Economic prosperity in the United States

The stock market is once again approaching historical highs. Unemployment is at multi-year lows. Interest rates and inflation, if not at record lows, are close to it. The president claims we are enjoying the strongest economy in our nation’s history. Is that true? The short answer, according to a recent study by Bloomberg, would be no, not even close. They went back over the course of the last 43 years and measured the nation’s economy under three Democratic and four Republican presidents. They found that in all but one case both the economic and financial performance of the U.S. was better than it is now. Bloomberg used 14 different gauges to measure a wide range of economic activity. Everything, from manufacturing jobs to the value of the greenback versus other currencies, was included. All the traditional variables such as GDP, unemployment, wages productivity, etc. were also analyzed. It turns out that the economy under the last seven presidents saw the greatest improvement under President Bill Clinton between 1993 to 2001. Ranking number two was Barack Obama. President Obama, readers may recall, took office in 2009 during the worst recession since the 1930s. By the time he departed in 2017, he handed Donald Trump an economy that saw the second-best performance of all seven presidents. Ronald Reagan only ranked number three, followed by George H.W. Bush, Jimmy Carter then George W. Bush (who presided over the largest financial crisis in 80 years). President Trump settles in at the number six place, not quite as bad as George W., but clearly lagging Jimmy Carter. Even though it is early days, with...

Trumps’ war on drug (prices)

For the second year in a row, President Donald Trump called on Congress to do something about the escalating drug prices in America. The president is doggedly pursuing this campaign promise in the face of an army of special interest groups and big drug companies. Hurrah for you, Mr. President. In his State of the Union address he said: He wants our legislators to “deliver fairness and price transparency for American patients. We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring down costs.” Given that drug pricing is a complicated area and there have been various proposals and recommendations proposed, I will focus on just a few at a time. One of the president’s proposed actions would reduce drug prices by allowing pharmaceutical companies to offer discounted prices to Medicare and Medicaid directly, bypassing the middlemen, called Pharmacy Benefit Managers (or PBMs). Historically, these PBMs have been useful to insurance companies and large employers. They make their money by negotiating behind-the-scenes deals with Big Pharma acquiring discounts, called “rebates,” for their big clients on certain “approved” prescription drugs. These rebates are targeted to name-brand drugs that are covered by Medicare and Medicaid. Since this is a well-known system of back-scratching, drug companies simply hike prices high enough each year to cover these “rebates.” This year, for example, despite the president’s call to hold down prices, 60 drug companies increased prices on over 300 products, and we are only in February of the new year. Trump wants these discounts, instead, to flow directly to the consumer at the pharmacy counter,...

The pay gap for women is growing

If Citigroup, one of the world’s largest banks, is any indication, women earn 29% less than their male counterparts. It also revealed that only 37% of its managerial jobs were held by females. Wall Street has long been known as “the last bastion” for white males. But to Citigroup’s credit, it just made public its internal assessment of the existing pay gap between the genders. One reason it did so was the new disclosure standards that are now required in the United Kingdom since last April. Last year, when Citigroup first reported these numbers for its UK workforce, women were paid 44% less, and if bonuses were counted, the gap widened to 67%. Kudos to Citigroup for at least narrowing the gap over the last 12 months, but much more needs to be done. However, let’s not pick on Citigroup. Plenty of the nation’s top financial institutions are in the same boat. But, as a result of increasing shareholder pressure, many American companies are being required to fess up and supply data of their own inadequacies in this area. Historically, the wage gap for women in this country has been reported to be 80 cents for every dollar a man receives in compensation. Critics argue that there has been real progress since the Equal Pay Act was passed in 1963. Back then, women only earned 60% of what men did. Over the next thirty years or so that disparity was reduced by half, but it is still 80 cents. Those who think this gap is justified (mostly white, middle-aged and older males) argue that women get paid less because...

The Fed stands tall

Sometimes it takes a while, but financial markets almost always test a new incoming Federal Reserve Bank Chairman. On Wednesday, Jerome Powell faced his test and passed with flying colors. Of course, a glance at the stock market averages at the end of the day on Wednesday, would have the casual observers scratching their heads. As most readers know, the stock market has been declining since October. One of the reasons for the sell-off is the fear that the Federal Reserve Bank’s gradual tightening policies have gone too far. Their continuous interest rate hikes coupled with the selling of $50 billion of U.S. Treasury bonds every month had started to reduce the excess liquidity from the financial markets. Investors fear that these actions will slow the growth of the economy and tip the country into a recession as early as next year. No one is sure that this will happen, although most economists are already ratcheting down our forecasted growth rate to somewhere around 2-2.5% for 2019. That is by no means a recession, simply a slowing of growth, but nonetheless, investors have decided to sell first and see what happens as events unfold. The continued losses in the stock market, after so many years of gains, have driven the level of angst to a point where the markets (and the president) have demanded that the Fed stop tightening—now. The media and Wall Street, coming into Wednesday’s FOMC meeting, were convinced that the Fed would cave-in to their demands and announce a cessation of their tightening policies. Investors wanted him to say no more rate hikes and possibly a...

Will our country’s military win the next war?

There was a time, not long ago, when most Americans would answer that question in the affirmative without much thought. It was one of those “truisms” that we didn’t give much thought. But today, many experts are debating that answer. Back in the day, after WW II, our military prowess, (aided by the development of the atomic bomb) was unquestioned throughout the world. Growing up, it was never a question of spending on defense for me, it was simply how much. Republicans wanted more, Democrats wanted less. Today, not only is the amount of spending crucial but also its predictability and even more importantly, what those billions are spent on. The Pentagon’s National Defense Strategy was issued in January. Like all of their tomes before, it is heavy reading and fairly boring but this time around things were different. The United States Institute of Peace, a federal institution, issued a 98-page report rebutting some of the assumptions made about peacetime competition or wartime conflict. The authors focused primarily on our top competitors for global hegemony, Russia and China, but also included recognized threats in Europe, Asia, portions of the Middle East. The report authored by a panel of former security officials and military experts did not mince words. “The U.S. military could suffer unacceptably high casualties and loss of major capital assets in its next conflict. It might struggle to win or perhaps lose, a war against China and Russia. The United Sates is particularly at risk of being overwhelmed should its military be forced to fight on two or more fronts simultaneously.” Unlike WW II, where we did...

Nurses do it right

Nurses save more, work more, and sock more money away than the general population. It also so happens that they love what they do. Is there a connection? If the truth be told, I have a soft spot in my heart for nurses. Like many of my readers, I have found myself in the hospital more times than I would like over the past few years. Nurses have taken great care of me throughout my stay and afterward. Nurses are working longer than they did back in the Seventies and Eighties. Half as many nurses today are working past the age of 62 as they did back then. Almost one in four are still working at age 69. The trend in nursing over the recent past is that fewer than one in four nurses at age 60 were planning to retire within the next five years. This is a trend that is changing their field. On the one hand, we have seen a flood of young nursing graduates enter the profession. That number has grown by almost 75% over the last 16 years or so. Despite that growth, the demand for nurses continues to outpace supply. The “Graying of America” is as real as it gets. As a result, more older nurses are choosing to stay on. As such, the age dispersion of nurses looks like a barbell with large numbers of younger and older nurses in the field with fewer middle-aged nurses in-between. What keeps nurses at a job, which is high-pressured, requires long, long hours on your feet, and is fraught with tension and risk? Most of...