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The Trump Economy

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As a corp credit mgr for a manufacturing company I occasionally get these updates on the state of the economy based the perspectives of

credit mgmt.   A couple of items of note in the report copied in part below:   1.  The tax cut 'benefit' is slowly loosing its bunch.  2. The economy growth from

the last quarter was boosted by tariff fears.   I expect slower growth next quarter.   I'm not an economist, nor do I play one on TV, but tariff threats and increasing

tariffs is no way to build an economy.  I also believe we are beyond the point where tax cuts can add real long term value to the economy.  It may have worked

for JFK and Reagan during high tax eras but it didn't work for GWB  (with all of his big spending) and it won't be sustainable under Trump.  My tax reduction has

already been eaten up by rising gas prices.

 

 

 

https://bcm.nacm.org/index.php/enews#1

Quote

 

NACM’s Credit Managers’ Index (CMI) saw a small downturn in June, and this trend of dropping numbers continued in the month of July. The combined score fell just shy of a point, reaching a low of 55.5 that hasn’t been seen since January.

Sales, in particular, saw the biggest fall in both sectors, a combined drop of 5.7 points from last month. Even though the American economy appears to be thriving with a Q2 growth of 4.1% and unemployment down to 3.8%, this sharp drop in sales and tumble in the combined sectors indicates challenges for the future. NACM Economist Chris Kuehl, Ph.D., said many of the positives come in the form of concentrated, deliberate preparation.

“It seems that credit managers are seeing some of these warning signs and are not as impressed with these good news reports,” said Kuehl. “Much of what drove the fast growth in Q2 came from higher export levels, which took place as buyers of soybeans and other agriculture products rushed to get their orders filled before tariffs took effect. Sales will now start to fall like a rock.”

Despite the apprehension in sales, Kuehl noted the number reads above 60 at 63.9, which is still a solid reading. The hype from the tax cuts in the new tax reform has begun to calm, meaning sales are calming down with it. Just as sales are fading, so are dollar collections and amount of credit extended.

The manufacturing sector saw a slightly smaller decline than service, falling a total of half a point to 55.4 compared to service’s fall of about one point. The smaller drop in manufacturing likely comes from small- and medium-sized businesses finally purchasing the machines needed for years following the recession. While this did bring the score up, it appears to be only a temporary fix and not a sustainable one for the future.

Quote

“What is worrisome is that there are still lots of sagging readings in the nonfavorable sectors,” Kuehl said. “If companies are still struggling to get out of a rut this long into a robust recovery, what will they look like when there are issues later with a slowing economy?

Looking at the service sector, sales dropped significantly by about five points, but the score is at 65.3—a decent reading. This sector also saw a jump in new credit applications, likely due to retail stores building up inventory for the upcoming shopping season.

 

 

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I posted this elsewhere and got blasted for it, but back home over the summer, I usually stop in some of the smaller towns in SE and Central Nebraska, usually because the smaller towns still know my family name and I can get good stories about my late father, grandfather, and/or grandmother (or dirt on my current aunts/uncles). ;)

 

The *same* thing I heard over and over again was about these tariffs and how their soybean crop was worth only a fraction of what it was previously (when costs of planting are factored in), and that many of the family farmers are going to be in dire fiscal straits with these actions from Washington. Sure, it's anecdotal, but when you go from cafe to cafe, and it's the same story all over, it gives you pause to think what the long-term impact of this will be.

 

Of course, corporate farming is salivating at all of the purchase opportunities that are lining up for them should this come to fruition...

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2 hours ago, Clifford Franklin said:

 

Bloody brilliant.

 

3 hours ago, RedDenver said:

 

Amazing - both the air head fox commentator  and the reply.

Let's move to Denmark!

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21 hours ago, VectorVictor said:

I posted this elsewhere and got blasted for it, but back home over the summer, I usually stop in some of the smaller towns in SE and Central Nebraska, usually because the smaller towns still know my family name and I can get good stories about my late father, grandfather, and/or grandmother (or dirt on my current aunts/uncles). ;)

 

The *same* thing I heard over and over again was about these tariffs and how their soybean crop was worth only a fraction of what it was previously (when costs of planting are factored in), and that many of the family farmers are going to be in dire fiscal straits with these actions from Washington. Sure, it's anecdotal, but when you go from cafe to cafe, and it's the same story all over, it gives you pause to think what the long-term impact of this will be.

