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Westlake Legal Group > Posts tagged "GDP"

Ryan Bourne: In America, public spending conservatism is being lost. It could happen in Britain.

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Austerity is over. Theresa May told us so after the 2017 election, and again at the Conservative Party Conference last year. Philip Hammond tried restraining her from a blitz of high-profile spending announcements. Yet Team Johnson has now picked up the baton anyway. Today’s spending review from Sajid Javid will reportedly confirm significant money injections for schools, hospitals and the police. The Prime Minister said Monday it will be “the most ambitious spending round for more than a decade.”

Restraining government spending was always said to be a temporary deficit repair tool, of course. Those “tough choices,” added to net tax hikes, have helped bring down the budget deficit to just 1.3 per cent of GDP, from a gargantuan 9.9 per cent in 2010. Once near-balance, a spending squeeze was never envisaged to continue year after year. Despite Nick Timothy’s fear of libertarians under the bed, no recent Conservative leader has been ideologically committed to shrink the size and scope of government. Absent “thinking the unthinkable,” one eventually must release the spending grip given voter demands for high-quality services.

And yet…the zeal with which the Tories have turned heel on their spending narrative is surprising. Whatever one’s view on the efficacy or composition of “cuts”, they were central to the party’s offer through 2016, including the 2015 election win. Balancing the books was said to be about unburdening the next generation from dumping more debt on top of the iceberg associated with an ageing population. Any intergenerational justice message has now gone the way of the Titanic.

For the Government is not promising gradual targeted spending increases in these areas – a natural uplift from a reset baseline after years of restraint. No, proposed hikes in education funding would virtually reverse any real schools’ spending cuts over the past decade. May’s extra money for the NHS is a big step-change too. The spending review is celebrated as the “biggest, most generous spending review since the height of Tony Blair’s New Labour,” no less – a far cry from denouncing that era’s profligacy. In one swoop, the Treasury has undercut its long-held opposition to raising borrowing and junked the idea that public service reform trumps showering public services with money.

Javid attempts to thread the needle by arguing that more spending is still consistent with keeping the debt-to-GDP ratio on a shallow downward path. That maybe true. But a stated goal of policy was always to balance the books overall, even if George Osborne and David Cameron continually pushed back the deadline. A former Treasury fiscal policy director now says that borrowing will in fact start rising again, and soon be above two per cent of GDP. Manageable, yes – but a clear change in direction.

The public discourse effects of this reversal should worry fiscal conservatives. Cameron and Osborne’s consistent messaging helped entrench two crucial contours in discussions about government spending. First, that there was no free lunch (every Labour proposal for years was met with the question “how will you pay for it?”) Second, that what you did with the money (the organisation of public services) was as important as spending levels. After years of Tony Blair’s money throwing, the public were receptive to such apparently grown-up thinking. Now, both those claims-cum-restraints that ensnared Labour have been removed.

If large, real increases in education funding are synonymous with better schools, as Tories imply, Labour can coherently ask “why did you cut real funding beforehand?” Such corrective spending hikes look an admission of a past mistake. Doubly so if funded through borrowing that was previously considered intolerable.

Couching this as “an end to austerity” brings similar peril. These particular decisions don’t imply “we are going to return to affordable spending increases consistent with a low deficit.” If large spending hikes for education are seen as reversing austerity, then obvious questions arise: what about local authority funding? Prisons? Criminal justice? Have these not suffered more from the pain you admit was damaging?

Of course, Brexit is the important context here. It is sucking oxygen from normal economic debates – one reason why the logjam needs to be broken. A slowing economy, induced in part by uncertainty, means an obsessive near-term public finance focus is probably unwise. The very process of extrication requires budget flexibility, not least because the underlying public finances could look very different when future trade relations crystallise.

But all this would be a case for relaxing or suspending fiscal targets through the choppy Brexit seas, not bold new announcements.

No, it’s difficult not to conclude there’s not something bigger happening here. Much of the party has embraced a simplistic “left behind” narrative of the Brexit vote – that it was a cry for investment in public services. They are egged on by former government advisors, armed with polling, who see an opportunity to steer the party towards a “bigger government” vision for the party they’ve always spoiled for.

Academic evidence in fact shows new Brexit voters affiliating with the Tories quickly adopt traditional Tory views on other issues. There’s no need to pander. Yet when you see John Redwood railing against austerity, you realise how strong this view about the changing party voter base has set.

