Good Now

... could get bad later - unless we elect the right woman.

The Bureau of Economic Analysis reports that GDP has grown for 10 quarters in a row, and 14 out of the last 15 (since Biden took office in 2021).

U.S. economy grew at 2.8 percent pace, slowing slightly ahead of the elections

Solid consumer spending fueled GDP growth between July and September, new figures show.

The U.S. economy continued its expansion in the third quarter, growing at an annualized rate of 2.8 percent and reinforcing a rosy lens of the economy days before the elections.

The latest gross domestic product report offers a snapshot of an economy that has slowed slightly from a 3 percent reading in the previous quarter, according to data released Wednesday morning by the Commerce Department’s Bureau of Economic Analysis.

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The economy’s resilience ahead of a tightly contested presidential election was fueled by robust consumer spending that has outlasted even the most optimistic forecasts. Despite inflation, Americans have continued to shell out for a range of goods and services, including cars, dining out and travel.

However, there are pockets of softness. A dip in housing investments, a slowdown in inventory purchases and a rise in imports all dragged down the latest reading. Many economists expect growth to slow later this year and into 2025, as state and local governments dial back their spending.

- more -

Companies ready price hikes to offset Trump’s global tariff plans

Executives say Americans, not foreign countries, will pay the tariffs.

Across the United States, companies that rely on foreign suppliers are preparing to raise prices in response to the massive import tariffs that former president Donald Trump promises if he wins the election Tuesday.

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Producers of a range of items, including clothing, footwear, baby products, auto parts and hardware, say they will pass along the cost of the tariffs to their American customers.

The planned price increases next year would come as consumers are beginning to enjoy relief from the highest inflation in four decades and directly contradict Trump’s repeated assurances that foreigners will pay the tariff tab.

“We’re set to raise prices,” Timothy Boyle, chief executive of Columbia Sportswear, said in an interview. “We’re buying stuff today for delivery next fall. So we’re just going to deal with it and we’ll just raise the prices. … It’s going to be very, very difficult to keep products affordable for Americans.”

Trump vows to impose the heaviest tariffs since the 1930s, including a 60 percent tax on products from China and a 10 to 20 percent fee on all other foreign goods. Doing so will encourage companies to produce inside the United States using American workers rather than buy from foreign suppliers, he has said.

Trump also has repeatedly claimed that foreign companies — not Americans — pay such import taxes. “The countries will pay,” he insisted this month during an interview with Bloomberg’s John Micklethwait at the Economic Club of Chicago.

In fact, American importers pay all tariffs to the U.S. Customs and Border Protection agency at the time their products enter the country.

Depending upon demand for individual products and the availability of alternatives, the tariff burden may be shared among the foreign producer, the U.S. importer and the final customer.

The foreign company that makes the product, for example, might redesign its assembly line to reduce its costs or might agree to trim its profit margin to retain U.S. sales.

But the main costs fall on American buyers.

“A consistent theoretical and empirical finding in economics is that domestic consumers and domestic firms bear the burden of a tariff, not the foreign country,” according to an analysis by the nonpartisan Budget Lab at Yale University.

Executives at AutoZone, an auto parts retailer, told investors this month they were prepared for products they import to become more expensive. The company’s top suppliers include companies in India, China and Germany, according to a June press release.

“If we get tariffs, we will pass those tariff costs back to the consumer,” Philip Daniele, CEO of AutoZone, said on a recent earnings call. “We’ll generally raise prices ahead of — we know what the tariffs will be — we generally raise prices ahead of that.”

Likewise, Stanley Black & Decker CEO Donald Allan earlier this year told investors his company would probably “have to do some surgical price actions” to offset any new tariffs.

During his presidency, Trump imposed tariffs of up to 25 percent on $360 billion in Chinese imports. The Biden administration has retained most of those taxes and added others on Chinese electric vehicles, computer chips and solar cells.

Vice President Kamala Harris has assailed Trump’s proposed tariffs as a “national sales tax” that would hammer consumers. Trump’s tariff plans would cost a typical U.S. household between $1,700 and $2,600 per year, depending upon whether his universal import fee was set at 10 percent or 20 percent, according to an August study by economists Kimberly Clausing and Mary Lovely.

Harris campaign officials say their approach is more targeted than Trump’s plan to tariff all of the $3 trillion in foreign products that the United States imports each year.

“Just like 2016, Wall Street and so-called expert forecasts said that Trump policies would result in lower growth and higher inflation, the media took these forecasts at face value, and the record was never corrected when actual growth and job gains widely outperformed these opinions. In fact, then — as now — Trump policies will fuel growth, drive down inflation, inspire American manufacturing, all while protecting the working men and women of our nation from lopsided policies tilted in favor of other countries. These Wall Street elites would be wise to review the record,” said Brian Hughes, a senior adviser to the Trump campaign.

Manufacturers that have been hurt by China’s trade practices, including its heavy use of government subsidies, say tariffs are justified as a defensive measure.

Over the past two decades, Orrco, a maker of precision machined products such as brass hose nozzles, lost sales to Chinese competitors that produced the same products for less than its material costs.

Orrco employs about 25 workers in Greensburg, Pennsylvania, just half of its workforce 20 years ago.

“I’m a believer in free trade. But what we have with China is not free trade. It’s just hollowing out our manufacturing sector,” said Keith Orr, Orrco’s vice president.

As the presidential campaign enters its final days, businesses are bracing for potential trade policy upheaval.

Some companies are placing unusually large import orders, aiming to stock up before new tariffs take effect. The United States imported 11 percent more Chinese goods in July and August this year than during the same two months in 2023, according to the Census Bureau.

Other companies hope to avoid the heaviest levies by shifting to suppliers outside of China, Trump’s main target. By December, some of Acme United’s Westcott brand products, such as rulers and paper trimmers, will be made in Thailand and the Philippines, allowing them to escape tariffs aimed at China, CEO Walter Johnsen said on a recent earnings call.

The Shelton, Connecticut-based company, which operates under multiple brands, also has shifted production of some first aid and medical products to India, Egypt and its U.S. factories in Florida, North Carolina and Washington state.

Johnsen said he was skeptical that Trump would actually follow through with his announced plans to increase tariffs on all U.S. imports. Taxing imported medical products, including medicines, for example, would be too disruptive for the U.S. health-care system, he said.

“The hospitals would come to a halt. So it’s highly unlikely, in my view, that 60 percent tariffs are even remotely going to be real, but it’s a negotiating point,” he told investors.

