[ May 2, 2024 ]
Coronavirus is being weaponized by the Democrats to create panic and blame Trump.
There are no mixed messages, only political weaponization by people like you and your brother, Fredo! https://t.co/NqH4pHfuwt
— Donald J. Trump (@realDonaldTrump) March 9, 2020
Fears of negative impact on U.S. GDP due to coronavirus overstated
By Richard W. Rahn – – Monday, March 9, 2020
Some have argued that the trade disruption caused by the coronavirus puts the U.S. economy in grave danger. These fears are overstated.
Exports are about 11.7 percent of U.S. GDP, and imports are equal to about 14.5 percent of GDP, and much of this trade (goods and services) is likely to be little affected by the virus.
Trade statistics, even more so than most economic statistics, are notoriously weak. Most of the trillions of dollars of goods that go back and forth over the world’s borders are in containers that are typically lightly or not inspected. The sheer volume of trade makes detailed inspection almost impossible. There are sophisticated detection devices for drugs, nuclear materials and explosives, but most of the rest is done on an honor system, particularly when it comes to the proper value of a shipment.
Bulk commodities — like coal, iron ore, bauxite, and agricultural grains and fresh fruits and vegetables always have some loss in transit. (Back in the 1980s, I served on a bilateral U.S.-Canadian committee dealing with economic issues. At the time, I remember being astounded by the huge discrepancy between what U.S. and Canadian authorities were reporting in terms of exports and imports between the two countries. It was certainly worse with many other countries. The reporting — because it relies by necessity on many imperfect humans in the chain, and many incentives to misreport — is unlikely to get better.)
There is trade between countries both in physical goods and services. The trade in services has been and will continue to grow faster than the goods sector and, in many ways, is far less measurable. In the past, buildings were typically designed by local architects. Large projects are now often designed by teams of architects and teams of engineers located in many different countries, and the drawings are shared by electronic means in real time. The iPhone is largely designed in California, built from components from dozens of countries, and assembled in more than one country — and its software written who knows where. As a result, there are never-ending trade statistic and tax allocation fights among countries — because there are no commonly agreed upon answers. Google and Facebook and others are everywhere and nowhere.
Keeping in mind the above caveats, our biggest trading partners are Mexico and Canada, closely followed by China, with Japan, the U.K. and Germany in 4th, 5th and 6th places. These six countries account for more than 51 percent of total U.S. trade, and the top 15 countries account for almost 75 percent. Last year, the United States exported more to the U.K. than to Germany. If the proposed free trade agreement is concluded with the newly independent U.K., it is likely that it will uphold as the new 5th largest U.S. trading partner, replacing Germany in the long run.
Let me get this straight:
Democrats and the mainstream media are trying to incite panic over the Coronavirus
…Yet they still push an open border agenda that allows thousands of unchecked & potentially unhealthy migrants to flow into America?
🤔
— Charlie Kirk (@charliekirk11) March 9, 2020
Mexico, once again, elected poor political and economic leadership, and the economy, as a result, was weakening even before the onset of the coronavirus. Thus, it likely that U.S. exports to Mexico will fall, despite the expected benefits from the new U.S.-Mexican-Canadian trade agreement (USMCA).
Canada also has been plagued by weak leadership and counterproductive economic policies under Prime Minister Justin Trudeau. A major rail dispute has greatly disrupted freight and commodity transportation, further weakening an already weak economy, which is again a downer for U.S. exports.
Most experts expect China to have negative economic growth this quarter, which will depress demand for U.S. exports, but the new trade agreement does obligate China to buy more agricultural products from the United States. U.S. imports from China will almost certainly fall, both because of supply chain problems within China due to the coronavirus, and Chinese companies’ credit problems, as well the scramble by U.S. companies to find alternative sources of supply.
The long-standing U.S. trade deficit in oil and gas has been eliminated due to the brilliant engineering and risk-taking by U.S. oilmen who gave us the fracking revolution. We still import some oil but export a lot of natural gas, so it is largely a wash in terms of the economy. If oil prices fall, U.S. consumers will benefit, and if they rise, U.S. producers will benefit.
