Economy Update – December 2019 – Elliot Eisenberg

Economy Update – December 2019 – Elliot Eisenberg


Hi this is Elliot Eisenberg
consulting economist for American Pacific Mortgage. Catching you up to date on
what’s going on in economics and the news has been very
good of late! It really has
been. The first thing that was really
important it’s happened
recently is USMCA, the new NAFTA 2.0 the US-Mexic- Canada Free Trade
Agreement is going to get ratified by
all three countries. THIS IS GOOD NEWS! It’s not
going to boost the incredibly corporate spending on plant
and equipment but had it not passed and had we been removed
from the old NAFTA that would have really
hurt GDP. That’s thing number one that’s
good. The second thing is it really
seems that we’re gonna have a
Phase 1 deal with China. This also isn’t going to
dramatically alter GDP but probably boost it by it
seems at 10th or a 15th of a point based on
what we can tell and again it would have been much
worse had it not happened and had instead we
impose tariffs of 15 percent on the remaining
hundred and thirty or hundred
and forty billion dollars of
Chinese goods entering the
U.S. That would’ve been a negative
shock to the economy hurting
growth. This is that of a positive
shock, helping growth.
So that’s good. The third thing that happened
that’s really good is it BoJo. Boris Johnson, won the election
in Great Britain. The pound went up. Stock markets are happier
because this is gonna be some resolution to Brexit. Instead of going around for
another couple of years
chasing their tails, it’s going to come, it’s
beginning to come to an end
and that’s very good. The next thing that happened
that’s very good is that the
U.S. government’s not going to
close. The Democratic House House and
the Republican administration, the Trump
administration seem to have
agreed on a budget, that’s really
good. Last year if you remember, the
government closed and Christmas sales were bad and
the stock market almost had a bare market, down by 20
percent and so on. Consumer confidence really got
rattled but that’s not
happening. And last but not least and
perhaps most important inflation remains remarkably
low. As a result of that when the
Fed recently met. The Fed said the following: The
Fed said basically if things get worse we’re
going to jump in quickly but if things get better and
inflation takes off and growth growth gets a
little better than we think
we’re not going to run and and raise
rates so fast the Fed has an easing bias. This is important GDP growth
next year is probably going to be sub 2 percent a
little bit lower than this past year but it should be
relatively quiet in terms of financial markets
and GDP report of course going to be
solid and the headwinds that we thought might appear
in the form of BoJo not winning the
election and USMCA and free trade with China and
all of these things going going negative have all
turned positive. This is really good new! I’m
not on recession watch. The Fed has our back. That’s it for now. See you next month!

Leave a Reply

Your email address will not be published. Required fields are marked *