Likewise, on a recent trip to China, Sebastien Breteau, CEO of QIMA, which conducts worldwide factory inspections and audits for major retailers, found few Chinese suppliers who believed Trump would implement what he has promised.

“He’s a man who can change [his] opinion 10 times in a day. So people don’t believe him. People don’t believe Trump is going to raise tariffs by 60 percent,” said Breteau, whose clients include Costco and Walmart.

Still, Trump’s first trade war, starting in 2018, rattled U.S. companies that had become overly dependent upon Chinese suppliers. Subsequent trade disruptions during the pandemic, aggravated by Russia’s invasion of Ukraine, caused many companies to investigate other options.

Columbia Sportswear in recent years has moved some of its production for the U.S. market from China to Central America, Boyle said.

Newell Brands, owner of Rubbermaid, once relied on Chinese suppliers for about 30 percent of the goods it sold in the United States. But it has trimmed that dependence to less than 15 percent and expects to be below 10 percent by the end of next year, CEO Chris Peterson told investors this month.

By making foreign goods more expensive, tariffs should make items produced in Rubbermaid plants in Ohio and Virginia more competitive, he said. “We’ve been preparing for the potential for tariffs and I think we are as well-positioned as we can be to benefit in some categories,” he said.

Computer peripherals maker Logitech for several years has been trying to spread its supply chain across additional Asian nations. About 40 percent of its global shipments come from outside China and the company aims to boost that figure to 50 percent in “the near future,” executives told investors this month.

“We’re on a multiyear journey to make our supply chain more resilient, more diversified,” said CEO Hanneke Faber. “We’ll continue to do that, and we think we’ll be prepared for whatever happens after the U.S. election.”

Trump’s repeated insistence that other nations will pay his tariffs frustrates the U.S. importers who actually get the bills. Lalo, a baby and toddler products retailer, was just opening its doors as the first trade war got underway. The company imports an array of premium items such as play tables, high chairs and bibs.

Some of its products were exempt from the trade levies. But many of the made-in-China goods faced tariffs, forcing the company to raise prices, according to Michael Wieder, the company’s co-founder.

Lalo is growing fast, but not yet profitable, Wieder said. The last thing the 30-employee company needs is higher costs. Along with China, it imports products or materials from countries such as India and Turkey, all of which would face Trump’s universal tariff.

Though reluctant to raise prices, Lalo needs to become profitable so that it can invest in new products and continue growing, Wieder said. Fresh tariffs will get in the way.

“It just hurts the consumer. Straight up. Ten times out of 10,” he said. “Exporting countries do not pay the tariffs. It’s just that simple.”

Biden Didn't Do That

... except where he did.

How Biden helped end a port strike that threatened Democrats in November

With early morning Zoom calls and a surprising ultimatum, the White House brain trust averted a potential economic disaster weeks before the election.

It was a stark ultimatum, delivered by President Joe Biden’s most senior aide.

At 5:30 a.m. Thursday, before the sun had risen above his Washington home, White House Chief of Staff Jeff Zients was on a Zoom call with two Cabinet secretaries and the executives of the shipping companies negotiating with workers who had gone on strike at critical docks along the East and Gulf coasts, according to two people familiar with the matter who spoke on the condition of anonymity to describe private conversations.

Then in a surprising move, as the call was wrapping up, Zients told the board members of the U.S. Maritime Alliance that he was going to tell Biden in about an hour that they had agreed to propose a new offer to the union. By that point, the shipping executives had agreed to do no such thing. Zients was saying they would.

read it

 - and -

Employers added 254,000 jobs in September, reflecting strong gains as election nears

The U.S. unemployment rate ticked down to 4.1 percent.

U.S. employers added 254,000 jobs and the unemployment rate ticked down to 4.1 percent in September, signaling signs of strength in the labor market heading into the height of the election season.

The last several months of steady job growth have been plenty enough to keep the American labor market firmly out of recession territory, economists say, especially as GDP growth remains hardy, productivity is strong and consumers continue to spend.

read it

It should be telling that every time there's good news about the American economy, the Republicans get a sad.

And BTW - Harris has been gaining on Trump in the polls that try to gauge how we feel and what we think about the economy.

The next few days might tell us a very interesting story.

More Belle

As is usually the case, MAGA talking points are wrong pretty much across the board.

Trump is wrong.

MAGA is wrong.

GOP is wrong.

Republicans just fuck it up - every time.

Dems are better for the economy.

Fact Check

It's always hard to compare performances, but there are ways to weight and un-weight the stats to get a pretty fair analysis

This comparison seems to lean pretty hard towards the conclusion that Democrats are better at handling the economy.

Coming Down

And no, of course he didn't do it. But he was able to get things put in place that made a nice steep drop in inflation far more likely to happen than anything any Republican would've done - especially that jackass Trump.

Thanks, Joe. Ya done good.

Inflation hits lowest level since spring 2021, most likely teeing up rate cuts

Federal Reserve officials have said they won’t trim borrowing costs until they’re confident that prices are easing back to normal.

Updated August 14, 2024 at 10:15 a.m. EDT|Published August 14, 2024 at 7:39 a.m. EDT
Inflation dropped in July to its lowest level in three years on an annual basis, setting up the Federal Reserve to cut interest rates soon to take pressure off the economy.

The snapshot was the clearest indication yet that inflation is heading back to normal levels from 40-year highs — without a recession. Central bankers won’t be caught celebrating, scarred by years of unexpected twists that repeatedly upended the Fed’s inflation fight. But officials will close out the summer with the surest sense yet that it’s time to loosen up on the economic brakes, possibly starting next month.

That would mean some breathing room for households and businesses trying to get mortgages or auto loans, or grow their businesses. For two years, high interest rates have been an added strain for those also struggling under the weight of high prices, especially for basics like food and gas. Now, more relief is in sight — even though the run-up in inflation means prices are still significantly higher now than they were just a few years ago.

“This is pretty much in line with what the Fed expected, and hoped,” said Douglas Holtz-Eakin, president of the conservative American Action Forum. “I had always felt the [Fed’s] language had pretty much locked them into a rate cut in September. This essentially guarantees it, unless we get something really bizarre.”

Data from the Bureau of Labor Statistics showed July’s annual inflation rate hit 2.9 percent, dipping below 3 percent for the first time since March 2021, when price increases took off on the heels of the pandemic. A core measure that strips out volatile categories such as food and energy also saw the smallest 12-month increase since April 2021.

Markets rose slightly off the news, but were mixed by midmorning.

