MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: Your elected officials in Washington—you sent them there—have spent officially $1 trillion more than the tax money you also sent there. And they did it in just 11 months’ time. The fiscal year 2019 deficit hit $1.07 trillion by the end of August.
The government’s fiscal year starts in October, so September is the final month of this year. Officials project a surplus over the coming weeks that will bring the full-year deficit below a trillion. But they’re also projecting trillion-dollar deficits for the next 10 years. Big drivers: Interest on the national debt, but bigger than that, Social Security and Medicare, with baby boomers retiring and not enough money to pay benefits promised to them.
Here’s another important point: Numerous media reports place the blame for the deficit on the big tax cut in 2017. That’s misleading, to be generous. Tax revenues are up 3.4 percent year over year. Spending is up 7 percent. You can take the math from there.
REICHARD: Update on the trade-war between the United States and China: The latest round of trade talks is still on. And the Trump administration extended what it called a goodwill gesture after Beijing lifted punitive tariffs on American imports of pork, soybeans, and other farm goods.
The administration agreed to delay the start date for a new round of tariffs on Chinese imports by two weeks to give talks a little more time to work. Tariffs set to take effect on October 1st will now wait for October 15th.
Here’s an explanation for China’s recent goodwill gesture. Turns out, China’s domestic producers of pork are having a difficult time meeting the usual demand.
Two big reasons: First, they’ve not been allowed to feed the livestock inexpensive American soybeans. So they have to buy more expensive beans from Brazil and Argentina.
Second, an African swine fever that has killed 1 million pigs. So Chinese suppliers have to increase the price they charge for a more scarce and more expensive-to-produce food. Pork is a staple of the Chinese diet.
EICHER: Here in this country, our central bankers, the Federal Reserve, are meeting this week to decide whether to decrease interest rates to bolster up the economy and protect against possible recession.
Among other economic factors, here are two new ones they’ll likely have to think about: One, retail sales weakened in August, and that’s one of the major components of consumer spending, which almost by itself has been keeping the economy humming lately. The Commerce Department reported a four-tenths of a percentage point rise in August retail sales, but it was due almost entirely to one big thing, the rise in auto sales. Without that, retail was otherwise flat.
Factor No. 2: the first sign of inflation pressure in a long time. So-called core inflation rose at the fastest pace in a year. Core inflation considers prices on everything other than energy and food, both of which have been quite cheap.
That’s important because what gives the Federal Reserve pause about lowering interest rates is that it can place upward pressure on inflation.
And that is today’s Monday Moneybeat.