Whether Johnson shares that interpretation is less clear. Perhaps he sees funding boosts now in three major non-Brexit policy areas as short-term deck clearing before an election. Polling strength from these “good news stories” might even firm up pressure on the EU and rebel MPs on his central task. If it helps finally deliver Brexit, many of us will accept fiscal jam tomorrow.

I want to believe this, but the noises aren’t encouraging. And living in the US, where Republicans have gone from a Tea Party anti-spending force to delivering unprecedented deficits for peacetime, in just a decade, I’ve observed just how easily spending conservatism is lost.

Here, it started with big spending increases on priorities too. Republicans cut taxes, yes, but huge cash increases for defence were delivered, greased by money for some Democrat priorities. Once that dam opened though, the money poured. July’s budget deal threw off the last vestiges of spending caps delivered by the Tea Party Congress. Promises of Republican spending restraint in Donald Trump’s potential second term ring as hollow as claims he’s using tariffs as a path to freer trade.

Here’s the worrying consequence. As US conservatives have learned to love deficits, or at least use them, the left’s spending demands have only gotten more extreme. With constraints stripped away, Democratic Presidential candidates feel liberated to propose mammoth programmes and spending hikes – the Green New Deal, a jobs guarantee, universal childcare and more. When asked how the country can afford this, they point out to the red ink spilled for Republican priorities. There is no answer.

UK Conservatives are far from the Republican point of no return on spending, as yet. But the mood music has changed dramatically. America shows that when conservatives abandon spending constraint, they legitimise the left’s spending wild demands, to taxpayers’ detriment.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ryan Bourne: In America, public spending conservatism is being lost. It could happen in Britain.

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Austerity is over. Theresa May told us so after the 2017 election, and again at the Conservative Party Conference last year. Philip Hammond tried restraining her from a blitz of high-profile spending announcements. Yet Team Johnson has now picked up the baton anyway. Today’s spending review from Sajid Javid will reportedly confirm significant money injections for schools, hospitals and the police. The Prime Minister said Monday it will be “the most ambitious spending round for more than a decade.”

Restraining government spending was always said to be a temporary deficit repair tool, of course. Those “tough choices,” added to net tax hikes, have helped bring down the budget deficit to just 1.3 per cent of GDP, from a gargantuan 9.9 per cent in 2010. Once near-balance, a spending squeeze was never envisaged to continue year after year. Despite Nick Timothy’s fear of libertarians under the bed, no recent Conservative leader has been ideologically committed to shrink the size and scope of government. Absent “thinking the unthinkable,” one eventually must release the spending grip given voter demands for high-quality services.

And yet…the zeal with which the Tories have turned heel on their spending narrative is surprising. Whatever one’s view on the efficacy or composition of “cuts”, they were central to the party’s offer through 2016, including the 2015 election win. Balancing the books was said to be about unburdening the next generation from dumping more debt on top of the iceberg associated with an ageing population. Any intergenerational justice message has now gone the way of the Titanic.

For the Government is not promising gradual targeted spending increases in these areas – a natural uplift from a reset baseline after years of restraint. No, proposed hikes in education funding would virtually reverse any real schools’ spending cuts over the past decade. May’s extra money for the NHS is a big step-change too. The spending review is celebrated as the “biggest, most generous spending review since the height of Tony Blair’s New Labour,” no less – a far cry from denouncing that era’s profligacy. In one swoop, the Treasury has undercut its long-held opposition to raising borrowing and junked the idea that public service reform trumps showering public services with money.

Javid attempts to thread the needle by arguing that more spending is still consistent with keeping the debt-to-GDP ratio on a shallow downward path. That maybe true. But a stated goal of policy was always to balance the books overall, even if George Osborne and David Cameron continually pushed back the deadline. A former Treasury fiscal policy director now says that borrowing will in fact start rising again, and soon be above two per cent of GDP. Manageable, yes – but a clear change in direction.

The public discourse effects of this reversal should worry fiscal conservatives. Cameron and Osborne’s consistent messaging helped entrench two crucial contours in discussions about government spending. First, that there was no free lunch (every Labour proposal for years was met with the question “how will you pay for it?”) Second, that what you did with the money (the organisation of public services) was as important as spending levels. After years of Tony Blair’s money throwing, the public were receptive to such apparently grown-up thinking. Now, both those claims-cum-restraints that ensnared Labour have been removed.