For months, Fed officials have said they won’t trim borrowing costs until they’re confident inflation is easing to normal levels. Now that they’ve come about as close as possible, officials are increasingly acknowledging the risks of keeping rates too high for too long. Already, hiring has slowed down, and global markets are jittery over whether the Fed might have put too much pressure on the economy overall.

Housing continued to dominate the inflation snapshot, with shelter costs accounting for nearly 90 percent of the monthly increase. Rent costs have been cooling for some time now, but economists are still puzzled about why that shift didn’t show up in official statistics until this summer. July saw a slight backpedal, with a key rent gauge rising a smidgen more than in previous months. (The widespread expectation is inflation won’t come down all the way to normal until there’s major headway on the housing component.)

Energy costs stayed level after a few months of declines. Indexes for car insurance and household furnishings were also up. Meanwhile, costs for used cars and trucks, medical care, airline fares and apparel dropped in July compared to June.

In the meantime, families and households are feeling long-awaited relief from price increases, especially on key budget items such as food and housing. Gas costs are down compared with last year.

In the backdrop, Republicans and Democrats are crisscrossing the country trying to attract voters to their economic agendas. Inflation routinely polls as a top reason many Americans don’t think the economy is working for them, even while other metrics such as the job market and consumer spending remain strong. GOP presidential nominee Donald Trump often slams Democrats for massive spending during the pandemic that helped supercharge inflation. Meanwhile, Vice President Kamala Harris, the Democratic nominee, argues that her proposals would help the middle class and that Trump’s plans for mass deportations and spiked tariffs would make inflation worse.

Jared Bernstein, chair of the White House’s Council of Economic Advisers, hailed the “solid disinflation” as good news. But in an interview with The Washington Post, he said the administration is keeping its focus on ways to relieve everyday costs for rent, prescription drugs and more.

“We’re very happy to see lower inflation, to see it have some momentum,” Bernstein said. “But that’s not going to stop us from continuing to lower costs wherever we can.”

The Fed has made major progress on its inflation fight since prices took off in 2021. Since then, officials hoisted the benchmark interest rate to the highest level in more than two decades, in an aggressive attempt to slow the economy at any cost. The result has turned out better than just about anyone predicted, with robust growth, low unemployment and rising wages accompanying cooling inflation. (The Fed wants inflation to hit a 2 percent target each year, but that’s using a different inflation gauge from the one released Wednesday. That gauge rose 2.5 percent in June on an annual basis. Officials have said they won’t wait until inflation gets all the way down to 2 percent before they start cutting rates. Still, they routinely say 2 percent is the ultimate goal.)

The fear, though, is that the economy will begin to crack under the continued weight of high rates. A weaker-than-expected July jobs report stoked fears of a downturn, with that anxiety quickly rippling through the financial markets over a dicey day of trading last week. And even though the job market isn’t being gripped by widespread layoffs and the markets quickly stabilized, the recent panic has put a spotlight on the Fed, which decided to hold rates steady last month instead of starting to cut. With no meeting in August, some observers wondered if the Fed should have lowered rates in July.

Ultimately, the answer will lie in the data.

“You can see inside the data it’s a good report,” said Joe Brusuelas, chief economist at RSM. “It’s just not where we would have wanted to see it to say, ‘all clear.’”

The overwhelming forecast is that the Fed will announce a rate cut at its next meeting in September, possibly by a larger half-point cut if policymakers think the economy is slowing too much. Analysts also expect that the Fed — playing a bit of catch-up — will cut at the year’s remaining meetings in November and December, too. (A November cut would be notable because that meeting falls the week of the presidential election, when the central bank would otherwise avoid anything that affects politics at all costs.)

Fed leaders have made clear that no decisions are set in stone, and depend entirely on the data. But it’s clear that leaders are more confident in their progress against inflation than at any time over the past few years.

Speaking at a news conference in late July, Powell said the recent string of encouraging reports was even better than how things looked in late 2023. Last year, much of the fall in inflation came from a rapid decline in goods prices, as people pulled back on all of the couches, treadmills and home office equipment they had bought during the pandemic. Now, Powell said, there’s a “broader disinflation” taking hold.

“This is so much better than where we were even a year ago,” Powell said. “It’s a lot better. The job is not done, I want to stress that, and we’re committed to getting inflation sustainably under 2 percent. But we need to take note of that progress.”

Still, that progress looks different across the economy. Speaking to The Post this month, Chicago Fed President Austan Goolsbee said that when he travels across his district — which includes Iowa and most of Illinois, Indiana, Michigan and Wisconsin — businesses say supply chain issues from the pandemic have largely cleared. But many companies are still frustrated that they can’t pass their rising operating costs on to customers, because people are already so sensitive to more price increases.

Goolsbee also said there’s a disconnect between wages for low-income Americans rising faster than inflation — and the reality of high costs for the basics.

“Low-income people are getting squeezed in every way,” Goolsbee said.

Overheard

Actually, we're not spending all that much on cancelling student debt.

Someone with a $20,000 college loan, who has paid $250 a month for 10 years, has repaid $30,000, but often still has an outstanding balance of $15,000 - because of the way the loan was written.

Loan relief says the borrower has paid 50% more than what they borrowed - so we're going to call it good and discharge the remaining balance.

The lender has already received a fair return on their investment.

Plus, someone in their late teens or early 20s is not fully equipped to understand the long-term effects of these high-interest loans - many of which are basically equivalent to Usury, trapping people in a lifetime of debt.

It's better to erase that debt, and allow the borrowers to spend the money in ways that better benefit the broader economy instead of filtering it through a middleman.

You know - like we did with the banks.

Dynastic Wealth

... AKA: Rich Legacy Pukes

The Change Is Real

When the plutocrats clutch their pearls, and blanch at the prospect of having to take a hit in order to move away from an economy that they've totally geared for dirty fuels, they always scream about the enormous cost that all you little people will have to bear, so don't fuck with us and maybe we'll throw you a tiny bone sometime and blah blah blah.

Guess what.

Economic damage from climate change six times worse than thought – report

A 1C increase in global temperature leads to a 12% decline in world gross domestic product, researchers have found

The economic damage wrought by climate change is six times worse than previously thought, with global heating set to shrink wealth at a rate consistent with the level of financial losses of a continuing permanent war, research has found.

