Crosscurrents

By Isaac Cohen*

You have to look behind the strong performance of the US economy, at the start of this election year, to discover what Federal Reserve Chairman Jerome Powell called the “crosscurrents and conflicting signals” that appear in the outlook.

By sectors of productive activity, manufacturing and agriculture are experiencing downturns, due mainly to self inflicted damage caused by the protectionist measures emanating from the White House. Manufacturing declined during three quarters of last year and the slowdown continued into this year. Industrial production in January, the Federal Reserve said last week, decreased 0.3 percent from December. True, besides the impact of the trade confrontation with China and others, the halt in production of Boeing’s 737 MAX airplane pushed down production in the aerospace industry 7.4 percent in January.

Farmers are still waiting for the benefits promised by the “first phase” agreement between China and the United States, in the form of massive purchases of agricultural products. Meanwhile, the government has a $28 billion program to subsidize farmers hurt by higher tariffs. But there have been complaints that some of the subsidies have gone to big transnational corporations, including a US subsidiary of Brazilian giant JBS, the world’s biggest meat processing company.

All these sector “crosscurrents” are reflected in a declining trend in business investment, with weak consumer spending during last year’s fourth quarter and flat sales in January. Finally, the unforeseen effects of the corona virus have already pushed down commodity prices, including oil and are disrupting global supply chains originating in China.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

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