Trade Wars

How America Spoiled Christmas – CNN

Although the pandemic has ignited the game, the United States has been building this bonfire of supply chain failures for years. The government drastically cut investment in the manufacturing sector, crippled the postal service and engaged in minor trade wars that made the pandemic era particularly painful for consumers.

Empty mail: The U.S. Postal Service is sort of a hot mess right now – strapped for funding and workers, and burdened by the influx of packages in the era of the pandemic.

Since October 1, mail in the United States has become more expensive, and in many cases much slower, thanks to a controversial new service standard that cuts post office hours and charges consumers high rates. rush shipping. just in time for the holidays!
The dire financial situation of the USPS is largely the fault of Congress. Ironically, the USPS is actually cash flow positive. But the agency, which receives no funding from taxpayers, was crippled by Congress’ 2006 decision that it must pre-fund 75 years of retirement benefits – an obscure system that no other government agency follows.

Manufacturing issues: Washington must also share the responsibility for the United States’ dependence on global supply chains.

For decades, the United States has innovated at home and built overseas, allowing high-end manufacturing (and the high-paying jobs that come with it) to disappear.

Take semiconductors, for example, those tiny chunks of etched silicon that power virtually every aspect of modern life, from your car to your refrigerator to the device you’re reading this on.

“The reason we’re really in this mess is because for a long time we haven’t invested,” Commerce Secretary Gina Raimondo recently told CNN. “We used to be the world’s leading semiconductor manufacturer and now we don’t do it anymore. We just divested.”

Over the past three decades, the United States’ share of global semiconductor manufacturing has fallen to just 12 percent, from 37 percent in 1990, according to the Semiconductor Industry Association.

Meanwhile, Asian competitors have increased their capacity, putting the United States at a “competitive disadvantage,” the trade group said. Although the Biden administration is pushing Congress to pass a $ 52 billion bill that would boost semiconductor production and research in the country, the impact of any legislation (which has yet to be passed in the House) would be years away.

Trade wars: To complicate matters further, the United States is locked in a trade war with China. Long before the pandemic, the Trump administration imposed tariffs on more than $ 300 billion in goods. Rather than pressuring China to reform its trade practices, the tariffs have hurt American consumers and manufacturers who depend on materials made in China (read: everyone). Treasury Secretary Janet Yellen has acknowledged this, but the Biden administration has yet to act.

Bottom line: Even if you don’t buy holiday gifts, the end of the year still looks like a chore as inflation remains stubbornly high.

Winter utility bills are another huge drain on household finances as inflation creeps into almost every consumer product on the market. Prices for natural gas – a non-renewable fossil fuel that remains America’s most common way of heating homes – are skyrocketing as the northern hemisphere slips into fall and winter.

This open fire on which you roast your chestnuts may need to serve as a home heating system.

US Employment Report

U.S. consumer spending rose in August, according to data released last month, suggesting that summer fainting caused by the Delta variant of the coronavirus may be coming to an end.

Another important test took place on October 8, when the U.S. government released its employment report for September. US employers added just 194,000 jobs in September, the smallest number since January and far fewer than expected. The unemployment rate fell to 4.8%, according to the Bureau of Labor Statistics, from 5.2% in August.
Remember: The US recovery hit a major hurdle in August, when the economy created just 235,000 jobs. The slowdown shocked economists who expected three quarters of a million jobs. Two straight months of fewer jobs added is a troubling sign of how Covid is disrupting the economy.

Analysts were hoping for a better performance. Going forward, they will be watching wage growth closely, which may affect inflation.

Still, low-wage workers are making “remarkable” gains in their paychecks, Goldman Sachs said last week.

The bank said wages for low-paid workers rose 5.3% in the second quarter from a year earlier. Preliminary third-quarter data suggests wage increases are on track to peak at 6% in three decades.