A 1C increase in global temperature leads to a 12% decline in world gross domestic product (GDP), the researchers found, a far higher estimate than that of previous analyses. The world has already warmed by more than 1C (1.8F) since pre-industrial times and many climate scientists predict a 3C (5.4F) rise will occur by the end of this century due to the ongoing burning of fossil fuels, a scenario that the new working paper, yet to be peer-reviewed, states will come with an enormous economic cost.

A 3C temperature increase will cause “precipitous declines in output, capital and consumption that exceed 50% by 2100” the paper states. This economic loss is so severe that it is “comparable to the economic damage caused by fighting a war domestically and permanently”, it adds.

“There will still be some economic growth happening but by the end of the century people may well be 50% poorer than they would’ve been if it wasn’t for climate change,” said Adrien Bilal, an economist at Harvard who wrote the paper with Diego Känzig, an economist at Northwestern University.

“I think everyone could imagine what they would do with an income that is twice as large as it is now. It would change people’s lives.”

Bilal said that purchasing power, which is how much people are able to buy with their money, would already be 37% higher than it is now without global heating seen over the past 50 years. This lost wealth will spiral if the climate crisis deepens, comparable to the sort of economic drain often seen during wartime.

“Let’s be clear that the comparison to war is only in terms of consumption and GDP – all the suffering and death of war is the important thing and isn’t included in this analysis,” Bilal said. “The comparison may seem shocking, but in terms of pure GDP there is an analogy there. It’s a worrying thought.”

The paper places a much higher estimate on economic losses than previous research, calculating a social cost of carbon, which is the cost in dollars of damage done per each additional ton of carbon emissions, to be $1,056 per ton. This compares to a range set out by the US Environmental Protection Agency (EPA) that estimates the cost to be around $190 per ton.

Bilal said the new research takes a more “holistic” look at the economic cost of climate change by analyzing it on a global scale, rather than on an individual country basis. This approach, he said, captured the interconnected nature of the impact of heatwaves, storms, floods and other worsening climate impacts that damage crop yields, reduce worker productivity and reduce capital investment.

“They have taken a step back and linking local impacts with global temperatures,” said Gernot Wagner, a climate economist at Columbia University who wasn’t involved in the work and said it was significant. “If the results hold up, and I have no reason to believe they wouldn’t, they will make a massive difference in the overall climate damage estimates.”

The paper found that the economic impact of the climate crisis will be surprisingly uniform around the world, albeit with lower-income countries starting at a lower point in wealth. This should spur wealthy countries such as the US, the paper points out, to take action on reducing planet-heating emissions in its own economic interest.

Even with steep emissions cuts, however, climate change will bear a heavy economic cost, the paper finds. Even if global heating was restrained to little more than 1.5C (2.7F) by the end of the century, a globally agreed-upon goal that now appears to have slipped from reach, the GDP losses are still around 15%.

“That is still substantial,” said Bilal. “The economy may keep growing but less than it would because of climate change. It will be a slow-moving phenomenon, although the impacts will be felt acutely when they hit.”

The paper follows separate research released last month that found average incomes will fall by almost a fifth within the next 26 years compared to what they would’ve been without the climate crisis. Rising temperatures, heavier rainfall and more frequent and intense extreme weather are projected to cause $38tn of destruction each year by mid-century, according to the research.

Both papers make clear that the cost of transitioning away from fossil fuels and curbing the impacts of climate change, while not trivial, pale in comparison to the cost of climate change itself. “Unmitigated climate change is a lot more costly than doing something about it, that is clear,” said Wagner.

Go Joe Go

Biden's doing great - which is kinda hard for me to say because I've never been a Joe Biden fan.

Come See About Me

As we "age out", there could be problems that won't lend themselves easily to solutions.

Not that there are any problems in a large diverse society that are easy to tackle, but when you're in a struggle against a strong authoritarian trend, it's likely there will be plenty of muddled thinking - even more than "usual".

On the immigration issue, we have a bunch of "conservatives" who are spouting off about workforce needs and not wanting immigrants "stealing our jobs!!!" And they know we'd be hard up without immigrants to step in and do the jobs we need doing, but they don't like all those brown people, so their idea is to crack down on all this feminism stuff and put women back in the home, making babies and raising workers.

In a May 2022 House Judiciary Committee hearing, MAGA Mike Johnson suggested that abortion deprives the national economy of potential “able-bodied workers” during a discussion of the Supreme Court’s anticipated overturning of Roe v. Wade.

But there's a bigger problem coming down the road if we give in to these idiots and close off immigration completely - which is actually what some of them want to do.

Circling back now - as we age, we're bound to see a labor squeeze that's going to get tighter, because more people are retiring, and fewer people are able to step in and take over.

So who's going to be changing your sheets, and cooking your meals, and wrangling your meds, and doing all the things you need done, but can't manage on your own cuz you're too fuckin' old? Up until recently, we've had plenty of immigrants looking to ply their trades, or learn one, or otherwise handle a job that requires particular skills.

Who's going to be here to look after you when you can't handle it anymore?

This piece from Brookings Institution looks more globally, and they don't address the problems posed by the migrating herds that are already on the move and making for trouble.

The age of the longevity economy

Because demographic shifts are incremental, gradual, and long-term, most people do not look carefully at new data until the change is so significant that they are forced to pay attention. Last year marked three demographic milestones: The global population topped 8 billion; India overtook China as the most populous country in the world; and China saw its first population decrease in decades. Yet, the milestone with perhaps the most significant social and economic implications passed with relatively little fanfare: The number of older adults—those aged 50 and over—surpassed the number of children under the age of 15 for the first time (Figure 1). Broadly speaking, the 8 billion global population is now comprised of 2 billion children, 2 billion older adults, and 4 billion youth and other adults.

Despite significant changes in demographic trends, the global population continues to rise, with an estimated increase of 75 million people in the next year alone. An important trend implied by the data in Figure 1 is that population growth today is driven by the falling mortality of adults and not by high fertility. In fact, the number of children in the world has peaked and will remain constant at its current level for a couple of decades. What is instead driving population growth is that people are living longer, extending their lives well beyond age 50. So, if we look at the change in age distribution between now and 2040—when the world will have added 1 billion more people—we will see no change in the number of children, but an additional 800 million people in the 50+ age group (Figure 2).

Where will the growth in the 50+ population come from?