As China, Germany and many other countries fall into recession, U.S. exports of both industrial goods and consumer goods will fall, hurting the U.S. economy. U.S. agricultural exports of soybeans, corn, wheat, cotton, etc. are likely to remain strong, in part because of the China trade agreement. U.S. imports of machinery, including computers and related equipment, may increase as the price of these items falls due to decreased world demand.
The United States has been a major importer of pharmaceuticals and medical supplies, and there are likely to be some shortages if companies cannot diversify production away from China fast enough, including building domestic plants. The irony is that this process has already been underway because of President Trump’s trade fight with the Chinese.
In sum, the negative impact on U.S. GDP, because of trade disruptions caused by the coronavirus, is likely to be very manageable. Some export markets will be lost, but these will be partially offset by lower prices of foreign-sourced raw materials and components, and finished products. The AI (artificial intelligence) revolution will reduce the comparative advantage of many foreign sellers to the United States, in turn, giving the U.S. economy a boost as more domestic production capability is created.
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39 Comments
4 years ago
Indeed, the Coronavirus is a pandemic; however, the never-ending hyperbole from the MSM, the Democrats, and others with nefarious intent is no more than politicizing the virus to undermine Trump Presidency. This political weaponizing of the Coronavirus by the Leftist contagion should not shock anyone.
It is another malevolent ruse, an extension of the failed impeachment by the Democratic Party. Not unlike their Islamic allies, appendage, the Democrats deem Trump as the Great Satan; thus, the world is undergoing Allah’s wrath.
4 years ago
Reply to
TomSJr
Last year 37,000 Americans died from the common Flu. In the USA, common Flu mortalities average between 27,000 and 70,000 per year. Worldwide, common Flu mortalities average between 290,000 to 650,000 per year.
At this moment there are 546 confirmed cases of the Covid-19 virus in the USA, with 22 deaths. Nothing is shut down, life and the economy go on. Only the toilet paper is under threat.
4 years ago
Reply to
DemocracyRules
People, thanks to the MSM cannot grasp it, the common flu deaths by comparison to the Coronavirus.
4 years ago
Reply to
Ziggy46
Yes, according to the CDC, 18,000 Americans have died from from the common Flu so far this year. And it’s always hard work to push people to get the flu shot.
4 years ago
Reply to
DemocracyRules
The annual vaccination …. My wife always gets one. On the other hand, when studies show that well over half that die, from influenza’s complications, had been inoculated, I continue to pass.
4 years ago
Reply to
DemocracyRules
People could improvise! Why not get some baby wipes or tissues? It doesn’t have to be toilet paper! One person mistakenly order 12 YEARS worth of toilet paper instead of 12 MONTHS! LOL!
I didn’t know the flu death rate was so high and I don’t think most did either. Yet no one bats an eye at that fact.
The number one guaranteed killer is ABORTION and we can’t seem to get enough of that. As more states legalize euthanesia, more deaths will increase there too.
Such sick selective hypocrisy! I guess it has to be a planned death….not a random virus. Maybe it is a control issue… who knows!
4 years ago
Reply to
felix1999
People are worried because it’s a new disease, and it’s spreading rapidly. What most people and the MSM don’t know is that new diseases usually follow a bell curve, increasing rapidly, then tapering off. Also, ‘pandemic’ doesn’t have to mean high mortality, it just means an epidemic that affects many countries. Pimples [acne] are a ‘pandemic’ because they occur worldwide.
4 years ago
Reply to
DemocracyRules
I was under that impression as well. However, although 37,000 died from influenza. When you add in those that died from its complications (eg: pneumonia), the number popped to over 66,000. Someone pointed that out to me, just two weeks ago.
4 years ago
Reply to
Achmed Mohandjob
Most influenza mortalities result from pneumonia. The person gets the flu, it gets worse, it gets into the lower respiratory tract, and treatment fails, so shock from bacterial infection [sepsis] and lack of oxygen to tissues [ischemia] causes organ failure, and death.
But not all pneumonia is caused by the flu, so that may cause the confusion.
4 years ago
Reply to
DemocracyRules
No. The sixty-six thousand deaths were all flu related. Non influenza related, or not caused by, pneumonia is a separate number.
4 years ago
Reply to
Achmed Mohandjob
4 years ago
Reply to
DemocracyRules
Thanks, DemocracyRules. So, last year between 20,000 and 52,000 died?
On this subject, each day I become more confused.