 

Of course, corporate farming is salivating at all of the purchase opportunities that are lining up for them should this come to fruition...

I never thought of this. Could this turn into the death of the family farm? We know that family owned farms have been dwindling for sometime, but could this decimate any chance for those left. How long can these family run businesses really hold out?

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My family farms, and I spoke with my dad about this. He was not happy about the tariffs, but he explained it to  me that he felt it is what was probably best for out country in the long term in regards fair trade. I tend to listen to my father who always seems to be right (despite me consistently going against his advice) and is a pretty staunch democrat. 

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22 hours ago, VectorVictor said:

I posted this elsewhere and got blasted for it, but back home over the summer, I usually stop in some of the smaller towns in SE and Central Nebraska, usually because the smaller towns still know my family name and I can get good stories about my late father, grandfather, and/or grandmother (or dirt on my current aunts/uncles). ;)

 

The *same* thing I heard over and over again was about these tariffs and how their soybean crop was worth only a fraction of what it was previously (when costs of planting are factored in), and that many of the family farmers are going to be in dire fiscal straits with these actions from Washington. Sure, it's anecdotal, but when you go from cafe to cafe, and it's the same story all over, it gives you pause to think what the long-term impact of this will be.

 

Of course, corporate farming is salivating at all of the purchase opportunities that are lining up for them should this come to fruition...

I'm not really hearing/seeing much of that talk here in S.E. Nebraska.   In fact I don't know if I have heard anyone bring up the tariffs.

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32 minutes ago, Huskertrapper said:

I'm not really hearing/seeing much of that talk here in S.E. Nebraska.   In fact I don't know if I have heard anyone bring up the tariffs.

 

A couple times this summer, I've been around a group of farmers.  Most don't know my dislike of Trump.  I'll bring up the question on crop prices and tariffs and it's like I was at the family reunion and asked why Cousin Clifford wasn't here (because he's in prison).  They quickly change the subject.

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3 hours ago, Husker from Kansas said:

My family farms, and I spoke with my dad about this. He was not happy about the tariffs, but he explained it to  me that he felt it is what was probably best for out country in the long term in regards fair trade. I tend to listen to my father who always seems to be right (despite me consistently going against his advice) and is a pretty staunch democrat. 

 

It's pretty odd. A lot of these famers, despite the tariffs, seem to put a lot of faith in Trump that he's out their fighting for their best interests. It's almost Stockholm Syndrome-like. 

Personally I think the guy just always wanted to play trade wars. One day we'll wake up and the grift will be over. I just wonder how much better or worse off the farmers (and the rest of us) will be.

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17 minutes ago, Huskertrapper said:

Clifford you are watching too much CNN...the drought this year has hurt farmers more than the tariffs will.

 

I can agree with this, a lot of farmers around here are struggling more due to poor yields then the what the tariff's will do. But I think the real travesty is the fact that the small time farmer is almost non existent. Farmers feel pressured to farm more land, have bigger equipment, larger yields, etc, etc. This has caused a lot of farmers to go into massive debt in order to buy the necessary equipment, seed, fertilizer, fuel and everything else it takes. 

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Just now, Husker from Kansas said:

 

I can agree with this, a lot of farmers around here are struggling more due to poor yields then the what the tariff's will do. But I think the real travesty is the fact that the small time farmer is almost non existent. Farmers feel pressured to farm more land, have bigger equipment, larger yields, etc, etc. This has caused a lot of farmers to go into massive debt in order to buy the necessary equipment, seed, fertilizer, fuel and everything else it takes. 

I agree, but that has gradually been happening over the last 20 or so  years.  Its happened to the pig farmers, and the row crop farmers mostly, but I also see it happening to the cattlemen.  I think a lot of it has to do with young people not staying around the small rural communities to farm/ranch.  The town I work in, and grew up in has also really changed the last 20 or so years, and I attribute much of the change to the decline of small family farms. 

