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US: IMPEACHMENT VS GROWTH
US President Donald Trump has been impeached and now faces the next stage of a process that could, with enough support in Congress, see him removed from office. It all depend on whether or not he improperly sought help from Ukraine to boost his chances of re-election in 2020. Mr Trump became only the third president in US history to be impeached after two votes in the Democratic Party-controlled House of Representatives - but more on what that means below. President Trump is accused of pressuring Ukraine to dig up damaging information on one of his main Democratic challengers for the presidency in 2020, Joe Biden, and his son Hunter. Hunter worked for a Ukrainian company when Joe Biden was US vice-president. The president is accused of dangling two things as bargaining chips to Ukraine -withholding $400m of military aid to Ukraine that had already been allocated by Congress, and a White House meeting for Ukraine's president. This, Democrats say, amounts to an abuse of presidential power, using the office for personal political gain and to the detriment of national security. Ukraine was using that money in its ongoing conflict with Russia. Mr Trump is also accused of obstructing Congress by refusing to co-operate with the congressional inquiry.
Starting through the major sectors of the economy, consumer spending has been a solid foundation for our economic growth. Consumer spending has increased by 3.9% over the past 12 months, with the most recent four months even better. Disposable income grew even faster, up 4.7%, bringing the savings rate up. This sets the foundation for solid growth in the future. Total consumer spending includes retail sales as well as services, with retail being more discretionary and thus volatile. Retail sales increased by only 3.4% over the past 12 months, but a good bit of the gain came in the most recent four months. Car and light truck sales were 17.3 million units last month, a typical level for the last few years. Residential construction is light at 1.253 million housing units. We used to think of 1.5 million as normal, but today’s slower population growth has pushed normal downward. Home prices are still rising, though not as fast as last year. If the recent mortgage rate decline stimulates new construction and sales, developers will only be borrowing from the future. This sector is weak. Business spending on equipment and software was up just a little last quarter. A more useful measure is orders for non-defense capital equipment. The normal form of this indicator excludes aircraft order, because they are highly volatile and a substantial portion of them are foreign. Total government spending is increasing significantly, with federal up 7.0% and state plus local government up 3.5%. The federal side is roughly 5/8 of the total.
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