The 800-million-person expansion in the 50+ age group is heavily concentrated in developing countries in Asia. The increase is particularly noticeable in the consumer class, defined as those spending more than $12 per day in 2017 purchasing power parity (PPP). Membership in this consumer class indicates an ability to afford not just basic necessities, but additional goods and services as well. While the overall population is projected to rise by 1 billion by 2040, the consumer class is expected to expand by 2 billion. Figure 3 shows that 700 million of these people will live in 10 low- and middle-income countries, mostly in Asia. The United States is the only high-income country with a significant rise in older adults. If the countries of the European Union were combined, their increase in the number of older adults would be roughly equivalent to that of the U.S.

The country-level breakdown reveals that even though India is the world’s most populous country with a still-growing population, China will have a significantly larger increase in its 50+ consumer class population.

Furthermore, China’s shifting demographics are happening at a comparatively early stage in its economic development. By 2040, China’s older adult population will resemble Japan’s today — its median age will reach 48, compared to 50 in Japan this year. But the average expenditure of a Chinese consumer in 2040 will be only two-thirds as much as a Japanese consumer spends today—hence the observation that China is one of many countries growing old before it grows rich.

Chronicling the power of the Longevity Economy

The Longevity Economy refers to the economic contributions of people aged 50 years and older. According to AARP’s Global Longevity Economy Outlook report, In 2020 the 50-plus population contributed $45 trillion to global GDP, or 34% of the total. That equates to about three times the combined revenue of the world’s 100 highest-earning companies in 2020. World Data Lab projects that the spending growth of this group will be around 5.5% over the next decade. In 2024, older adults account for 42% of total spending worldwide, and as they grow in numbers and in wealth, their relative contribution will continue to steadily rise.

Within this group of older adults, those aged 65 and over will be the biggest spenders. In the large developing countries where the growth is concentrated, the new cohort of seniors will have accumulated higher savings than their predecessors, so per-capita spending will also increase. The combination of these two forces will result in aggregate growth of older adult spending of 6 to 6.5% per year for the next decade, making the 65+ age group the fastest-growing age cohort.

In aging societies, like China, the power of the Longevity Economy is particularly striking. Over the next decade, Chinese seniors are expected to experience twice the spending growth compared to other consumers, driven equally by an increase in the number of older adults and higher spending per citizen in this population segment.

Understanding trendlines before they become headlines

While demographic shifts tend to take place over decades, the past year has borne witness to major milestones that have garnered significant attention with enormous downstream societal and economic implications. Essentially, trendlines have now become headlines. Advancing our understanding of these demographic realities and their consequences in the decades to come will be increasingly important as the world is getting older at a faster pace than ever before.

Today's Zeihan

Peter Zeihan observes the world, and while he's not glum, he's also not crazy about our longterm prospects.

Remember:

Geopolitics is a poker game with 200 players who're all cheating. They all know they're all cheating, and the fact that they all know they're all cheating helps them rationalize their cheating.

Today's Press Poodles

WaPo reports a pretty good jobs number for November with "labor market slowdown" (even though the number for Nov was higher than Oct), and that bit was in big bold headline type, but then - in tiny little sub-head font - it's "favorable to workers".

And they bury the rest of the good news in the last 2 paragraphs.

• 4% Wage Growth
• Unemployment down to 3.7%
• Inflation is less than Wage Growth
• Bankers feel encouraged

Fuckin' Press Poodles

U.S. adds 199,000 jobs in November as labor market slowdown continues

The unemployment rate dipped to 3.7 percent, reflecting a labor market that remains favorable to workers

The U.S. economy created 199,000 jobs in November and the unemployment rate fell to 3.7 percent, according to data released Friday by the Bureau of Labor Statistics, reflecting the continued slowdown in labor market.

The labor market has tightened through the end of the year with just a handful of industries, health care especially, fueling job growth, keeping the economy out of a recession that economists had widely feared just a year ago.

“The current state of the labor market is a good one,” said Nick Bunker, economic research director at the jobs site Indeed. “For the last year plus, we’ve been talking about a normalizing labor market. We’re at the spot where that process is complete. This is a normal labor market. Things have calmed down in a painless way.”

Health care and government created the most jobs, as consumers have continued to shift spending toward services and an aging population has intensified that demand. Health care added 77,000 jobs in November, mainly in ambulatory health-care services, hospitals and nursing-care facilities. The government sector added 49,000 jobs in November, finally catching its pre-pandemic employment levels, as wages in state and local government have caught up with the private sector.

Manufacturing also trended up by 28,000, reflecting the return of union auto-manufacturing workers from their strike. Leisure and hospitality added nearly 40,000 jobs, mostly at restaurants and bars, after months of choppy growth.

Other industries showed negative or sluggish growth. Retail lost 38,000 jobs, while transportation and warehousing, construction, financial services and the information sector, which includes tech, showed little change.

Some of the slowdown is a reaction to the Federal Reserve’s interest rate hikes. The central bank, which has lifted interest rates to the highest level in 22 years to bring down inflation, so far has achieved its goal of easing demand in the labor market and wage growth enough to bring down inflation, to 3.2 percent over the year in October, without triggering catastrophic job losses so far. Economists caution that it remains too early to see the full impact of the rate hikes.

Investors are optimistic that the softening in the labor market will spur the Fed to cut rates early next year, which has spurred enthusiasm in the financial markets. Friday’s jobs report provides one of the last snapshots of the labor market before the Fed meets Tuesday and Wednesday to consider policy on interest rates, which are designed to curb inflation.

By most measures, the labor market remains just as strong or stronger than the years leading up to the pandemic, a period marked by low unemployment and hardy job growth. The percentage of Americans who are unemployed has been below 4 percent for two years, a sign that the labor market remains unusually favorable for workers, giving them leverage to demand raises and switch into better jobs. Layoffs also remained low in October, according to the Labor Department’s job openings survey released Tuesday, despite some concentrated pockets of job losses in finance, tech and media.

Meanwhile, job openings have dropped substantially from their peak at 12 million in March 2022 down to 8.7 million jobs in October, according to the Tuesday report, in a sign that employers are no longer on a hiring frenzy. The low layoff rates and reduction in hours worked since earlier this year are signs that employers are acting cautiously, holding on to workers despite tempered demand, after years of competing for labor.

“Employers aren’t willing to close their eyes and pay for labor anymore,” said Drew Matus, chief market strategist at MetLife Investment Management. “But they’re paying attention to who and what they need. And they’re thinking, what if everything gets so much better and I’m understaffed? Some of that is a hangover from the covid experience.”

In welcome news for the Fed, wage growth moderated in November, rising by 4 percent over the previous 12 months in November, to $34.10 an hour. The good news for workers is that even as wage growth has moderated since earlier this year, inflation has slowed more, meaning average hourly earnings are beating price increases, boosting Americans’ spending power.