If large, real increases in education funding are synonymous with better schools, as Tories imply, Labour can coherently ask “why did you cut real funding beforehand?” Such corrective spending hikes look an admission of a past mistake. Doubly so if funded through borrowing that was previously considered intolerable.

Couching this as “an end to austerity” brings similar peril. These particular decisions don’t imply “we are going to return to affordable spending increases consistent with a low deficit.” If large spending hikes for education are seen as reversing austerity, then obvious questions arise: what about local authority funding? Prisons? Criminal justice? Have these not suffered more from the pain you admit was damaging?

Of course, Brexit is the important context here. It is sucking oxygen from normal economic debates – one reason why the logjam needs to be broken. A slowing economy, induced in part by uncertainty, means an obsessive near-term public finance focus is probably unwise. The very process of extrication requires budget flexibility, not least because the underlying public finances could look very different when future trade relations crystallise.

But all this would be a case for relaxing or suspending fiscal targets through the choppy Brexit seas, not bold new announcements.

No, it’s difficult not to conclude there’s not something bigger happening here. Much of the party has embraced a simplistic “left behind” narrative of the Brexit vote – that it was a cry for investment in public services. They are egged on by former government advisors, armed with polling, who see an opportunity to steer the party towards a “bigger government” vision for the party they’ve always spoiled for.

Academic evidence in fact shows new Brexit voters affiliating with the Tories quickly adopt traditional Tory views on other issues. There’s no need to pander. Yet when you see John Redwood railing against austerity, you realise how strong this view about the changing party voter base has set.

Whether Johnson shares that interpretation is less clear. Perhaps he sees funding boosts now in three major non-Brexit policy areas as short-term deck clearing before an election. Polling strength from these “good news stories” might even firm up pressure on the EU and rebel MPs on his central task. If it helps finally deliver Brexit, many of us will accept fiscal jam tomorrow.

I want to believe this, but the noises aren’t encouraging. And living in the US, where Republicans have gone from a Tea Party anti-spending force to delivering unprecedented deficits for peacetime, in just a decade, I’ve observed just how easily spending conservatism is lost.

Here, it started with big spending increases on priorities too. Republicans cut taxes, yes, but huge cash increases for defence were delivered, greased by money for some Democrat priorities. Once that dam opened though, the money poured. July’s budget deal threw off the last vestiges of spending caps delivered by the Tea Party Congress. Promises of Republican spending restraint in Donald Trump’s potential second term ring as hollow as claims he’s using tariffs as a path to freer trade.

Here’s the worrying consequence. As US conservatives have learned to love deficits, or at least use them, the left’s spending demands have only gotten more extreme. With constraints stripped away, Democratic Presidential candidates feel liberated to propose mammoth programmes and spending hikes – the Green New Deal, a jobs guarantee, universal childcare and more. When asked how the country can afford this, they point out to the red ink spilled for Republican priorities. There is no answer.

UK Conservatives are far from the Republican point of no return on spending, as yet. But the mood music has changed dramatically. America shows that when conservatives abandon spending constraint, they legitimise the left’s spending wild demands, to taxpayers’ detriment.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Uh oh: BLS preliminary recalculation sheds half-million jobs in 2018-19

Westlake Legal Group trump-rose-garden Uh oh: BLS preliminary recalculation sheds half-million jobs in 2018-19 The Blog jobs GDP employment Economy Bureau of Labor Statistics

Every year, the Bureau of Labor Statistics recalculates its benchmarks for employment calculations. It’s not every year, however, when those revisions chop a half-million jobs out of its previous estimates. In its preliminary calculations, the new benchmark does just that — although it remains to be seen whether those benchmarks will hold up for their final implementation next February:

Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For national CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus two-tenths of one percent of total nonfarm employment. The preliminary estimate of the benchmark revision indicates a downward adjustment to March 2019 total nonfarm employment of -501,000 (-0.3 percent).

Preliminary benchmark revisions are calculated only for the month of March 2019 for the major industry sectors in table 1. The existing employment series are not updated with the release of the preliminary benchmark estimate. The data for all CES series will be updated when the final benchmark revision is issued.