 

The last two  years have been pretty tough rain wise here in extreme southeast Nebraska.  We have finally gotten some rain the last week, and it will help some.  We will get by though.

 

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46 minutes ago, Husker from Kansas said:

 

I can agree with this, a lot of farmers around here are struggling more due to poor yields then the what the tariff's will do. But I think the real travesty is the fact that the small time farmer is almost non existent. Farmers feel pressured to farm more land, have bigger equipment, larger yields, etc, etc. This has caused a lot of farmers to go into massive debt in order to buy the necessary equipment, seed, fertilizer, fuel and everything else it takes. 

 

40 minutes ago, Huskertrapper said:

I agree, but that has gradually been happening over the last 20 or so  years.  Its happened to the pig farmers, and the row crop farmers mostly, but I also see it happening to the cattlemen.  I think a lot of it has to do with young people not staying around the small rural communities to farm/ranch.  The town I work in, and grew up in has also really changed the last 20 or so years, and I attribute much of the change to the decline of small family farms. 

 

The last two  years have been pretty tough rain wise here in extreme southeast Nebraska.  We have finally gotten some rain the last week, and it will help some.  We will get by though.

 

 

Family farmers have been struggling with debt for decades. Probably since the Dust Bowl, probably before that.

 

I remember a joke back in the 1980s my grandpa (who farmed) told us:

 

A reporter was asking a local farmer what he was going to do with the million dollars he just won in the lottery. Was he going to retire? Travel? Buy a big car? 

 

"Nah," said the man. "I'll probably just keep farming until it's all gone."

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36 minutes ago, knapplc said:

 

 

Family farmers have been struggling with debt for decades. Probably since the Dust Bowl, probably before that.

 

I remember a joke back in the 1980s my grandpa (who farmed) told us:

 

A reporter was asking a local farmer what he was going to do with the million dollars he just won in the lottery. Was he going to retire? Travel? Buy a big car? 

 

"Nah," said the man. "I'll probably just keep farming until it's all gone."

sounds like something my Grandpa would have said.  He was a farmer, my dad also farmed the same land.    

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Those poor farmers sure drive nice trucks though... :P

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So this guy wants to put tariffs on "Canadian" cars, to bring Canada to the negotiating table. Ok, but those cars are built with parts made in the USA, and owned by American OEMs. So he wants to bring Canada to the table by punishing American car companies and their supplier base, all because Canada is protecting it's dairy farmers. Something that we probably do too. Good plan Donnie...

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5 hours ago, ZRod said:

So this guy wants to put tariffs on "Canadian" cars, to bring Canada to the negotiating table. Ok but those cars are built with parts made in the USA, and owned by American OEMs. So he wants to bring Canada to the table by punishing American car companies and their supplier base, all because Canada is protecting it's dairy farmers. Something that we probably do to. Good plan Donnie...

 

 

He’s stupid. Par for the course. 

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46 minutes ago, BigRedBuster said:

I'm posting this here and acknowledging that there was a lot that came before Trump came to office that contributed to this.

 

 

So serious question... How many would be ok if we continued this trend for the next 5 to 7 years? Knowing that the recovery was slow, but steadily positive. Do we really need to slash regulations to "spur" an already positively trending economy? Curious what people's thoughts are.

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1 hour ago, ZRod said:

So serious question... How many would be ok if we continued this trend for the next 5 to 7 years? Knowing that the recovery was slow, but steadily positive. Do we really need to slash regulations to "spur" an already positively trending economy? Curious what people's thoughts are.

 

 

The environment is on the top of my list of things to care about, unless there’s a disaster or someone invades the U.S. or there’s a coup.

 

So, to answer the question, we didn’t need to deregulate. People’s lives and keeping animals and plants from going extinct are more important than huge corporations increasing their profits.

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1 hour ago, ZRod said:

So serious question... How many would be ok if we continued this trend for the next 5 to 7 years? Knowing that the recovery was slow, but steadily positive. Do we really need to slash regulations to "spur" an already positively trending economy? Curious what people's thoughts are.

