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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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  • 3 weeks later...

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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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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