The chart shows how broadly the retrenchment goes in the US economy. Nearly every industry appears to have had its employment levels overstated:

Westlake Legal Group bls-benchmark Uh oh: BLS preliminary recalculation sheds half-million jobs in 2018-19 The Blog jobs GDP employment Economy Bureau of Labor Statistics

Keep in mind that this is only a proposed new benchmark. The BLS will continue working on it to tweak it for better accuracy, although this release shows that this is well advanced from the spitballing stage. The new preliminary calculations have some economists already assuming the figures are solid, which would be a mistake:

The economy had about 501,000 fewer jobs as of March 2019 than the Bureau of Labor Statistics initially calculated in its survey of business establishments. That’s the largest revision since the waning stages of the Great Recession in 2009.

The newly revised figures indicate the economy didn’t get a huge boost last year from President Trump’s tax cuts and higher federal spending. They also signal the economy is a bit weaker than previously believed and could give the Federal Reserve even greater reason to cut interest rates in September.

“This makes some sense, as the 223,000 average monthly increase in 2018 seemed too good to be true in light of how tight the labor market has become and how much trouble firms are said to be having finding qualified workers,” said chief economist Stephen Stanley of Amherst Pierpont Securities.

The average 223,000 monthly increase in employment in 2018 — the strongest in three years — could be trimmed to 180,000 to 185,000, economists estimate.

That’s certainly possible, but it’s not certain yet at all. There’s reason to think that this understates reality too, especially when it comes to wage growth. That has objectively accelerated over the last couple of years, which only makes sense if job growth was pitched high enough to put pressure on employers to increase compensation more rapidly.

That leads us to another point: the measures from BLS do not create reality but reflect it, as best as surveys can do, anyway. During this same period, US economic growth as measured by the Bureau of Economic Analysis ran higher than 3% annualized GDP growth in four of the last nine quarters. That itself would indicate a higher level of sustained job growth than the 180K level, although that would be an indirect measure of job growth, to be sure, about which more in a moment.

Still, the BLS release has begun to catch eyes, and one surprising set in particular:

It’s a legit headline, and a legit story — as long as the proper context is provided. This is an adjustment of measures rather than reality, and job growth is itself an indirect measure of economic growth. The GDP reports provide the direct measures of economic growth, and those have been reviewed repeatedly over the last two-plus years.

The bottom line: This doesn’t actually change anything about the economic reality of the moment. It’s not a massive job loss, but rather a recalculation of previous growth intended to better reflect that reality — and even that’s a preliminary change to a previous survey model, not the data itself.

The post Uh oh: BLS preliminary recalculation sheds half-million jobs in 2018-19 appeared first on Hot Air.

Westlake Legal Group trump-rose-garden-300x166 Uh oh: BLS preliminary recalculation sheds half-million jobs in 2018-19 The Blog jobs GDP employment Economy Bureau of Labor Statistics   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Economy slows to 2.1% GDP, but still beats expectations; Trump: “Not bad”

Westlake Legal Group trump-thumbs-up Economy slows to 2.1% GDP, but still beats expectations; Trump: “Not bad” wages The Blog recession GDP Economy donald trump 2020 election

It’s not great news for the White House, but it could have been a lot worse. The US economy’s growth slowed to 2.1% in the second quarter, down a full point from Q1. However, with economists predicting a recession right around the corner, the growth is still substantial enough to look positive:

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2019 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.1 percent.

The Bureau’s second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The “second” estimate for the second quarter, based on more complete data, will be released on August 29, 2019.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment, exports, nonresidential fixed investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP in the second quarter reflected downturns in inventory investment, exports, and nonresidential fixed investment. These downturns were partly offset by accelerations in PCE and federal government spending.

One point was unalloyed good news for Donald Trump. Disposable personal income leaped upward by almost 5% in Q2, the result of a tight labor market and continued economic expansion. It follows a similar jump in Q1 and is at least one factor in the best increase in consumer spending in nearly two years.

There are other glimmers of hope as well. Final sales of domestic product increased by 3.0% in Q2, which suggests that retailers burned through inventory backlogs over the last three months. If consumer spending stays high, new orders should begin to make up that difference. Yesterday’s durable-goods report showing an increase of 2.0% in June, following a -2.3% decline in May, suggests that better news is on the way. Also, exports took a big hit in Q2, dropping 5.2% while imports stayed mainly static. If that’s a one-time glitch, then Q3 should be cheerier, but that might depend on whether Trump can draw his trade wars to a close.

No other issue is more important to Trump than the economy. Despite all of the other controversies and noise around Trump, some of them created and stoked by Trump himself, none of them are as do-or-die as the economy. As long as the economy keeps growing and producing real wage increases for workers, Trump can win re-election. Any kind of slowdown makes him vulnerable, and even this 2.1% rate might raise eyebrows.

