonna end well.

From WSJ. To summarize, looking at averages, the economy has been fine...with its head in the oven and feet in the freezer.

Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon. The top 10% of earners—households making about $250,000 a year or more—are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets.⁠
⁠
Those consumers now account for 49.7% of all spending, a record in data going back to 1989, according to an analysis by Moody’s Analytics. Three decades ago, they accounted for about 36%.⁠
⁠
All this means that economic growth is unusually reliant on rich Americans continuing to shell out. Mark Zandi, chief economist at Moody’s Analytics, estimated that spending by the top 10% alone accounted for almost one-third of gross domestic product. ⁠
⁠
Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period.⁠
⁠
Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn’t. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more.⁠
⁠

 R_P wrote:

wrong thread. its political, not economical.
listening to his supports, they think the tariff move is a great idea. its political..it will raise prices in the s-t but once all the jobs come back to the US, it will be worth it.
they seem to misunderstand that companies have no interest in returning to the US...even if they did, we dont have the infrastructure, job/employee knowledge to handle it.
it will hurt small cos, further consolidating the big. 

Surely coincidentally and totally voluntary like the decoupling from China's Belt-and-Road Initiative earlier
BlackRock inks $23B deal for Panama Canal ports
BlackRock is acquiring the ports of Balboa and Cristobal at the Panama Canal

On the economic front
China slaps extra tariffs of up to 15% on imports of major US farm exports, including soy and beef

---

Mexico tried, but it's still getting the tariff boom
Canada, too, is expected to be targeted with 25% import taxes tomorrow, putting $1.3 trillion in common trade into the shock zone

President Trump announced today that he would impose 25% tariffs on imports from Canada and Mexico starting tomorrow. The tariffs were originally set to take effect on February 4, but he then announced a last-minute reprieve of one month.

The announcement comes despite very different responses from Canada and Mexico to Trump’s tariff threats. President Sheinbaum of Mexico has gone to some lengths in recent days to accommodate U.S. preferences on key American concerns–migration, crime and Chinese exports to Mexico.

Last Thursday, she oversaw the transfer of 29 high-profile drug lords to US custody, signaling a willingness to align more closely with Washington in the fight against drugs and organized crime. And on Friday, Treasury Secretary Scott Bessent said Mexico was going to impose tariffs on imports from China to match those set by the U.S., a step he urged Canada to follow.

The measures announced by the Mexican government likely have or would have had associated costs — potential violent retaliation by drug gangs, and forgoing inbound investment from China, the world’s current leader in electrical vehicle technology. But evidently, this was a price Sheinbaum felt was worth paying to avert the tariffs.

Canada has taken a much more combative approach, with tempers likely inflamed further by the relentless taunts (if not yet actually threats) of the country’s incorporation as America’s 51st state. Large parts of Canada’s political spectrum have united against these suggestions. The outgoing Liberal Party Prime Minister Justin Trudeau has drawn closer to the European Union and sought common ground with them on the subjects of global trade and Ukraine. Ontario Premier Doug Ford of the Conservative Party has been threatening for months to turn off Canada’s power supply to parts of the Northeast, a step he said today he would take, with a smile on his face. The complexities of power transmission might make this hard to do but it is still an indication of how fraught the current relationship across the 49th parallel has become. (...)

Voters Were Right About the Economy. The Data Was Wrong.
Here’s why unemployment is higher, wages are lower and growth less robust than government statistics suggest.

Before the presidential election, many Democrats were puzzled by the seeming disconnect between “economic reality” as reflected in various government statistics and the public’s perceptions of the economy on the ground. Many in Washington bristled at the public’s failure to register how strong the economy really was. They charged that right-wing echo chambers were conning voters into believing entirely preposterous narratives about America’s decline.

What they rarely considered was whether something else might be responsible for the disconnect — whether, for instance, government statistics were fundamentally flawed. What if the numbers supporting the case for broad-based prosperity were themselves misrepresentations? What if, in fact, darker assessments of the economy were more authentically tethered to reality? (...)

“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”

 rgio wrote:

AFAICT economics has blithely ignored or underestimated the difficulty of transitioning into a new industry, esp. when workers are coming from jobs that didn't require much skill or didn't have skills that applied to the new industry. It's psychologically daunting and isolating. And while some American re-training programs are well designed, they typically offer insufficient stipends for people to live on while they re-train. 

The US has been through this before. The steelmaking areas have suffered long-term decline. Even in areas like the Lehigh Valley, PA where employment % has rebounded from the loss of Bethlehem Steel jobs, household income levels are below the US average. 

