Economic and Government Policies - United states - June 2016

Information about Economic and Government Policies - United states - June 2016

Published on June 12, 2016

Author: paulyoungcga

Source: slideshare.net

Content

1. Economy and Government Policies – United States of America (USA) – June 2016 By: Paul Young, CPA, CGA

2. Disclaimer • This presentation discuss government and economics policies for USA

3. Paul Young - Presenter Bio • CPA/CGA • 25 years of experience in Academia, Industry and Financial solutions • Youtube Channel - https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

4. Agenda • Debt to GDP • T-Bills • Budget Deficits • Economic Forecast • GDP Analysis • Retail Sales • Income inequality • Trade • Nearshoring • Tax policies • Banking Sector

5. Government Debt to GDP

6. US T-Bill Key information • 58% of T-Bills are held by Japan and China • Cayman Island has many financial services companies due to their tax friendly policies • Ireland has recovered from austerity measures (Focus in Exports and cuts to government spending)

7. USA Budget Deficit • The U.S. government’s budget deficit expanded in May, driven by a continued rise in spending and a decline in corporate profits that has strained government revenues. • Federal spending exceeded revenues by $53 billion in May, the Treasury Department said in a monthly update Friday. Over the past year, the deficit totaled $479 billion, up 16% from a year earlier. The main factor is weaker government tax revenue. • While payroll taxes have risen due to steady hiring across the U.S., corporate taxes have been falling as profits dwindle due to weak business spending and exports. A slowdown in productivity and modestly rising wages are also pinching corporate profits. • Economists look at the deficit as a share of the economy to determine how big of a burden it represents to the federal government. In the 12 months through May, the deficit represented 2.6% of the nation’s economic output, or gross domestic product. That was down from 2.8% in the 12 months through April. • Source : The Wall Street Journal

8. Donald Trump/Clinton - Budget Deficits • Presidential candidates may talk a good game when it comes to fiscal responsibility, but the reality come January is likely to be a lot messier. • Future projections for U.S. debt and deficits already are bleak — by 2025 the deficit is likely to exceed $1 trillion and total federal debt will be more than $29 trillion, according to Congressional Budget Office projections. • However, plans from both Hillary Clinton and Donald Trump, the likely respective nominees for the Democrat and Republican parties, offer little hope that conditions will turn around under the next administration. • "Both candidates also have bold ideas on tax reform that might reshape the character of the domestic tax landscape," Citigroup economists said in a report for clients. "But despite comprehensive attempts by tax policy think tanks to determine the extent to which Trump's and Clinton's proposals might either reduce or increase tax revenues, it is unclear which candidate might successfully neutralize the looming threat of outsized Federal debt and deficits over the next decade.“ • Source - CNBC

9. Income inequality • Source - CNN Issues • Other countries have done a better job of re-distribution on income • Other countries have invested more in education Canada • Increases to transfer payments to education, healthcare, etc. • Tax cuts to both income tax as well as consumption taxes Key quotes: • When measuring income inequality across the globe, after accounting for taxes and transfers, the United States ranks second worst in income inequality across developed countries," Scott, D-3rd, wrote in a June 12 statement.

10. Global Forecast

11. USA GDP by Sector - $18 Trillion Economy Positive Impact • Consumer spending on nondurable goods also increased, notably on food and beverage grocery items and on gas and other energy goods. • However, consumer spending on durable goods declined, notably on motor vehicles and parts. • Residential investment and state and local government spending also rose in the first quarter Negative Impact • These positive contributions to GDP growth were partially offset by the following: • Business investment decreased, mainly in equipment and in structures. • Goods exports declined, notably in nonautomotive capital goods. • Farm and nonfarm private inventory investment declined. • Federal government spending declined, notably on national defense spending. • Low Oil prices •

12. Retail Sales / USA • U.S. retail sales in April recorded their biggest increase in a year as Americans stepped up purchases of automobiles and a range of other goods, suggesting the economy was regaining momentum after growth almost stalled in the first quarter. • The Commerce Department said on Friday retail sales jumped 1.3 percent last month, the largest gain since March 2015. March's retail sales were revised up to show a 0.3 percent decline instead of the previously reported 0.4 percent drop. • Excluding automobiles, gasoline, building materials and food services, retail sales shot up 0.9 percent last month after an upwardly revised 0.2 percent gain in March. • These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. • Source: CNBC

13. Near Shoring / United States • Offshoring of U.S. manufacturing operations is not only outpacing reshoring but gaining strength, according to a new report from management consulting firm A.T. Kearney. • In 2015, A.T. Kearney reports, its U.S. Reshoring Index fell to -115, down from -30 in 2014. This is the fourth consecutive year when reshoring failed to keep pace with offshoring and the largest year-to-year decrease in the last 10 years, the company reported. • Even if the effect of raw material price declines is discounted by holding manufacturing input values constant relative to 2014 while ignoring that same effect on the value of offshore manufactured goods, the consulting firm found, the reshoring index would drop to -26, “still supportive of the view that the widely predicted reshoring trend seems to be over before it started.” • The A.T. Kearney study clashes with a recent report from Boston Consulting Group, which found that nearly a third of large corporations with operations in the U.S. that were planning to add capacity for the U.S. market would increase production in the U.S. Only 20% said they would do so in China, reversing earlier findings. Harold L. Sirkin, a BCG senior partner, called the results “the latest evidence that a revival of American manufacturing is underway.” • Rising labor costs in China have not resulted in manufacturing returning to the United States, the study noted. Instead, operations in China have been moved to other Asian countries, such as Vietnam. U.S. imports of manufactured goods from Vietnam in 2015 will be nearly triple the level of imports in 2010. This shift to new low-labor-cost countries has been done without incurring significantly higher supply chain costs, despite their weaker infrastructure and supporting ecosystems, A.T. Kearney stated.

14. Top USA Trade Partners

15. USA Tax System • US has one of the highest corporate tax rates in the G-20 • Ranking – USA – 64th (Source – KPMG)

16. Banking Sector – USA - Health Banking System - Safest • US Banks are ranked 39th • Banking sector is stable in terms of capitalization • Canada Banks are ranked 1st • Very few banks • Strong oversight and regulations

17. Sources • Contact: [email protected]

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