So far, though, the media is breathing sighs of relief. CNBC’s Jeff Cox notes that recession fears will likely recede now:

Growth decelerated in the second quarter, but not by as much as Wall Street thought, as tariffs and a global slowdown weighed on the U.S. economy, the Commerce Department reported Friday.

GDP increased 2.1%, down from 3.1% from the first quarter, the weakest increase since the first quarter of 2017 as President Donald Trump took office. Dow Jones estimates were for 2% growth.

However, the underlying numbers in the report seemed to take steam out of the recession fears that have been much of the talk among economists and policymakers at the Federal Reserve.

“The recession talk was always overstated,” said Michael Arone, chief investment strategist at State Street Global Advisors. “Those that were doing the Chicken Little, the sky is falling, we’re headed for recession talk were clearly early in that assessment. The economic data continue to suggest that the economy isn’t near recession, at least in the next year or so.”

Trump needs that to be more like … eighteen months. To get that, though, he’ll have to settle accounts with China and get the USMCA passed in Congress.

Update: Stock markets are sharply up as this update is being written, with investors apparently agreeing with Trump’s overall assessment:

“Not bad” is a little bit of an understatement, actually. It’s pretty good, especially in the context of the global economy. That’s the bigger anchor, especially the trade disputes that at least for one quarter hit our exports hard.

The post Economy slows to 2.1% GDP, but still beats expectations; Trump: “Not bad” appeared first on Hot Air.

Westlake Legal Group trump-thumbs-up-300x166 Economy slows to 2.1% GDP, but still beats expectations; Trump: “Not bad” wages The Blog recession GDP Economy donald trump 2020 election   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Iain Mansfield: Brexit by October 31. Stop using the Left’s language. And stand for skilled workers. Essentials for our next Prime Minister

Iain Mansfield is a former senior civil servant, winner of the Institute of Economic Affairs Brexit prize and a Conservative councillor candidate. He writes in a personal capacity.

Our next Prime Minister will take office at the most challenging time since the 1970s. Not only is there Brexit – an issue of fundamental national importance, that has destroyed the last two Prime Ministers and poses an existential challenge to the future of the Conservative Party – but the old political assumptions are changing. Across the West, traditional voter coalitions are shifting, as citizens reject centrist compromises. Flatlining productivity, unaffordable houses and millions of voters feeling abandoned, either culturally or economically, are just some of the challenges they will face.

Many of those who voted for David Cameron in 2010 are lost to the party, alienated by Brexit. In Britain today, age and education level are better predictors of a person’s vote than class. To win a general election, our next Prime Minister must forge a new coalition of voters that unites the traditional Tory shires with the left-behind Leave voters in the Midlands and North. Even more importantly, they must deliver authentic right-wing policies that address the causes of ordinary working people’s dissatisfaction. People want change and, if the Conservative Party does not deliver it, they are likely to seek answers in the flawed blandishments of Jeremy Corbyn’s socialism.

In that context, there are three essentials that our next Prime Minister must prioritise for the good of the people, the nation and the party:

  • Leave the EU by 31 October, on WTO terms if needed.
  • Openly champion conservative values rather than speaking the language of the left.
  • Reposition the party as the natural home of the skilled working and lower middle classes.

Leave the EU by 31 October, on WTO terms if needed

Not only is delivering on the outcome of the referendum a democratic imperative, it is vital for the continued existence of the party. Recent polling shows that, if we have not left the EU, the Conservatives are likely to suffer devastating losses in a general election; these figures could be even worse if large numbers of members, councillors or even entire associations defect to the Brexit Party. Many members have held on over the last few months purely out of hope that the next Prime Minister would deliver where May failed: another betrayal in October would see these members permanently lost.

Leaving with a deal is preferable, if some changes to the backstop can be agreed and Parliament will pass it. If not, as I have argued previously on this site, we have nothing to fear from No Deal. Preparations for such should be put into top gear on the first day in office. The Prime Minister must make clear that they will under no circumstances ask for an extension; and that they are, if needed, prepared to systematically veto any measure put forward by the EU on regular business if the UK is for some reason kept in. While every effort should be made to secure a deal, if it cannot be reached, Parliament must be faced with the simple choice of permitting a WTO exit or voting no confidence in the Prime Minister – a gamble, admittedly, but one that is preferable to another disastrous extension.