 NoEnzLefttoSplit wrote:

agreed...cos made money and also helped keep inflation in check for 30 years. 
but like the article said, everyday low prices are no good if you don't have a job and are strung out on opioids. 

besides china, the other big shift was specialization, which also became an issue during the pandemic. An auto mfg might have hundreds of vendors, but for each part maybe just one or two mfg. 

this is in today's issue:

China’s Xi Is Building Economic Fortress Against U.S. Pressure

As Trump turns up the heat on Beijing, China is trying to become more technologically self-sufficient, but its efforts have a significant cost

Instead of relying on foreign firms for robots and medical devices, China is now making more of its own. Chinese-made solar panels are replacing some of the country’s need for imported energy. The success of China’s electric-vehicle makers and artificial-intelligence upstart DeepSeek has ignited fears that China might even eclipse the West in some cutting-edge sectors.

Beneath those wins, however, Xi’s industrial policy is hugely expensive, eating up state resources as government revenues are stagnating. One estimate by the Washington-based Center for Strategic and International Studies put China’s annual spending on industrial policy at around $250 billion as of 2019

https://www.wsj.com/world/chin...

 NoEnzLefttoSplit wrote:
This paragraph is MAGA in a nutshell.  There are 2 groups, the ones described here:

But, the economists find, the people who were hurt by the China Shock did not recover. Manufacturing workers did not transition to these new sectors. The economists find that the people who took the new jobs, concentrated in the service sector, were often newcomers and demographically different, including immigrants, U.S.-born Latinos and younger workers with college degrees. Meanwhile, the ladders in manufacturing that once provided workers without a college diploma a solid wage and upward mobility were kicked over. The research on the China Shock had already illuminated why so many Americans have been swayed by President Trump's brand of populist, nativist politics. This new installment is even more eye-opening on that front.

And those that use the anger of this group for their personal gain.  

Undereducated, manufacturing workers couldn't find work and didn't have transferrable skills... so they blame education and immigrants (who do certain jobs many Americans won't).   These folks were told at an early age that they could have a nice, comfortable living by working in the mill, the plant, the factory... and then it all disappeared after they had under-performed in school.  There is no way out...and they're pissed.  What's the point of being angry with yourself.  The American Dream achieved through rugged individualism is just too damn hard.  It's a hell of a lot easier to blame everyone else.

Stupid and racist creates angry, and the selfish people figured out they could get even richer if they had that anger directed at policies that would help them keep their money.   Any person in America who somehow believes their lives are improved when billionaires pay less tax deserves everything they (don't) get.
 

 black321 wrote:

Agreed. I remember similar charges being levelled against Japan in the sixties and seventies. I don't think offshoring industry per se is the main issue but rather the wider political context. The Chinese state has actively pursued a policy of obtaining a monopoly on industrial expertise by a combination of buying out foreign companies to get their know-how and then price-dumping the resulting products to force any remaining foreign companies they don't control into bankruptcy and then buying them up cheaply or watch them go under. I can understand why the Chinese state would want to do this, as they want to be the very hub of the world economy, but for far too long western nations assumed that China was just another international market where the principles of fair trade apply or will in the near future as it transitions to democracy. 

OTOH to vilify China would be far too simplistic. A lot of western companies have earned massive profits doing business with China (which is what business is all about) and open trade between China and the west should be sought, at least in an ideal world where we were all playing by the same rules. But, we are not.

Prior to Trump's reelection I saw positive signs in the move towards reshoring critical industries due to the exposure to supply chain risks that became manifest during corona. Now, it is all just a mess. I have no idea what is going to happen.

And the Chinese economy, despite its impressive growth is starting to show the first signs of implosion, which would be bad for all of us.

Personally, I would love to see a return to greater diversity within geographic regions, a set of global villages instead of just one.  No idea how to get there though.

EDIT i.e. greater regional autarky but still with open borders between regions..   yeah, I know, trying to square the circle.

 NoEnzLefttoSplit wrote:

some issues with the article, like indicating china shock started in 2021, when it started back in the early 90s.
of course the china trade started with the thought, oh we are only importing cheap trinkets, tshirts and such, nothing substantial like chips, electronics, ha.
so how do you unravel this? 
Will tariffs do the job? Maybe as part of a long-term strategy to onshore or even nearshore mfg with our friendly neighbors, remember Canada and Mexico?
As it stands, implementing tariffs overnight is only punishing mfg and consumers.
We have seen some diversion in apparel and footwear, usually to other fareast countries like vietnam.
Other mfg, like healthcare, has shifted too, but some sourcing will never shift. Cardinal health indicated just the same in a recent earnings call. 

So again, how do we unravel the last 40 years? I do believe China is the west's biggest threat, and it was foolish to hand over so mfg to an adversary, especially healthcare (while unraveling extensive pharmaceutical mfg in puerto rico). 
But even if we wanted to, the US doesnt have the expertise/ management to handle manufacturing. 