“This is encouraging for central bankers and the people getting real wage gains,” Bunker said. “It’s helping people spend more which is good for GDP growth and for everyone. It’s a win-win for a variety of audiences.”

Today's Econ 101

1. Consolidation
2. Charging more for less
3. Exploiting workers
4. The illusion of scarcity
5. Mis-directed rage

The Rebound

There are problems with the American economy. 

• Housing affordability
• Wage suppression
• Labor rights being denied
• Massive Inequity

Way too many people are struggling just to squeak by.

IMHO, we can fix an awful lot of those difficulties by fixing the tax code. We've seen the long term results of the Trickle Down thing, and we have to face the simple fact that it was bullshit from the start. Poppy Bush nailed it perfectly in 1980 when he called it Voodoo Economics.

For every dollar in direct stimulus (the kind Biden and the Dems pushed thru in 2021), we see, on average, a boost in economic activity of $1.19. For every dollar in tax cuts (like the GOP's TaxScam2017®) we see 59¢ in return. Tell me you wouldn't fire your broker if he kept pushing you in the wrong fucking direction on this shit.

My point is that Biden and the Democrats are working the problems, and making some changes that are showing some pretty great results.

I realize I sound like a cheerleader, but when it works, it works - and we should all be able to acknowledge that.

So lemme see - Biden's doing as well as anybody could do handling numerous foreign affairs clusterfucks (including 2 hot wars and other periodic flare-ups), he's got the economy starting to click, he's got us poised on the verge of enormous Climate Change progress, and he's not a fucking Nazi.

So if you're dumb enough to be looking for a reason to vote Biden-Harris that doesn't stop at "HE BEAT THAT DOG-ASS NAZI TRUMP", then you've got plenty to go on.

Household Wealth Has Taken Off, Fed Data Show. That Explains a Lot.

Americans’ wealth grew by 37% from 2019 to 2022, an astonishing pace of accumulation that helps explain why the U.S. economy has remained robust, according to the latest report on consumer finances released Wednesday by the Federal Reserve.

U.S. households’ real median net worth grew to $192,900 by the end of 2022, up from $141,100 recorded three years prior, according to the latest Survey of Consumer Finances. The rapid pace of wealth growth was the largest three-year increase recorded in what the Fed described as the modern survey results. It was more than double the next-fastest increase on record, according to the banks.

That's a 37% increase since the pandemic.

The Fed’s Survey of Consumer Finances is ordinarily conducted every three years and is one of the primary sources of information on the financial condition of different types of U.S. families, but was delayed because of the Covid-19 pandemic. The data released Wednesday are from surveys conducted between March and December 2022.

The figures shed fresh light on just how much financial strength American households were able to build up throughout the course of the pandemic, as generous federal stimulus payments and a slowdown in spending in 2020 allowed families to accumulate savings and pay down debt. Easy-money policies allowed households to refinance mortgages at ultralow rates, while student-loan forbearance programs put payments on hold for tens of millions of borrowers.

As a result, all measures of what the survey terms “financial fragility” declined between 2019 and 2022. The median leverage ratio, or a family’s total debt relative to its total assets, declined to its lowest level in two decades, at 29.2%. The median ratio of debt payments to income ratio also dropped to its lowest level on record, at 13.4%.

That combination of soaring net worth and rising affordability of debt payments helps to explain why the economy has been able to defy expectations and remain so resilient in the face of high inflation and rapidly rising interest rates. With more cash on hand, households have been able to keep up a surprisingly strong level of spending, which has propped up the labor market and helped stave off a long-anticipated recession.

Americans’ surge in net worth was helped along by rising homeownership rates, the increase in home values, higher stock prices, greater overall participation in investing, and, to some extent, higher incomes. Americans who owned their homes or participated in the stock market were more likely to have built up wealth between 2019 and 2022, Federal Reserve economists said.

By 2021, U.S. household median income hit $70,300, a 3% increase from the prior survey. But the mean household income increased 15% from $123,400 recorded in 2018 to $141,900 in 2021.

The income gains were “relatively widespread,” though there were variances among demographic groups, according to the Fed. Median income rose by 1% for white households over the three-year span, for example, but declined by 2% for Black families and fell by 1% for Hispanic.

Other big wealth generators, homeownership and stock-market participation, also increased slightly between 2019 and 2022. The homeownership rate rose to 66.1% of the population, according to the Fed. The median net housing value rose from $139,100 in 2019 to $201,000 in 2022, a positive for homeowners. This was due, in large part, to the fact that home prices rose and debt was relatively flat.

But for those looking to buy, things were getting tougher. Housing affordability fell to historic lows, with the median home worth more than 4.6 times the median family income.

Investing activity also picked up. About two-thirds of working-age families reported they invested in a retirement plan during the 2022 survey period. Roughly one in five households invested in stocks, up from the 15.2% recorded in the 2019 survey. That had a measurable impact given the “sizable rise in major stock indexes” over this period, according to the Fed. All major income groups experienced robust growth in the median and average values of their investments.

In addition to bulking up the asset side of the household balance sheet, Americans also reduced their debt obligations over the course of 2019 to 2022. The median leverage ratio—a household’s total debt relative to total assets—declined to 29.2%, the lowest recorded rate in 20 years, according to the Fed. Only about 6.5% of U.S. families with debt had payment-to-income ratios above 40% as of 2022, the lowest rate on record.

Although the Fed’s survey data only extends through the end of 2022, the relative strength of U.S. consumers has extended into 2023 as well, despite the spending down of pandemic-era savings, higher interest rates, and inflation rates persistently above the Fed’s 2% target.

The deleveraging Americans did during the pandemic has continued to keep consumer spending levels up, according to new, separate research released Wednesday by the Federal Reserve Bank of New York. The large swath of households that took advantage of low interest rates and extra savings to pay down debt, paired with forbearance programs like the pause on student-loan payments, led to significant, sustained improvements in household cash flows.

About 14 million households refinanced their mortgages, which reduced housing debt by about $30 billion annually through 2021, the New York Fed researchers found. Starting in 2020, the researchers calculated, the additional cash flow available for consumption amounted to about $450 billion.

That extra cash has helped drive the unexpectedly steady levels of high consumer spending. While spending growth has retreated somewhat from its 2022 levels, the six-month average of 5.4% is well above its prepandemic level of 3.1% in February 2020. That, in turn, has helped keep readings of gross domestic product on the upswing, given that consumer spending is a huge engine of economic activity.