Needless, redundant regulations yes -  there is often overlapping regs between various agencies.  Sometimes we no longer need the regs.  Thus I think we should always be for  auditing what regs are needed and cutting those that have outlived their usefulness or intended purpose.  The goal should be 'efficient govt' and not necessarily 'smaller govt'.  If smaller govt is the goal, then our eyes are on the wrong prize and we will slash needful things that in the end hurt people, business, environment, etc.   But if the goal is efficient govt then we will aim at keeping regs that promote the 'common welfare' of our society without causing an unwarranted burden on our right to  "Life, Liberty and the pursuit of Happiness"

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2 hours ago, ZRod said:

So serious question... How many would be ok if we continued this trend for the next 5 to 7 years? Knowing that the recovery was slow, but steadily positive. Do we really need to slash regulations to "spur" an already positively trending economy? Curious what people's thoughts are.

I have been very happy with the economy over the last 6-8 years.  In fact, on top of Trump being a total idiot, this is one of the biggest issues with me that I didn't like.  He wanted to come in and change everything, slash everything, bolster the economy....bla bla bla....

 

I sat back and thought....WTF???  the last 5-7 years have been pretty dang good....why do we need to do all of that and potentially screw everything up?  Which.....I ultimately think will happen.  So...I already didn't like what he was proposing.....then he ended up being a total blubbering idiot.....which scares me even more.

 

I am a FIRM believer in things like this, slow and steady is way better because, what goes up always goes down.  If it goes up fast....it's going to come crashing down.  If it goes slow and steady, it will turn south and we have time to react.

 

TG also reminded me of something else.  As a rule, I am not opposed to going through regulations and weeding out old, repetitive, outdated regulations....or ones that don't accomplish what they were sat in place to do.  I am NOT for the wholesale slashing of regulations just because a "D" put them in place.

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I am going to post this here with this caveat.  I have no clue if my feelings on this are an indication of where things are headed and even if I'm right, I have no clue if Trump's policies are causing it.

 

But....

 

Many here know our company sells products into the housing industry all over the US.  We aren't a huge company, but big enough that I can get a feel for how the economy is going in various areas of the country.

 

For most of this year, we have been very busy.  On top of that, it has been very difficult at times to get trucks to deliver materials.  There were so many loads that need delivered, trucks could basically name their price.  It made for an interesting summer.

 

However, in the last month, our Florida customers have indicated that their business has really slowed down.  Back in 2007, Florida was the first place that started telling us the housing market was pulling back and their sales dropped.  Company wide, over the last 6 weeks, our orders have been below last year's.  On top of this, our shipping department is telling me it's no problem getting trucks.

 

Now, saying that, many times we see a pull back in August due to family vacations and people getting kids back to school....only to see a pick up going into the fall.

 

It's going to be really interesting to see if this is a seasonal issue or if this is an indication of a pull back in the entire economy.

 

Honestly, no matter who would have won in 2016, I was preparing for a pull back at some point, just because we were due.  We have been growing since 2009.  The economy never goes up without pulling back every once in a while.

 

Time will tell.

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On 9/12/2018 at 10:21 AM, ZRod said:

So serious question... How many would be ok if we continued this trend for the next 5 to 7 years? Knowing that the recovery was slow, but steadily positive. Do we really need to slash regulations to "spur" an already positively trending economy? Curious what people's thoughts are.

There's a small problem with this scenario, while wages have risen, inflation has risen about the same or faster meaning that real wages have actually been flat or falling. And when you break it down into different income percentiles, you can see that the top 10% are getting most of the rise and the bottom 50% getting nothing.

 

In U.S., wage growth is being wiped out entirely by inflation

Quote

Cost of living was up 2.9 percent from July 2017 to July 2018, the Labor Department reported Friday, an inflation rate that outstripped a 2.7 percent increase in wages over the same period. The average U.S. “real wage,” a federal measure of pay that takes inflation into account, fell to $10.76 an hour last month, 2 cents down from where it was a year ago.

For most U.S. workers, real wages have barely budged in decades

FT_18.07.26_hourlyWage_increases.png

 

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14 minutes ago, ZRod said:

There's no units on that Excel graph. It means nothing.