 NoEnzLefttoSplit wrote:

Good article. True answers are always more complicated then what is presented in the media. It also takes a long time for policy affects the economy in most cases but I think it will happen quicker this time, at least the negative effects. How long before people notice or will they? Given the unusually high numbers for his approval ratings, its still going to be awhile. But, or course, when things do get bad, he will just blame everyone else and they will believe him, apparently. I am hoping I have gotten past under-estimating the stupid, but that just leaves depressingly pessimistic.

China Shock
Seems like a good example of how textbook economics often fails to map the nitty gritty implications of policy changes and also a big reason for the massive dissatisfaction leading to Trump V2.

Enjoy your MAGA import taxes
White House confirms 25% tariffs against Mexico and Canada starting this Saturday
The US will also impose a 10% levy on goods from China over fentanyl trafficking



More than 90% of interdicted fentanyl is stopped at Ports of Entry (POEs), where cartels attempt to smuggle it primarily in vehicles driven by U.S. citizens.

 rgio wrote:

I dont know if this is an accurate theory. Most small town grocers are sourced by large grocery coops, which share the profits with the independent retailers...so they have competitive costs.
Perhaps the bigger issue is $ stores moving into these markets, sucking up the center store sales. And obviously city markets need to deal with crime/shrink.  

 black321 wrote:
So this is where the Trump appointees will begin attacking each other and possibly Trump, and Donnie will either just ignore things or have to take a stand that will limit his "change agents" abilities to make change.

RFJ Jr. is a nut, but his stance on food makes sense.  We eat processed shit...and need to cut it out.  To enable that, something like the "fairness" in the Atlantic article is necessary.  To do that, he'll need to fight the Walmart and Amazon lobbyists.  Trump will have to decide.... health or money.  

I've got little doubt where that goes...meaning RFJ gets pissed off and begins to lose faith and interest in the gig while remembering why he referred to Trump as "a terrible human being", "a sociopath", and "the worse president ever" before selling his soul to the orange overlord.  

Interesting Atlantic story about food deserts. What hit me is that without the repeal of this regulation, inflation over the last 40 years would have been higher...or if we tried to brink it back, it would increase inflation. Not that I am arguing to keep or repeal...not sure where I stand on it.

The Atlantic writes:

"Food deserts are not an inevitable consequence of poverty or low population density, and they didn’t materialize around the country for no reason. Something happened. That something was a specific federal policy change in the 1980s. It was supposed to reward the biggest retail chains for their efficiency. Instead, it devastated poor and rural communities by pushing out grocery stores and inflating the cost of food. Food deserts will not go away until that mistake is reversed."

The Atlantic argues that the mistake that needs to be reversed is the decision - made by the Reagan administration, and virtually coinciding with the emergence of food desert, not to enforce the Robinson-Patman Act, which bans price discrimination, "making it illegal for suppliers to offer preferential deals and for retailers to demand them."

"If you were to plot the end of Robinson-Patman enforcement and the subsequent restructuring of the retail industry on a timeline," The Atlantic writes, "it would closely parallel the emergence and spread of food deserts. Locally owned retail businesses were once a mainstay of working-class and rural communities. Their inability to obtain fair prices beginning in the 1980s hit these retailers especially hard because their customers could least afford to pay more."

The Atlantic writes that "the problem of food deserts will not be solved without the rediscovery of the Robinson-Patman Act. Requiring a level pricing playing field would restore local retailers’ ability to compete. This would provide immediate relief to entrepreneurs who have recently opened grocery stores in food deserts, only to find that their inability to buy on the same terms as Walmart and Dollar General makes survival difficult. With local grocery stores back on the scene in these neighborhoods, chain supermarkets may well return, too, lured by a force far more powerful than tax breaks: competition."

There is, of course, a political component to all this:

"The Biden administration has begun to connect the dots. Alvaro Bedoya, a member of the Federal Trade Commission, has been an outspoken proponent of Robinson-Patman enforcement, and the FTC under Chair Lina Khan is widely expected to file its first such case in the coming months. But Donald Trump’s election casts doubts on the long-term prospects for a Robinson-Patman revival

"Although the law has garnered support among some GOP House members, powerful donors are calling for corporate-friendly appointments to the FTC. Hopefully the incoming Trump administration realizes that the rural and working-class voters who propelled him to power are among those most affected by food deserts - and by the broader decline in local self-reliance that has swept across small-town America since the 1980s. A powerful tool for reversing that decline is available. Any leader who truly cared about the nation’s left-behind communities would use it."

You can read the entire story here.