Openly champion conservative values rather than speaking the language of the left

In recent years too many Conservative politicians have allowed our opponents to define the playing field. We cannot beat the socialists by adopting the language and assumptions of socialism. Our next Prime Minister must stop feeding the narrative of identity, grievance and division, with its assumption that an individual’s potential is defined by their characteristics, that so-called ‘burning injustices’ are solely the responsibility of the state to address, and that the government always no best.

Changing the narrative will be a long endeavour. The systematic appointment of those with conservative values into key ministerially appointed positions; an authentically right-wing approach to policy making in Whitehall; and the withdrawal of state funding from the network of organisations that maintain the left’s grip on the policy narrative are essential. But over and above this, the Prime Minister must be willing to personally stand up and champion individual liberties and freedoms; to condemn progressive authoritarianism and to be visibly proud of Britain, our culture and the rich global heritage of our citizens.

Reposition the party as the natural home of the skilled working and lower middle classes

Young, metropolitan graduates may once have been natural Conservatives, but no longer. There is little hope of reversing this in the immediate aftermath of Brexit. Instead of squandering our effort here, our new Prime Minister should instead make the party the natural home of the skilled working and lower middle classes, particularly in the midlands and north.

Such voters have a natural affinity to the traditional conservative values of low tax and individual liberty, but also greatly value and rely day-to-day onn strong public services. This places the Conservatives in a difficult position after a decade of austerity: Labour made hay campaigning on cuts to police numbers and falls in per pupil spending in 2017. But how to fund significant increases in core services without raising taxes or alienating core Conservative voters, such as via the disastrous proposals on social care in the 2017 manifesto?

To find the funding the next Prime Minister must be bold enough to slay the progressive sacred cows that soak up billions annually in public funding. Three immediately spring to mind:

With the additional £15 billion plus a year, the Prime Minister could at a stroke increase police funding by 25 per cent (£3 billion), boost school funding per pupil by 20 per cent (£8 billion) and increase spending on social care by 20 per cent (£4 billion). And then split the proceeds of further growth between public services and tax cuts.

As well as this, we should champion the interests of the high street, enterprise and small businesses and oppose crony corporatism. Multinational companies that make use of aggressive tax avoidance, abuse their market position or actively work against UK sovereignty should not enjoy government grants, procurement or time in No. 10. Fundamentally, our next Prime Minister should spend more time listening to the Federation of Small Businesses and less time listening to the CBI.

Conclusion

As members, we have two candidates set before us. Both are able politicians and tested leaders who represent the best the Parliamentary party has to offer. As we assess who should be not just our next leader, but our Prime Minister, we should do so against their ability to deliver these vital elements.

Both have committed to delivering Brexit by October 31 – but which one has the ability, the genuine will and the courage to do so by any means necessary? Both are true-blue Conservatives – but which one will truly champion our values, taking the battle to our adversaries with the eloquence and conviction of a Thatcher or a Churchill? Both recognise the importance of reaching out to new voters – but which one can devise and push through the policies needed to unite the Tory shires with the Leave voters of the north? Consider carefully and cast your vote.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

GDP Posts 3.2% Increase In First Quarter As “Professional Forecasters” Line Up To Commit Seppuku In Atonement

Westlake Legal Group gdp-posts-3-2-increase-in-first-quarter-as-professional-forecasters-line-up-to-commit-seppuku-in-atonement GDP Posts 3.2% Increase In First Quarter As “Professional Forecasters” Line Up To Commit Seppuku In Atonement Tom Nichols Politics gdp growth GDP Front Page Stories Featured Story Economy donald trump democrats Allow Media Exception

There are two parts to this story. First, the news:

The U.S. economy grew at a faster pace than expected in the first quarter and posted its best growth to start a year in four years.

First-quarter GDP expanded by 3.2%, the Bureau of Economic Analysis said in its initial read of the economy for that period…

Exports rose 3.7% in the first quarter, while imports decreased by 3.7%. Economic growth also got a lift from strong investments in intellectual property products. Those investments expanded by 8.6%.

Disposable personal income increased by 3%, while prices increased by 1.3% when excluding food and energy. Overall prices climbed by 0.8% in the first quarter.

There is really damned little bad or marginal news here. Government share of GDP stayed nearly constant. Wages were up. Exports were up. Inflation came in at an annualized rated of 3.2% which is about where it should be.

