Trump’s gamble on the economy might make sense

first_imgHe’s allowing the government to run large budget deficits — some of the largest ever outside wartime or recession — in the hopes that this will somehow put growth on a higher trajectory.Irresponsible as that might sound, it actually makes some sense.In the long run, economic growth is a function of two variables: population and productivity.For decades, America had plenty of both. Birth rates were ample, and any additional labor could be attracted from elsewhere.From 1947 to 2007, workers’ output per hour grew at an average annual rate of 2.3 percent.So for the most part, American presidents could focus on improving rather than reviving growth.But since the last recession, the picture has changed. In advanced economies, central banks have the tools they need to fight it.Slow productivity growth, by contrast, has become a real concern, especially as countries seek the resources to take care of aging populations and still invest in their futures.Republicans and Democrats may disagree on the best way to create deficits, whether it be tax cuts and military spending or investments in infrastructure and education. But the balance of risks leans toward trying this experiment.Be it the Trump administration or the next, someone was eventually going to take the gamble.Conor Sen is a Bloomberg View columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.More from The Daily Gazette:EDITORIAL: Find a way to get family members into nursing homesEDITORIAL: Urgent: Today is the last day to complete the censusEDITORIAL: Thruway tax unfair to working motoristsEDITORIAL: Beware of voter intimidationFoss: Should main downtown branch of the Schenectady County Public Library reopen? Categories: Editorial, OpinionPresident Donald Trump is conducting a risky experiment on the U.S. economy. So the whole game becomes a big bet that deficits — created by the government’s tax cuts and spending plans — will boost productivity growth. Treasury Secretary Steven Mnuchin suggested as much last week when he said that the Trump administration’s policies could lead to wage growth without inflation, and that people shouldn’t worry about the forthcoming deficits.Ironically enough, this policy was espoused by the Bernie Sanders campaign (as my colleague Noah Smith has noted).The idea is that by running the economy hot and making labor more expensive, the government can induce businesses to do more investment than they would in a normal economy.Ever since the financial crisis, a weak economy has discouraged businesses from investing, leading to weaker productivity growth — so why not try the opposite? It’s a theory that hasn’t been tested in recent decades, but an intriguing one.What are the potential risks and rewards? Sticking with the status quo promises more of the same underperformance — annual real GDP growth of about 2 percent. The deficit experiment has two possible outcomes.In the best case, the U.S. gets some form of productivity miracle. In the other, rising inflation forces the Fed to raise interest rates to cool off the economy, triggering a recession.Most policymakers, economists, and investors aren’t worried about a period of inflation like what the world experienced in the 1970s. Labor-force growth is slowing as baby boomers retire. For a variety of reasons, some understood and some not, productivity has decelerated as well.The Obama administration largely accepted the new reality: In a 2016 report, it projected inflation-adjusted gross-domestic-product growth of just 2.2 percent for the next decade, and offered fairly traditional ideas such as immigration reform, more cross-border trade, infrastructure spending and education investments.Trump has taken a very different approach, aiming for annual growth of 3 percent over the next decade.This certainly won’t come from population, particularly given his administration’s attitude toward immigration.That leaves productivity, which some of his policies don’t do much to encourage, either.Tariffs on imports such as steel and aluminum will serve largely to make output more expensive.Tax cuts might prompt companies to make more productivity-enhancing investments, but the effect will likely be modest given uncertainty about how long the cuts will remain in place.last_img read more

Rentals disappearing as Brisbane moves towards landlord’s market

first_imgBrisbane’s rental vacancy rate has declined for a sixth straight month, according to SQM Research.BRISBANE is fast becoming a landlord’s market as rentals are snapped up by southerners fleeing Sydney and Melbourne for a taste of the sunshine state.New figures from property valuation firm SQM Research reveal rental vacancies in the Queensland capital fell for a sixth straight month in August to 2.8 per cent — down from 3.4 per cent a year ago. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE More from newsParks and wildlife the new lust-haves post coronavirus16 hours agoNoosa’s best beachfront penthouse is about to hit the market16 hours ago Brisbane’s rental vacancy rate fell to 2.8 per cent in August, according to SQM Research. Image: AAP/James Ross.Around 9500 residential rentals are sitting empty in the city, compared with more than 19,000 in Sydney, as rising demand eats up surplus stock. But in good news for tenants, rents in Brisbane are holding firm — for now.The asking rent for a three-bedroom house in the city slipped just 0.4 per cent over the past month to $450 a week, while unit rents rose slightly to $371 a week. NEWS PRESENTER’S PLACE TO LET OFF STEAM BRISBANE UNITS SAFE AS HOUSES Brisbane is becoming a landlord’s market, with more people moving to the city to rent.SQM Research managing director Louis Christopher said Brisbane was experiencing a sustained reduction in its vacancy rate, driven by underlying demand sparked by a peak in housing completions and increased interstate migration.“The worst is definitely behind the Brisbane housing market, there is no question about that, and our expectation is vacancy rates will continue to fall from these levels,” Mr Christopher said.“There are more southerners moving from Sydney and Melbourne to southeast Queensland to take advantage of the standard of living and better housing affordability — both on the buyer front and the rental front.“Why this is happening now, as opposed to five years ago, is because job creation has increased in the Brisbane and southeast Queensland economy.”But Mr Christopher said the vacancy rate needed to get closer to 2 per cent before Brisbane could officially be declared a landlord’s market.He said asking rents would also likely start to rise as the vacancy rate continued to tighten.“When we do get close to that 2 per cent mark, that will put upward pressure on rents.” The national vacancy rate slipped to 2.1 per cent in August, according to SQM Research. The national residential vacancy rate dipped to 2.1 per cent in August, with 70,447 properties sitting empty across the country. Sydney’s vacancy rate is the highest in 13 years, with 2.8 per cent of the city’s units and houses unoccupied, yet the asking rent for a three-bedroom house in the city is still the highest in the country at $708 a week.last_img read more

Exelon to buy US Everett LNG terminal from Engie

first_imgImage courtesy of EngieExelon Generation, a unit of the US energy producer Exelon Corporation, struck an agreement with France’s Engie to purchase the company’s Everett LNG import terminal in the US.The acquisition would enable Exelon to supply fuel to Exelon’s Mystic generation station’s units 8 and 9 while they remain in operation before the planned shutdown in 2022.Following the acquisition Exelon will continue providing LNG to gas utilities, marketers and other market participants in New England, the company said in a statement.Transaction closure is dependent upon regulatory review by the U.S. Department of Energy for LNG import authorization and, as necessary, authorization from the U.S. Department of Justice, all expected in the fourth quarter of the year.The Everett Marine Terminal, also known as the Distrigas Terminal, is the longest-operating LNG import facility of its kind in the United States. The facility has connections with two interstate pipeline systems, as well as a local gas utility’s distribution system.Mystic generating station is a 2,000-megawatt natural gas- and oil-fueled power plant. Its units 7, 8 and 9 are the operating units currently, but Exelon has unveiled its plans to retire the units in June 2022.last_img read more