Sorry, But The Economy's Growth Spurt Isn't Going To Last

There are a lot of articles about the growth spurt U.S. economy experienced in the third quarter but it is not going to last. GDP increased at a 2.9 percent rate, the highest since 2014. The problem is that many of the growth comes from the strong demand of soybeans by China and surge in exports by the U.S. The U.S. is most likely to face competition soon in the market if the demand for soybeans remains high.

There are other factors apart from soybeans. Consumer spending cooled to 2.1 percent from 4.3 percent in the previous quarter, residential investment tumbled by 6.2 percent, equipment purchases declined by 2.7 percent and the growth rate of final sales to domestic purchasers increased by just 1.4 percent. If we exclude transitory effects or short-lived effects like the sudden demand and exports of soybeans, the actual growth rate would have been closer to 1.5 percent. Also, this plays in the election due to both candidates stating that they can do better and increase the growth rate of the economy if elected.

Link: http://www.cnbc.com/2016/10/28/sorry-but-the-economy-gdp-growth-spurt-is-not-going-to-last.html

http://www.forbes.com/sites/timworstall/2016/10/27/spain-has-no-government-for-10-months-economy-grows-unemployment-falls-to-18-9/#7286b4a15cb8

In the article "Spain Has No Government For 10 Months- Economy Grows, Unemployment Fella to 18.9%", the state of Spain is being discussed. It is oxymoron that even though no one seems to govern the country, the one of the main problems for most countries seems to be solving it self. Left wing politician named Mariano Rajoy seems to take the praises for this blessing and everything looks like he will be elected by Parliament for second time.

Global uncertainty about economic policy is at record highs

As the U.K. responds to voters' rejection of the European Union, the U.S. presidential election comes to a head and other disputes play out across the globe, uncertainty is at a record high in 2016, according to a new index that tracks newspaper articles in over a dozen countries. Uncertainty about how policy-makers will affect the economy can lead to underinvestment by firms, reduced hiring and slowed consumer spending. In the last five years, the average global uncertainty index has been about 60 percent higher than in previous years, surpassing even the period around the 2008 housing crisis and recession. Most of the recent increases have been driven by events in other nations — most notably the Brexit decision, which caused a massive spike in Europe and was felt as far away as Japan. Brazil is facing a down economy, a spate of corruption charges and the impeachment of its president. Turkey recently blocked a coup and had its credit rating downgraded, while military conflicts, political changes and other disputes have raised policy questions in Russia, China and Syria. Those economic uncertainties can influence short-term hiring decisions, as well as long-term plans for factory construction or expansion.

http://www.cnbc.com/2016/10/26/global-uncertainty-about-economic-policy-is-at-record-highs.html

America finally got some good economic growth

The United States economy expanded at a rate of 2.9% this year the highest growth in the last two years. "This shows that the U.S is roughly on track. It's a natural bounce back following a pretty underwhelming year so far,"says Luke Bartholomew, a fixed income investment manager at Aberdeen Asset Management. The economy gained some momentum in the third quarter but before the election it is at about 1.7%. A couple of economists took a look at Donald Trumps middle skill workers wages plummet. He said that the growth in the last couple of years was "dismissal" and he called the growth that we have right now "modest". Trumps says that he wants to get growth up to 4% if he gets elected. The economist who studied this say that that is just unrealistic. American spenders continue to drive growth throughout this year and I think that will continue because we have the holidays coming up so we should see steady growth in consumption. 
http://money.cnn.com/2016/10/28/news/economy/us-economic-growth-gdp-third-quarter/

Canada and EU Sign Major Trade Deal

International trade has come under frequent and heavy fire in the past months, particularly in the US presidential election, but also globally. Despite a handful of set-backs, Canada, the United States' closest trading partner, and the EU just signed a major trade deal, the Comprehensive Economic and Trade Agreement. Although this deal does not directly affect the United States, it is a major step forward for proponents of free trade in a world increasingly full of protectionist sentiment. Some seem to consider this a precursor for a Transatlantic Trade and Investment Partnership between the United States and European Union, for which plans are already in the works. The likelihood of a measure like this being realized, however, seems increasingly slim as the Transpacific Partnership continues to languish. The optimist in me imagines that this new agreement may signal the triumph of free trade advocates over its detractors, but realistically I am a little more skeptical. I imagine much of the US's trade future will depend on who we elect come November, which is not something anyone can truly predict now.

http://www.nytimes.com/2016/10/31/business/international/canada-european-union-trade-agreement.html?ref=business

Tony Blair: U.K. may need a second vote on Brexit

Tony Blair thinks Brits may be having second thoughts about Brexit.

The former Prime Minister said the U.K. should keep its "options open" over its decision to leave the European Union until it becomes clear what kind of deal it can get. 

"If it becomes clear that this is either a deal that doesn't make it worth our while leaving, or alternatively a deal that's going to be so serious in its implications, people may decide they don't want to go," Blair told the BBC. 