But with higher interest rates bearing down on consumers and continued restrictions on purchasing power, economists question how long U.S. households can sustain the spending.

It's time for somebody to step up and save Capitalism from the Capitalists - again.

That someone has always been a Progressive, and those Progressives are all on the Democrats' side of the aisle now.

The Bidening Continues

And of course the Press Poodle (Catherine Rampell) has to throw a little shade and remind us that presidents don't really, directly, all-that-much, maybe-it's something-else, get the credit for good economic news - even when it's astonishingly good news, and makes the doom-n-gloom gang look like total dopes. She just can't bring herself to say straight out that after decades of fucked up Republican policy decisions, Biden and the Dems are proving government can work, and have positive effects on the lives of regular everyday Americans.

At least she didn't leave the usual shitty aftertaste of "Yeah but it's prob'ly not good news for the Democrats in the long run".

Fuck 'em - take the W, Mikey.

Opinion

3 milestones from a stunning jobs report

The U.S. economy added nearly twice as many jobs in September as economists had forecast, according to the Bureau of Labor Statistics. And that’s before you consider how much job growth was revised upward in July and August. All in all, it was an astonishingly good report.

Three milestones in particular are worth celebrating:

1. Raise a glass

When covid hit, the shuttering of businesses around the country and reluctance of consumers to dine out eliminated about half the jobs across the industry. That is, between February and April 2020, about 6 million restaurant and bar jobs vanished.

Even as the economy reopened, these employers struggled to hire back workers. Some longtime food services workers had decided to leave the business altogether, trading up to better-paying or more humane positions. Some jumped from employer to employer amid the bidding war for staff. Declines in immigration — owing to pandemic-era policies and the Trump administration’s broader sabotage of immigration processing — hurt the industry as well, since foreign-born workers make up about a fifth of the sector’s jobs.

But bars and restaurants have steadily been recovering, and as of last month, employment levels were finally back to where then were in February 2020. It probably helps that more people are joining the labor force and immigration has largely normalized.

2. A boon for public-sector workers

Public-sector employment also took a hit early in the pandemic. The sector overall has finally recovered all the jobs lost, though that milestone is entirely driven by growth in the federal government.

State and local governments are still deeply in the hole. Hence all those headlines about shortages of teachers, bus drivers, cops, corrections officers, etc.

To be clear, state and local governments have lots of vacancies but are struggling to fill them. This is the result of a collection of factors. The sector’s disproportionately older workforce is aging into retirement, for instance. Amid high inflation, wages in the private sector have risen much faster than those in the public sector (which already paid less for many equivalent roles). Some government jobs (public health, education, elections, policing) have also grown much more stressful in recent years.

3. They can do it

Despite all those warnings about a “she-cession” setting working women back a generation, working women seem to be doing better than ever. After some stagnation in women’s employment early in the 21st century, women ages 25 to 54 are more likely to be working today than at any previous time in history. This is thanks partly to demographic changes, partly to changing social norms and partly to changing working conditions.

The same milestone is not true of men. Prime-age men’s labor force participation is back to where it was pre-pandemic, but longer-term, it’s been trending downward.

So: Does President Biden deserve credit for these remarkable numbers?

In his remarks Friday afternoon, he certainly claimed as much, saying, “It’s Bidenomics, growing the economy from the middle-out, bottom-up, not the top down.” In truth, presidents have very limited control over economic conditions, but since he gets blamed for the bad things no matter what, it’s hard to chastise him for taking credit for the good ones.

To the extent “Bidenomics” is primarily about manufacturing and industrial policy, though, its fingerprints are not terribly visible in data so far.

When Biden spoke in celebration of the robust hiring numbers, manufacturing was the one and only sector he called out by name. The same was true last month. But the recent hiring numbers show very little growth in the sector, even before taking into account the work stoppages related to the United Auto Workers’ strike. (If the strike had begun earlier in the month, the report might well have shown job losses rather than gains in the sector.) And over a longer-term horizon, manufacturing job growth since the pandemic began has been weaker than that in the rest of the economy. Other metrics suggest the sector has been contracting for the past 11 consecutive months.

But on the other hand: Claims that Biden is somehow discouraging Americans writ large from working, or otherwise hamstringing employers, are nowhere evident in the data. Employers are hiring, and Americans are ready to work.

China

1980s: The Canadians are buying up all the businesses - we're doomed!

We weren't doomed

1990s: The Japanese are buying up all the commercial real estate - we're doomed!

We weren't doomed

2000s: The Arabs are buying up all the resorts and apartments and condos - we're doomed!

We weren't doomed

2010s: Foreigners are buying up all the US debt bonds - we're doomed!

We weren't doomed

2020: The Chinese are buying up all the farm land - we're doomed!

Jeezus H Fuq, what's wrong with these people?

I'm not saying, "Don't worry, be happy". There's plenty to worry about. But I will say there's always an under-taste of fuckery whenever I hear some "conservative" telling us horrible things are about to happen.

China’s economic woes may leave U.S. and others all but unscathed

The forecast for escaping economic damage could deteriorate if Beijing cheapens the currency to boost exports

Judith Marks, the chief executive of the elevator maker Otis Worldwide, returned in April from a 10-day trip to China saying “all signals look positive” for the country’s recovery from its draconian covid lockdown.

The Chinese rebound that seemed to be gaining momentum in April lost steam in May and reached midsummer in danger of petering out altogether. Suddenly, the world’s second-largest economy, for years a reliable juggernaut, was ailing. The core of the problem: a debt-ridden, overbuilt property sector that threatened to smother growth well short of the government’s 5 percent annual target.

Chinese weakness is bad news for companies such as Otis, based in Farmington, Conn. China is its most profitable market for new equipment sales, accounting last year for roughly one-third of orders. Through the first half of the year, China was the company’s only major market where orders were in decline.

But the elevators that Otis sells in China are made there. So while the property market slump means that fewer are needed, most of the pain will be felt at Otis facilities in China, not in the United States. For all its remarkable progress and prosperity, China is not an important enough customer of goods produced elsewhere for its woes to be contagious. At least for now.

“China has been less of a growth engine than is widely assumed,” said Brad Setser, a former Biden administration trade adviser. “The direct effects of its slowdown are going to be relatively modest. It doesn’t matter to the export side of the U.S. economy if China grows at zero or China grows at 5 percent.”

That could change if China’s slowdown proves worse than anticipated, unnerving global financial markets, or if the government artificially cheapens its currency in a bid to export its way out of the crisis at the expense of its trading partners.

