Economic Nationalism -vs- Economic Globalism
Despite the intense doomsayer predictions surrounding the ‘Coronavirus as an economic contagion’ narrative, the U.S. economy remains strong. When evaluating economic impacts for the USA it is important to remember 80 percent of all activity within the U.S. is internal. We create and consume eighty percent of our own production.
The U.S. economy is unique in the amount of balance within it as compared to other industrial economies. We are not dependent on exports to sustain our economy; and we are not dependent on any imports at the macro level. Unlike China, Asia and Europe, and despite decades of efforts by globalists and multinationals, the U.S. generates and sustains a tremendous amount of our own economic prosperity. First the January data:
The Bureau of Economic Analysis (BEA) reveals data today showing January wage growth .5%, personal income increases .6%, consumer spending at .2%; overall U.S. savings at $1.33 trillion, and low inflation at 1.7 percent year-over-year. Solid and stable.
Both consumer spending (+.2 Jan) and inflation (1.6% Jan) were impacted by lower energy prices (-.7%) & mild weather in January. Reuters spins the lower rate of spending growth to imply a contracting U.S. consumer; there is no data to support that narrative.
The Commerce Department said the goods trade deficit contracted 4.6% to $65.5 billion in January. Goods imports tumbled 2.2% last month and exports dropped 1.0%. This is not necessarily surprising as manufacturing companies have started more long-term supply chain changes in the latter part of last year.
Coronavirus As An Economic Contagion
Obviously economic activity in China is severely impacted by the Coronavirus issues. The level of their impact is not yet quantified; however, any economic contraction within China can have impacts on downstream economies based on their level of dependency.
As an example the European economy is heavily dependent on China for delivery of products and for Beijing to purchase industrial goods from the EU.
The EU focus on climate change (to the exclusion of their own economic interests) created a scenario where they strongly curtailed manufacturing of some dirty industrial goods (ex. steel) and instead started to purchase more of their needs from China.
As a result of these EU political decisions; and within this EU process; the pollution was shifted away from Europe along with the production. However, the outcome is their dependency on China increased. The result: when Beijing sneezes the EU economy catches a cold.
Conversely, the EU is also an export driven economy. Over the past decade EU leaders gave China preferential treatment due to their ‘dirty product’ import needs. China is now a big purchaser of EU products… and when China slows purchasing, again the EU feels the impact more severely.
The U.S. economy is more balanced. As a consumer economy we consume our own production and we have the resources to produce just about everything we need. The America First policy of President Trump is specifically focused to keep this advantage in place; and actually grow the advantage of our natural economic disposition by returning production of major goods prior administrations watch go overseas.
The impact to the overall U.S. economy, from Coronavirus as an economic contagion, is far less than all other industrial economies. However, the impact to U.S. multinationals (Wall St) who are dependent on global transactions, trade & manufacturing, is disproportionate.
Under America-First it was always U.S. manufacturers, those who do business inside our nations’ economy, who saw the greatest benefit. U.S. owned companies doing majority business overseas (ie. Wall Street multinationals) do not gain as much advantage under the America-First programs. The same is true now with a global economic contagion.
Within a global economic contagion the U.S. companies who rely on the internal American cycle to produce, sell and receive income are safe; our internal economy is strong. However, the U.S. multinational companies are again at risk…. hence the stock market.