He said there could be a way to reverse the June referendum result if the British people change their mind. That could take place via a vote in parliament, a general election, or even another referendum. 

"We just don't know what we're going to be offered as an alternative and once we know we'll be in a position to make a decision," he said. 

Blair is not the only one suggesting there are still options to avoid leaving the EU. At least five legal challenges against Brexit are being considered by U.K. courts. 

Blair, who campaigned against Brexit ahead of the referendum, said the vote was a "catastrophe." 

Writing in The New Europea newspaper on Friday, he said the result had to be respected but the 48% of voters who wanted to stay in the EU could win the argument as the facts of Brexit come to light. 

"We're the insurgents now," Blair wrote in an article published in The New European newspaper. "We have to prise apart the alliance which gave us Brexit."

Full article: Tony Blair: U.K. may need a second vote on Brexit

US core capital goods orders unexpectedly fall in September

Demand for U.S. manufactured capital goods fell in September. The Commerce Department said on Thursday that non-defense capital goods orders also fell during this month at 1.2 percent. However, core capital good orders increased by 1.2 percent since August and shipments rose 0.3 percent. Though spending on equipment liked remained weak in the third quarter. Heavy machinery maker Caterpillar this week reported a 49 percent drop in third-quarter profit from a year ago and lowered it full-year revenue outlook for the second time this year. There were declines in orders for primary metals and fabricated metal products. Orders for machinery and electrical equipment, appliances and components rose last month.    

To read the full article click here.

U.S. economy posts best growth in 2 years

The U.S. economy grew at an annual rate of 2.9% from July to September, the fastest growth in two years. In addition to overall growth, trade also increased during this quarter. Overall, exports grew by 10%, the best increase in three years, largely due to the expansion of shipments of soybeans to China. This increase in exports has contributed to 200% overall growth of exports to China in the last decade. Although the economy experienced the fastest growth in two years, businesses inventories grew. However, the large amount of unsold items did not harm the growth of the economy. In addition, consumer confidence hit a nine-year high in September, with their spending being another large factor that contributed to the growth. The solid growth increase is helping the Fed in their plan to raise interest rates in December.

This subject has been a very popular topic in the current election. Both candidates have mentioned and promised to increase the amount of economic growth, specifically Trump promised if he is elected president to have a growth rate of 4%. This 2.9% growth rate was the last reported number before voting for the election began. It will be interesting to see how the outcome of the next election will affect the growth rate of the economy.

http://money.cnn.com/2016/10/28/news/economy/us-economic-growth-gdp-third-quarter/

Brexit and it's Global Challenges

Chief economist, Dan O’Brien, discussed the consequences of Great Britain's exit from the European Union. The talk was very informative and explained the many possible outcomes that would result from “Brexit”. Dan O’Brien did not only discuss Brexit, he also spoke about the state of employment in America and how it compares with the rest of Europe. The data was very surprising, it showed that in the last 10 years the United States has had the same decrease in employment as Greece. O’Brien discussed how capitalism does not bring the population closer but rather creates greater separation in the United States as businesses grow. Something else that was discussed was the shift in power that would occur if Great Britain left the EU. What would happen would be a much more German dominated European Union, which would drastically shift the political and economic landscape. In terms of economic landscape, Europe would be much less appealing as a foreign market for the United States. This would actually hurt the United States as Europe is one of the biggest and fastest growing markets in the world. Europe, especially Northern Europe, is also much better than the rest of the world for conducting business thus hurting the global economy. O’Brien also discussed how a Great Britain exit would severely hurt his homeland of Ireland. This would result due to the fact that 25% of Ireland's GDP as exports go to Great Britain. This would have catastrophic consequences for the country and create a recession that could begin a domino effect for other countries in the European Union.

O'Brien, Dan. "Brexit and it's Global Challenges." Ohio Wesleyan University. September 26th, 2016

Change comes in Tech (Bionic/Robo)

"A quiet change is happening in the financial industry at the moment. New technology is changing how markets work and how financial services are administered." (1)

Innovations in technology has propelled society to heights of only imaginable portions that are now reality. Impractical was once word of restriction in regards to progress, but imagination is the human characteristic that allows us to bridge the impossible. Imagination is the foundation of invention and innovation. Noise and men that use to clutter the floors of firms are now replaced by the hum of computers. In the piece, The Future is Bionic not Robo talks about the evolution in technology in the financial advisement market. "Technology presents a huge opportunity in this situation. It can give advisors more effective tools to give more efficient and better reasoned advice. The future of advice is one where the decisions of humans are augmented by technology, not replaced by them. In this sense, advice will be bionic, not exclusively robo." Technology is aiding financial advisors advice their client not just through numbers and figures, but creating a platform for clients and agents to talk and understand one another. Technology is no longer a crutch used for information, but now we can manipulate what we are given for desirable outcomes. It means smarter investments, better efficiency, and promotes a healthy market. In relationship to productivity, technology helps society take the leaps and bounds it needs to make for a brighter and better future.

Reference: 1. The Future is Bionic Not Robo