 

 

yes huh

 

 

Obama did really good to get a 7.5

 

Trump gets a .5

 

simple math dude

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32 minutes ago, Landlord said:

 

 

yes huh

 

 

Obama did really good to get a 7.5

 

Trump gets a .5

 

simple math dude

Meh..I agree with Zrod.

 

The graph is too simple to really mean something.

 

Is this an average annual rate?  Cumulative?

If it's Cumulative, there are more years for Obama than Trump.

 

 

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49 minutes ago, BigRedBuster said:

Meh..I agree with Zrod.

 

The graph is too simple to really mean something.

 

Is this an average annual rate?  Cumulative?

If it's Cumulative, there are more years for Obama than Trump.

 

 

 

 

Obama Economy 7.5 = good

 

Trump Economy .5 = bad

 

HOW IS THIS HARD TO UNDERSTAND

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7 minutes ago, Landlord said:

 

 

Obama Economy 7.5 = good

 

Trump Economy .5 = bad

 

HOW IS THIS HARD TO UNDERSTAND

 

No real reason to yell.

 

If it's a cumulative figure, that really is 1.5 for Obama and .25 for Trump


Still, Obama wins.  But, no where close to as impressive as the graph makes it look.  

 

With no further explanation to the graph, the graph really doesn't mean much.

 

How is this hard to understand?

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10 minutes ago, Landlord said:

 

 

Obama Economy 7.5 = good

 

Trump Economy .5 = bad

 

HOW IS THIS HARD TO UNDERSTAND

 

 

If it’s cumulative you divide 7.5 by a bigger number than for Trump.

 

I doubt it’s cumulative, but the thing I thought of right away is I doubt the effect Conservatives expect from tax cuts is supposed to happen after only 1 year. I’d think (if I believed in their theory) it would be a gradual improvement.

 

Trump cut taxes so it stands to reason his revenue would not increase at a high rate in the first year.

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8 minutes ago, Moiraine said:

I doubt it’s cumulative, but the thing I thought of right away is I doubt the effect Conservatives expect from tax cuts is supposed to happen after only 1 year. I’d think (if I believed in their theory) it would be a gradual improvement.

 

 

True.  The tax break on corporations won't fully be recognized for another year.  Tax rate are as such:

 

2017 = 35%

2018 = 28% 

2019 = 21%

 

Edit:  That's what it is for us.  But, the 2018 figure might depend on when your fiscal year starts and ends.  Ours is October 1st so we have a blended tax rate for this year.  But, to take this another step....some companies might not fully recognize the tax savings till they do their taxes at the end of fiscal 2019.

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Not really "Trump Economy" since only one data point is during his presidency, but putting it here anyway.

 

I wonder if the mid-2012 bump is due to people going to school in 2008 after losing their jobs/savings.

 

HHDC_2018Q1_Chart1-1024x768.jpg

 

 

Some others:

 

US-consumer-credit-total-2018-Q2.png

 

US-consumer-credit-student-loans-2018-Q2

 

 

1.53 trillion out of 3.87 trillion is student debt. 39.5%

 

Back in 2008 it was about 620 billion out of 2.63 trillion, which is 23.6%

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1 hour ago, BigRedBuster said:

A good thread about what Trump keeps bragging about. 

 

 

 

 

He said yesterday he’d be willing to look into “a” sanction, but not on any that affect arms sales.

 

It reminds me of the Republicans (including Trump) who are extreme anti regulation to the point where even if the regulation is preventing pollution that hurts people they’re fine with it because $ > all.

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Color me shocked SHOCKED that corporations took a major tax cut and lined their pockets instead of investing in their companies to grow their business and have better earnings.

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Read this last night. It seems like the mythical Trump economy is slowing down. Looks like those of us who just recently began building our portfolios are going to have to wait a while for them to start looking good.

 

I guess it makes sense. The juice from the tax cuts is probably starting to run out, and I can't see them adding more fuel via more cuts with a divided Congress coming soon. From what I've heard the overall economic indicators remain pretty strong due to the regulatory policies of this administration, but this piece lists substantial evidence a downturn is coming as well, ranging from the trade wars to falling energy prices to corporate growth & the jobs market peaking to the global economic cycle. 

 

That second piece suggests once we start seeing unemployment starting rising again we should brace for the oncoming recession.

 

 

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