Now for the second part. Former Vichy Republican, I say former because he’s quit the GOP at least twice, Tom Nichols wrote a book called the “Death of Expertise” in which he bemoans the fact that people, like him, with no experience doing anything but shooting their mouths off are dismissed by the lumpen proletariat and their vast body of “expertise” is dismissed. This, allegedly, is to the detriment of society and the world because experts know everything. That’s why they are called experts.

On March 1, this was the CNBC headline Atlanta Fed’s closely watched GDP tracker shows next to no growth for first quarter.

The Atlanta Fed’s GDPNow initial model estimate shows negligible growth for the first quarter of just 0.3 percent.

The Atlanta Fed noted Friday that the 2.6 percent estimate on Thursday of fourth-quarter real GDP growth was slightly above the forecast it released earlier in the week.

The first-quarter report, which was released on the Atlanta Fed’s website, sent stocks lower Friday morning, but they later recovered.

Westlake Legal Group q1-gdp-2018-summary-620x411 GDP Posts 3.2% Increase In First Quarter As “Professional Forecasters” Line Up To Commit Seppuku In Atonement Tom Nichols Politics gdp growth GDP Front Page Stories Featured Story Economy donald trump democrats Allow Media Exception

Graphic via ZeroHedge https://www.zerohedge.com/news/2019-04-26/q1-gdp-smashes-expectations-soars-32-fed-finds-itself-trapped

Many Wall Street economists see growth below 2 percent for the quarter, but for the most part they remain above 1 percent. Goldman Sachs cut its estimate of first-quarter growth to 0.9 percent Friday, and Macroeconomic Advisors reduced its call to 1 percent from 1.1 percent.

Let’s go back a Month ago to March 22 to a survey of “professional forecasters”:

The U.S. economy looks weaker now in the next few quarters than it did four months ago, according to 38 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 1.5 percent this quarter and 2.4 percent next quarter, down from the previous estimates of 2.4 percent and 2.7 percent, respectively. On an annual-average over annual-average basis, the forecasters predict real GDP to grow 2.4 percent in 2019, 2.0 percent in 2020, and 1.8 percent in 2021. The projection for 2019 is 0.3 percentage point lower than the estimate of four months ago, while the projections for 2020 and 2021 are roughly unchanged.

They also have the quarterly inflation rate at 1.1%, or an annual rate of 4.4.%.

I would submit that if your forecast is off by about 100% you might consider looking for a new job…you might even be a bit reticent to call yourself a “professional.” I would also submit that if you make business decisions based on what the experts tell you is going to happen, you’re going to be living in a refrigerator carton under an bridge abutment in the very near future.

The post GDP Posts 3.2% Increase In First Quarter As “Professional Forecasters” Line Up To Commit Seppuku In Atonement appeared first on RedState.

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Rebound: Economic growth hits 3.2% in Q1

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It’s been years since our operating philosophy was “it’s the economy, stupid,” but perhaps it’s time to return to it. Economic growth spiked upward in a quarter usually known for its retreats, hitting an annualized rate of 3.2% growth in Q1. That’s a full point above 2018Q4’s disappointing 2.2% growth rate:

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the first quarter of 2019 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2018, real GDP increased 2.2 percent.

The Bureau’s first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The “second” estimate for the first quarter, based on more complete data, will be released on May 30, 2019.

The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, state and local government spending, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased (table 2). These contributions were partly offset by a decrease in residential investment.

Not only does it show a recovery from a disappointing previous quarter, it breaks a Q1 trend that had developed over the last few years. For some reason, economic growth measures in the first quarter became oddly depressed; the last three years, the Q1 GDP turned out to be the worst reading of each year, sometimes dramatically so as in the past two years.

That’s not to say that there aren’t some potential dark clouds on the horizon. Personal income didn’t increase as much in Q1 as it did in the previous quarter despite the higher growth rate. Disposable personal income only increased at an annualized rate of 2.4%, just over half the Q4 rate of 4.3%. That may have led to a falloff on the rate of growth for consumer spending (PCE), which fell from 3.5% in 2018Q3 to 2.5% in Q4, and again to 1.2% in Q1.