But China’s downshifting economy is likely to clip just a few tenths of a percentage point off global growth, economists have said. One indication of the country’s modest impact can be seen in its trade in manufactured goods, such as industrial equipment, automobiles, furniture and appliances.

China’s imports of manufactured items for its own use, rather than to make products for customers in other countries, amount to just 3.5 percent of gross domestic product, according to Setser. And China’s reliance on foreign factories is about one-third lower than when Xi Jinping became the country’s leader in 2012 and accelerated a self-sufficiency drive.

“That’s unusually low,” said Setser, now a senior fellow with the Council on Foreign Relations. “China makes almost all of the manufactured goods consumed in China.”

Otis, which has plants in Tianjin and near Shanghai, has operated in China since the mid-1990s. Its elevators and escalators are used in infrastructure projects, such as the Tianjin metro, as well as in the residential and commercial developments at the heart of China’s real estate bubble.

Although the property market slowdown is pinching new equipment orders, demand for servicing of installed units remains strong, Marks told investors in July, when Otis reported higher quarterly sales and earnings.

To be sure, a prolonged downturn in China — or one that is deeper than expected — would be felt around the world. First to suffer would be major commodity producers. The Chinese economic miracle for decades has vacuumed up copper from Peru, ore from Australia, soybeans from Brazil and oil from Saudi Arabia and Russia.

Direct financial links between the United States and China have thinned in recent years, amid a trade war and rising geopolitical tensions. But a deeper Chinese slump could set off a “negative feedback loop,” with sinking stock and bond prices, rising volatility and a soaring dollar combining to sap consumer and business confidence in the United States and elsewhere.

Such a scenario, akin to the fallout from the 2015 Chinese stock market crash, could shave half a percentage point off global growth and 0.3 points off U.S. growth, according to Gregory Daco, the chief economist at EY-Parthenon.

“What matters to the U.S. and the rest of the world is if the China shock is translated into a broad-based deterioration in overall financial conditions,” he said.

China’s neighbors are already feeling a chill. But their decline in exports to China is primarily the result of American consumers buying fewer electronics than they did during the work-from-home phase of the pandemic rather than a consequence of Chinese domestic weakness.

China sits at the center of a pan-Asian electronics supply chain, assembling products with components shipped there from South Korea, Malaysia, Thailand and Taiwan.

Multinational corporations that serve the domestic Chinese market also would be hurt. The German automaker BMW depends on China for more than 29 percent of its annual revenue. More than 27 percent of Intel’s sales come from Chinese customers.

“China does matter for the global economy. Germany is a big exporter to it. It matters for commodity markets. It sets the tone for emerging Asia,” said Nathan Sheets, the global chief economist at Citigroup.

But China’s old growth model, which relied on heavy investment in public infrastructure and housing, is exhausted. After decades of frenzied growth, the country has just about all the high-speed rail lines and apartment complexes that it needs.

Chinese leaders have said they intend to pivot to an economy based on more consumer spending and service industries. But “there’s still a long way to go,” Sheets said.

The current slowdown underscores a shift in China’s global image. For years, China’s vast domestic market beckoned multinational corporations with the promise of enormous profits. And it seemed certain to surpass the United States as the world’s largest economy.

Now, the outlook is less rosy. China grew in the second quarter at an annual pace just above 3 percent, a far cry from the roughly 9 percent rate it averaged over its first three decades of economic reform. Its aging labor force is shrinking, and Xi emphasizes loyalty to the Communist Party rather than expanding the economy.

Visiting Beijing last week, Commerce Secretary Gina Raimondo said U.S. business executives have told her that China is “uninvestable” because of the government’s increasingly erratic treatment of foreign businesses.

“China is growing slower and building less. It’s not going to be uniquely central the way it used to be,” said Scott Kennedy, a senior adviser at the Center for Strategic and International Studies (CSIS).

The International Monetary Fund says China will contribute more than one-third of global growth this year. But that figure overstates China’s impact on its trading partners, some economists have said. Rather, it demonstrates the arithmetic truth that China, even with all its problems, is a large economy that will grow faster than its counterparts. That produces a large output gain, but most of the benefits stay at home.

China runs a sizable trade surplus with the rest of the world, meaning it sells to other countries much more than it buys from them. Chinese exporters dominate global markets for products such as electronics, footwear and aluminum, while consumers in China save much of their income rather than spending it on foreign goods.

As the Federal Reserve and other major central banks tried to cool inflation by raising interest rates over the past year, foreign demand for Chinese goods sagged. Through July, Chinese exports were down 5 percent from the same period in 2022. But imports fell nearly 8 percent, meaning the surplus widened.

“Countries that run a trade surplus basically subtract more from global growth than they contribute,” said George Magnus, an economist at Oxford University’s China Center. “It’s doing more for its own growth than it’s contributing.”

Exports have been a central ingredient in China’s economic strategy for decades. Government officials have repeatedly spoken of promoting domestic consumption. But in the past three years, China’s export sector has delivered more than one-fifth of the country’s annual economic growth, the largest share since the 1997 Asian financial crisis, according to the ChinaPower project at CSIS.

China began the year with hopes for a boom. In December, Xi reluctantly relaxed his strict zero-covid policy after rare public protests. Freed from lockdown, Chinese consumers were expected to drive an economic rebound.

But after a burst of spending, the recovery fizzled. Fresh government data this week showed Chinese factories, consumers and real estate developers all mired in a slump.

“They’re structurally in a deep hole that they’re going to have a lot of difficulty climbing out of,” said Andrew Collier, the managing director of Orient Capital Research in Hong Kong.

Chinese authorities have taken a number of steps to revive growth, including cutting interest rates. But they have made little headway. And with more than 21 percent of young people unemployed, the prospect of social unrest looms.

One lever Beijing has not pulled is manipulating the value of its currency.

The yuan this year has fallen 5 percent against the dollar, reflecting China’s slower growth and lower interest rates. The government could further cheapen the yuan by selling it on global markets. That would effectively discount Chinese goods, making them less expensive for customers paying with dollars and euros.

Swamping foreign markets with made-in-China products would raise export earnings and boost domestic employment. But it would be certain to worsen already fractious relations with the United States and Europe.

There’s no sign yet that the Chinese authorities plan to make such a move. But if the economic deterioration accelerates, they might.

After all, they have done so before. China kept its currency undervalued for years after joining the global trading system in 2001, prompting years of complaints from the U.S. government and American businesses.