United States Economy Is Better Than Advertisted

Over the last several years, the United States economy has experienced steady growth. While growth has been slow, it is evident that the American economy is making positive improvements.

Since President Obama’s first year in office, the unemployment rate has gone down from 10 percent to 5.3 percent. Gross domestic product expanded at a rate of 2.5 percent. Furthermore, the federal deficit is estimated to be $486 billion this year, which is about a third of deficit total in 2009.

However, as this article points out, if you follow the current political discussion, you would be likely to believe the economy is in horrible shape. Much of the discussion has centered around stagnant wage growth and growing income inequality. So why is there so much negative rhetoric surrounding the economy when we have clearly seen positive growth and encouraging signs?

This election cycle has no incumbent president running for re-election. The incumbent party has the difficult task of highlighting the successes of the party, but at the same time not appearing to be complacent. Therefore, the are more likely to highlight the weakness of the current policies and the president. In addition, the opposition party will focus on pushing the belief that the economy is in turmoil — as a result of the current president’s policies — and presenting their ideas for change.

The views of the United States economy are, undoubtedly, affected by the current outlook of the world economy as well. European nations are currently unstable, in large part due to the debt crisis in Greece. The future of the Chinese economy remains uncertain, as the currency has plunged and growth has slowed. Many are worried the troubles in China will begin to negatively impact the United States economy.

Lastly, the growth of the economy has not translated into any positive benefits for most Americans. Private investment has remained sluggish as companies struggle to generate more revenue for the top line. The investments are the main driver of productivity and as a result, wage growth. Therefore, wages have remained stagnant for many Americans leading to a negative outlook on the economy by many Americans.

Over the remainder of this election cycle, we will be sure to continue hearing about the many problems of the United States economy. Each presidential hopeful will continue to address and exploit these problems and introduce their plans and policies to address the concerns. However, it is important to understand that the economy is currently moving on a positive path while listening to these plans.

If you would like to learn more about the economic plans for some of the top presidential candidates, check out this website.

Google Transitions to Alphabet

Google has recently announced that it will be reorganizing into a holding company, taking on the name Alphabet. The company known as “Google” will now be one of the company companies within the broader organization, as there are numerous projects under the alphabet umbrella.

Over the past several years, Google has expanded far beyond its initial business of Internet search and online advertising. Reorganizing the structure of the company will allow some of its more experimental and far-reaching to have more autonomy moving forward.

“Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet,” stated Larry Page. “This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google.”

So what exactly is Alphabet comprised of? Under the plan announced yesterday, in addition to the core Google business (Internet search, mapping, and Youtube), there will be the separately managed entities of Google Fiber, Next, and Google Ventures (the investment business).

There will be slight shifts in the management of Alphabet and Google, with CEO Larry Page transitioning to CEO of Alphabet and co-founder Sergey Brin serving as president. Sundar Pichai, who has been a longtime executive with the company, will become the CEO of the core Google Business. But overall, not much of the responsibilities will change from this perspective, as Pichai has been overseeing much of Google’s core business for years now.

For those with investments in Google as the publicly-traded entity, all shares with automatically be converted into the same number of shares of Alphabet. The two class shares — GOOGL and GOOG — will continued to trade on Nasdaq under the same ticker name as well.

Despite Promising Progress, Trans-Pacific Trade Partnership Not Finalized

transpacific agreementThe Trans-Pacific Trade Partnership hit another roadblock this past week, as the United States and 11 other Pacific nations failed to reach a final agreement. The partnership, which would create the largest regional trade agreement ever, has been met with a great deal of complications.

The trade partnership has been in the works for over a decade, with America taking the lead back in 2009. The Trans-Pacific agreement, which involves so many countries, each with their own set of priorities, has proven to be even more complicated than anyone had originally thought. The representatives working on the deal, however, are still optimistic and believe they are closing the gaps, meaning a final agreement could be reached fairly soon.

“There are an enormous number of issues that one works through at these talks, narrowing differences, finding landing zones,” said Michael B. Froman, the United States trade representative. ”I am very impressed with the work that has been done. I am gratified by the progress that has been made.”

Final agreements were reached in a few key areas this past week, including broad environmental protections for some of the most sensitive, diverse and threatened ecosystems on Earth. This had been one of the more problematic sections of the agreement. In addition, agreements on how to label exports with distinct “geographic indications” and a code of conduct and rules against conflicts of interest for arbitrators who would serve on extrajudicial tribunals to hear complaints from companies about whether their investments were unfairly damaged by government actions.

Representatives will now be returning to their home countries to iron out the remainder of the agreement before they reconvene again. In order for the agreements to succeed, all countries involved will need to find ways to narrow the differences that remain.

The failure to not finalize the deal in its entirety means that the next round of negotiations will now likely force presidential candidates to voice their opinion on the agreement, a topic some of been avoiding. Republican candidates are likely to support the agreement but high profile democratic candidates, particularly Hillary Clinton, have shied away from taking a stance.

The progress made this past week is promising, as the countries have been able to keep the momentum going on this agreement. Although the longer they continue to go without reaching an agreement, the chances of the plan unraveling may increase.

To learn more about the Trans-Pacific Agreement, check out this CNBC article.

How The Decline Of The Chinese Economy Could Affect The United States

China has experienced enormous economic growth over the past several years, moving from the sixth largest economy in the world to the second over the past 15 years. But it seems that countries economic expansion has finally begun to cool off.

Growth in China has fallen to its lowest levels since 2009, which has many investors in the United States, and throughout the world, nervous about how this will affect them at home. This fear is compounded by the belief that Beijing may be cooking their books, meaning the economy may be even worse than they are letting on.

If the Chinese economy continues to shrink, many fear that this will bring other economies down as well. This comes at a time when governments are running out of money to continue jump starting economies in need, following the Great Recession of the United States as well as the European Debt Crisis and the troubles with Greece.

While it is still early to determine if China has just hit a minor roadblock or if country is, it doesn….. These are some of the main ways that China’s economic turbulence could affect the United States economy:

1) Trade Slowdown

United States – China trade is expected to surpass the United States – Canada trade relationship as the largest in the world, according to State Street Global Advisors. A slowing China economy would mean less purchases of United States goods.

However, exports only make up 13% of GDP, while consumer spending accounts for more than two-thirds. This means that the United States will likely not be greatly affected by reduced trade. As long as consumers continue to spend their money, the economy as a whole should be able to weather the storm.

2) American Business Hit

The United States stock market has significant exposure to China’s economic troubles. In fact, 40% of the revenue generated by S&P 500 companies comes from overseas markets. If China’s economy continues to struggle, it could hurt multinational companies that rely on purchases made from consumers overseas.

While many large companies, such as Apple and Nike, claim that China’s slowing growth has not hurt their business, continued downward pressure could eventually affect large companies with exposure to foreign markets.

3) China’s coming financial

The explosion of economic growth throughout China was fueled largely by an explosion of debt. But as the economy begins to slow down, the concern is that toxic loans could trigger a financial crisis similar to what happened in the United States with bad mortgages in 2008. Although many investors seem confident that the Chinese government will step in before a problem of the magnitude arises. The government has a cash hoard of $4 trillion and is willing to spend heavily to prevent a stock market plunge. The central bank has already aggressively lowered interest rates to help aid the economy.
Check out the video below to learn more about the problems within the Chinese economy.