4 years ago
Reply to
Achmed Mohandjob
Well, according to Table 2 on the link, for the flu season 2018-2019, mortality was 34,157
https://www.cdc.gov/flu/about/burden/2018-2019.html
Unfortunately, epidemiology has more pitfalls than oil production statistics! A lot is based on educated guesses, all the way from how many got flu that season [cases], to what they died of [case fatality rate]. Death certificates are maddeningly imprecise, because
[1.] Doctors hate filling them out, because for them, these are failure certificates,
[2.] people mostly die from multiple causes, and it’s always hard to sort out what was most important.
One Wild West doctor humorously wrote ‘lead poisoning’ for a man who died in a gunfight. Modern pathologists joke that ALL death certificates could say ‘cardiac arrest’ because even a terrorist who blew himself up eventually had his heart stop beating, wherever it was. And once the heart stops, that’s it, that’s all, end of story.
So the CDC does their best, and it’s pretty good, overall.
4 years ago
Reply to
DemocracyRules
On February 27 Italy had 600 cases and 30 deaths today it has 15000 and 1200 deaths. This is serious and you had better take precautions especially if you are over 60 and in poor health. stay away from planes,cruise ships and closed in areas with traffic like malls.
4 years ago
Reply to
TomSJr
Indeed, TomSJr… the Democrats have caused many a crisis, then, they blame the other guy.
4 years ago
Reply to
Ziggy46
Agreed. Pardon my fatigue which has turned into indifference, but the mass hysteria generated by the lamestream media nearly equals that caused by Orson Welles’ radio play back in the day entitled “The War of the Worlds”.
So far, no suicides jumping from tall buildings as back then.
4 years ago
Reply to
Drew the Infidel
Great analogy, Drew the Infidel. Orson Wells did broadcast the War of the Worlds that drove people to going utterly bonkers. I can’t watch the news, as it is either the regurgitation of the Coronavirus or blaming Trump for all that ails America and this fetid planet.
4 years ago
Israel becomes 1st nation to ban all in-coming travel to prevent Covid-19 (coronavirus) from engulfing the country. All tourists asked to leave.
4 years ago
Reply to
TomSJr
Meanwhile, Russia shoots herself in the foot, and the Ruble tanks to 1.3 cents:
Russia cannot survive $30 oil, she needs $50 to avoid economic meltdown. After Covid-19 reduced oil demand, Russia undercut Saudi oil prices, to increase her own market share. That backfired, and cratered all oil prices. Tyrants make rotten governments, and free market forces bite back.
4 years ago
Reply to
Ziggy46
Trump has already announced plans to help out the US fracking industry, that could be hit hard by $30 oil.
4 years ago
Reply to
DemocracyRules
Between oil and the virus, the anti Trump people are doing their best to hurt Trump.
4 years ago
Reply to
felix1999
If anyone remembers, the 1991 peak of crude, due to the run up of Desert Storm … they’ll also remember the collapse after the first day of turning Shield into Storm.
The price of energy … on the run up … was what all of the economist type pundits blamed the recession. The plummet (down to ten dollah, no hollah) was what pulled us out of the booshie senior’s recession.
If anyone can recall the “Three Lows” that all of the economist pundits credited for the nineteen nineties boom
Low Interest Rates …. Check
Low Crude Prices …. Check
Number Three is almost there.
So, shouldn’t we be celebrating the price of energy?
4 years ago
Reply to
felix1999
I agree. The US is so lucky to have President Trump. When President Trump was newly elected as your leader, I saw on the evening news One evening, a reporter in Canada stopping people on the street and asking them what they would think of Whoopie Goldberg, Barbara Streisand, Michael Moore and others moving to Canada now that Mr. Trump was in office. The half-dozen or so said that’d be great. I wished I had been there and asked. I would have said, ‘Keep them. Give us Trump.’
4 years ago
Reply to
DemocracyRules
This is garbage. Just another corporate welfare handout. When fracking was done by pumping hot sand, back in the eighties … Most producing wells had a cost of production of $18.00 – $27.00, with most coming in around $22.00. When West Texas Intermediate crude fell, from its $26.00-$34.00, they just capped the wells and waited for better times. Did the highly leveraged IDIOTS go broke? You pays yer money and you takes yer chances.