If consumer spending expansion didn’t drive the quarter’s growth results, what did? A significant drop in imports helped, falling 3.7% from the previous quarter. Exports also grew 3.7%, which doubled the impact from trade. Business investment had a strong quarter, growing 5.1%, mainly in intellectual-property investment. The growth rate of 2.5% for final sales to domestic purchasers shows that inventory expansion played a significant role in the overall GDP number too. However, with income and consumer spending growth slowing, those factors may well be too transient to expect them to last into Q2.

The Washington Post cheers the report with a headline that it “smashed expectations,” but also notes the longer-term issues:

The U.S. economy expanded at a strong 3.2 percent annualized rate from January through March, the U.S. Commerce Department said Friday, mainly because of companies beefing up their inventories and a smaller trade deficit, factors that aren’t expected to last.

Better-than-expected growth, the ongoing strength in the job market and fresh stock market highs this week are allaying fears that a recession or severe downturn is on the horizon.

Many economists initially predicted anemic growth at the start of 2019 as the partial government shutdown and a rash of extremely cold weather caused many businesses and consumers to hit the pause button on big purchases, but forecasters raised their estimates to 2.3 percent as it became clear companies were re-stocking their shelves. Growth ended up coming in almost a full percentage point higher than expected, the best start to the year since 2015.

Over half of the strong first quarter growth was driven by a surge in inventories and U.S. exports to other nations. State and local government spending also boosted growth by the biggest amount in three years.

Bloomberg highlighted weaker demand in the report:

Gross domestic product expanded at a 3.2 percent annualized rate in the January-March period, according to Commerce Department data Friday that topped all forecasts in a Bloomberg survey calling for 2.3 percent growth. That followed a 2.2 percent advance in the prior three months.

But underlying demand was weaker than the headline number indicated. Consumer spending, the biggest part of the economy, rose a slightly-above-forecast 1.2 percent, while business investment cooled. A Federal Reserve-preferred inflation measure, the personal consumption expenditures price index excluding food and energy, slowed to 1.3 percent, well below policy makers’ 2 percent objective.

Even so, the data showing faster growth and tame inflation helped push U.S. stock futures higher and Treasury yields lower on Friday.

Overall, it’s good news. It might just not be quite as good as the top-line GDP growth rate suggests. If any of the cautionary figures are still dealing with the Q1 reporting blues, however, we might see a very big Q2.

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Howard Flight: Finding taxpayers better value for money

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasur

Political Parties should be, and usually are, known for what they believe in; voters can, therefore, reasonably expect governments to focus on their Party’s territories of conviction and objectives. For the Conservative Party, these territories have comprised of supporting the national interest; creating a meritocracy and equality of opportunity; sustaining a homeowning democracy; backing free markets and lower taxation, and supporting businesses and especially small business. I add to this a less obvious objective, but crucial to achieving the other objectives: achieving good value from the taxes raised.

I suspect the Party’s reputation for the above objectives is holding up better than the media would expect; but there is clearly work to be done in housing to unblock supply, allowing markets to then achieve prices which are affordable to buyers.

A Conservative Government has also allowed increases in taxation – currently representing 34.6 per cent of GDP compared with 30 per cent in the 1990’s, when we are supposed to be the Party of lower taxation.

Between 2000 and 2004, I was Shadow Chief Secretary to the Treasury. I was then asked to organise a major review of how taxes were spent and the extent to which citizens were getting poor or good value for their taxes. I was able to organise some 50 senior professionals to undertake analysis of public expenditure in each of the ministerial departments and in local government. We ended up with a total figure for potential tax saving through measures to improve taxpayer value of around £80 billion per annum.

Over the last nine years, the Government has done a reasonably good job in constraining public spending in some areas and particularly in local government; but in the other non-constrained areas, of which the NHS is the giant, spending has again escalated.

What is needed is professional, third party review and analysis of expenditure, department by department, cutting out duplication and waste. One of the worst cases of waste which could have been avoided was the £18 billion write off for the failed NHS Systems Programme, which failed for the simple reason of not building up needs and programmes from existing grass root activities, but rather trying unsuccessfully to impose a programme from above.

Inevitably, some of the value-achieving decisions have to be political: what is the Government doing which would be better if it weren’t done? A significant amount of the increase in public spending of recent years has also resulted from government getting involved in areas that arguably it never should.

It is also unfortunate that the positive achievements of taxpayer value over the last decade have been tarred with the mistaken concept of painful austerity. We should be talking more about taxpayer value, and explain that it is in the interest of citizens both to get good value for the taxes they have to pay, and potentially lower taxes as the result of better spending efficiencies.

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