Trump's Carrier Victory Is the Economy's Loss

Donald Trump persuaded Carrier Corp, a maker of air-conditioning and heating equipment, to keep about 1,000 jobs in the U.S. The free market works in part because it relies on millions of individual enterprises to decide how best to employ their resources. The government's role is to protect their right to do so, and to intervene only in those cases where the market fails, when misaligned incentives lead to environmental damage, for example, or financial instability. In Carrier's case, the market was working. The company wanted to move production to Mexico to lower labor costs and remain competitive. American workers would lose jobs, but U.S. consumers and investors would get cheaper furnaces and/or better corporate earnings -- and, potentially, more spending on U.S. imports by the Mexican workers who got the jobs. This constant shifting of resources tends to boost living standards both in the U.S. and abroad, by allowing everyone to focus on what they do best. Now the company might be in worse shape than it would have wanted to prevent.

Another example is Ford Motor Co.'s decision to keep production of its Lincoln MKC sport utility vehicle in Kentucky, a move for which Trump has taken credit. The automaker had been considering moving the MKC to Mexico to make more room for the more popular Ford Escape, which is produced in the same factory. So to the extent that Trump influenced Ford, he may have done damage by preventing the company from efficiently responding to demand.

Bullying companies into making bad decisions is no way to make America great again.

Link: https://www.bloomberg.com/view/articles/2016-12-01/trump-s-carrier-victory-is-the-u-s-economy-s-loss

Jobless Rate Hits Nine-Year Low; 178,000 Jobs Added

The unemployment rate dropped to 4.6 percent from 4.9, the lowest it has been since August of 2007. In addition, 178,000 jobs were added in November. Many economists believe this is a sign that the economy is picking up and will hopefully continue to gain steam. The drop in the unemployment rate is partially due to a decline in the labor force participation rate, since many Baby Boomers are now retiring. These numbers come from the first report since the result of the election. Many are hopeful for the future of the economy under the new President-elect Donald Trump while others are uncertain. 

While the unemployment rate dropped and jobs were added, several other measures dropped. The average hourly earnings dropped by 3 cents, and the U-6 rate, the number of people who have given up looking for work and part-time workers who would like full-time work, also fell to 9.3 percent. Economists are not worried about either of these numbers since throughout the year earnings have actually increased 2.5 percent and the U-6 rate is at its lowest since April of 2008. It will be interesting to see how these rates, if any, will be affected throughout Donald Trump's time in office and what the differences will be at the end of his term.

http://www.nbcnews.com/business/economy/jobless-rate-hits-nine-year-low-n691111

https://www.washingtonpost.com/news/wonk/wp/2016/12/02/u-s-economy-added-178000-jobs-in-november-unemployment-rate-drops-to-4-6-percent/?utm_term=.f2185b7b1510

OPEC cutting production

It has been said that with the recent numbers for unemployment being so low, the US has come to the end of an economic era, and almost fully recovered from the recession almost 10 years ago. Forecasts have shown steady growth, and controlled changes in inflation and interest rates for 2017, but OPEC's recent deal to cut production may change some of these predictions.
Moderating output will cause a surge in prices, right now expected to exceed $60 per barrel in the first few weeks. This is immediately going to affect big oil consumers, especially airlines. Hopefully American producers will be able to get themselves out of their current slump and ramp up production as well with the higher market prices reviving their profit margins. Higher oil prices could also serve as a "bridge" into economies becoming less oil dependent.
Ultimately, there seems to be more positive than negative effects on the US economy because of this deal, but only time will tell.


http://www.economist.com/news/finance-and-economics/21711088-oil-prices-surge-saudi-arabia-and-iran-sign-deal-opecs-meeting