Once again, we find highly leveraged blithering idiots in ole business. The wells are developed. They can be capped. Good businessmen and knowledgeable players don’t need no stinkin’ bailouts.
I don’t like corporate welfare any better than I do food stamps and Section 8.
4 years ago
Reply to
Achmed Mohandjob
Well, I don’t like bailouts either. But there is some logic to this, because the bailout loans will be time limited. Neither Russia nor the Saudis can stand $30 oil for long, they will both go bankrupt. So offering bridge financing to keep frackers alive and working for a few months might be worth it. Shut-down and start-up costs are high with frackers.
4 years ago
Reply to
DemocracyRules
I have traded energy futures, when the only contract available was Number 2 Heating Oil. I’ve seen many a boom a more than a few busts along the way.
I get calls, all of the time … saying this and that about where they’re drilling … and you, sir, as an accredited investor can get in on this GUARANTEED triple your money return ….
I keep telling them, over the last few years that I am playing that market, SOLELY from the short side (Praise the Lord) and, if you don’t have a cost of production of thirty bucks or less … I ain’t interested. I have run into quite a few that do have that cost of production, or less. I’ll toss them some dinero.
Anyone that didn’t see this coming knows nothin’ ’bout the ole bidnets and deserves exactly what they’ll get.
4 years ago
Reply to
Achmed Mohandjob
Well, I defer to your knowledge of the art. It is much better than mine.
4 years ago
Reply to
DemocracyRules
It’s not so much knowledge as common sense. In today’s world, you can readily access a commodities long term history. It isn’t like the days when W.D. Gann spent two years in a London library researching the price of wheat, back to the Crusades.
One of them new fangled search engine things and a connection to the world wide interweb .. and you have a start.
Prices go up and prices go down. History shows that everything always recovers. History is also filled with tales of people, within an industry, that don’t know a dayummed thing about what they’re doing.
4 years ago
Reply to
DemocracyRules
No, my friend, Russia did not “shoot itself in the foot,” Putin said NO and has now seized control of the world’s oil. Russia has its oil presold at $50+ a barrel on the world market to Chian and Europe and can withstand $25 oil for an extended period. This price will bankrupt the world’s higher cost oil like the Permian and Canada and soon oil will bounce back up with Putin in control. Also, the Russians were very short in the oil markets the last week and profited handsomely from the precipitous drop in prices. Putin now controls not only Russia and Central Asia oil, but Venezuela and Iran’s as well. He will force hundreds of US and Canadian high-cost producers out. Putin is in control now of the world’s energy resources. After the election, Trump Will be forced to withdraw sanctions, recognize Russia’s Annexation Of Crimea and Donbas, and perhaps give the Russians a free hand in dealing with Turkey, Russia’s ancient enemy. BTW Putin’s Central Bank is stuffed with gold, not dollars and treasuries, and it is rumored is about to launch a gold-backed bitcoin-type cryptocurrency. This was a carefully crafted and executed plan and it was all put together while the GRU had the US distracted with this “Russia hoax” comedy show. I’m afraid Putin plays chess while the rest of the world’s leaders play in the sandbox.
4 years ago
There is no question about it in my mind that gloablists are doing all possible to take away Trump’s talking point of a roaring economy. Make no mistake about it some globalists like Ms. Trudy, would have no problem sacrificing his economy to get Trump out. Pelosi has met with him many times on trade…plotting against Trump….
Mexico and Canada don’t like USMCA and would prefer to go back to NAFTA. They gave in because they didn’t have much of a choice. NAFTA was expiring anyway due to how Trump was handling NAFTA. Globalists want our economy to tank too! We are fortunate that our economy is still roaring and we have some room to contract without devastating it. Other countries do not have that luxury.
I hope it is noted that this global componet JIT supply chain is not working and more companies willingly step up and bring more core manufacturing back to the U.S.. Other countries can use this as a weapn against us and influence our foreign policy by with holding critical supply parts that we no longer have or manufacture.
4 years ago
I do not own a lot of shares but yesterday I was surprised and pleased to see every one of my holdings was up in price
4 years ago
The only reason we need to be concerned is because Democrats gave away the farm. Of course the Bushes did not do much better! Wait until the isles at Walmart are empty and you will really HEAR ABOUT THE SELLING OUT OF AMERICA!
