Confidence In U.S. Economy Plunges
The U.S. economy has seen its lowest levels since 2016. “It was clear why people were anxious in August, but not so clear now.” The U.S. stock market has rebounded, hiring remains strong and homes prices are rising, yet Americans don’t see brighter days ahead. An overwhelming 60% believe the economy is getting worse.
“Some blame the U.S. presidential candidates for their negative rhetoric and making people feel worse about the economy and their futures than the reality.” Voters of both parties overwhelmingly cite the economy as their No. 1 concern in exit polls. Donald Trump doesn’t just bash the economy, he portrays it as a “loser.”
Will The Fed Raise Interest Rates Before The Election?
There’s one big factor this year that the Fed rarely mentions: the U.S. presidential election. Fed Chair Janet Yellen has stated that any further rate hikes will be data dependent, so what does it mean for interest rates?
The Fed has a lot of power over the economy and stock market. “How the economy fares could sway the election outcome.” If the Fed decides to raise rates too soon it could dramatically affect stock markets, which nobody wants to do before a presidential election.
The Fed has always defended its independence from politics. Although they are in close proximity geographically, the Fed argues it acts based on economic data, not polling data.
Yellen Says Rate Hikes On Track
The U.S. economy is on a solid course, so the Federal Reserve is on track for further interest rate hikes, Federal Reserve Chair Janet Yellen said on Thursday.
“She said that, seven years after the brutal financial crisis, the U.S. labor market was now close to full strength, again arguing that inflation would not be held down much longer by the strong dollar and low oil prices.”
Is Trade Really Killing Middle Class Jobs?
Bernie Sanders and Donald Trump both agree that trade is killing the American Dream.
Trade’s impact on jobs has been a long debate. “Trade has prompted factories to close and jobs to move overseas.” “And that has hurt certain communities.” “But global commerce and trade agreements are not the main cause for the troubled middle class.”
Iran Moves Forward To Ramp Up Oil Output
Iran will move forward with plans to pump an “additional one million barrels of oil per day into a oversupplied global market.”
Many oil producers are nervous and have been watching “Iran closely, after economic sanctions were lifted as part of a landmark nuclear deal with world powers.” “Amid mounting concerns about the impact of the price plunge, five of OPEC’s 13 members agreed earlier this month to keep output steady, but Iran has refused to join the production freeze.”
Iran considers that others countries should be held accountable to tackle the oil supply glut.
Janet Yellen: Negative U.S. Interest Rates Are Possible
Federal Reserve Chair Janet Yellen, did not rule out “negative interest rates”, as a possibility in her Congressional meeting Thursday.
However, if Congress does decide to go in this direction the U.S. would not be alone.
“Five central banks–Denmark, Eurozone, Sweden, Switzerland and Japan–now have negative interest rates.”
When central banks cut interest rates, their goal is to encourage people and businesses to spend their resources.“When people aren’t earning any interest in the bank, they look around for other ways to make money.” “Implementing a negative rate in a technical sense, means someone is actually being charged a penalty to hold money in the bank.”
There remains a mystery over whether negative rates work and how they impact the global markets.
The Middle Class Wants More Government Help
Many Americans believe that the government does not do enough to help the middle class, according to Pew Research Center.
However, there are 61% of respondents who believe the federal government is giving too much assistance to the wealthy. “Pew did not mention what help Washington should provide to the middle class, but the survey found that they were not happy with the federal government’s economic policy since the recent recession.”
The survey comes just as the 2016 presidential candidates seek to heal the middle class. “Democrats Hillary Clinton and Bernie Sanders argue that the federal government should do more by easing the cost of college and healthcare, and boosting paid family leave and minimum wage.”
The Republicans candidates however, want to assist the middle class by minimizing the role of the federal government. “They argue that reducing federal taxes and regulations will boost the economy and allow people to prosper.”
Many Americans see the GOP as the party for the wealthy, the survey found. The Democratic Party, on the other hand, are seen as supporters of the middle class and the poor. “But they don’t ignore the rich either.”
The views have changed little since 2011, Pew noted.