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July 2016 Economic Overview

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In a more connected world, there is more value in the infrastructure that joins us- roads and routes than borders that divide us. Deconstructing barriers via digital technology and flows of investment are the first steps towards realizing the potential of a connected world.

We have accepted the assumption that the world of our children would be a place of fewer borders and lower barriers to the movement of goods and people. Not long ago, walls were literally brought down, with the promise that global progress and prosperity would henceforth be marked by openness.

Sadly, that is not how things are trending now, and the consequence is troubling for those of us who believe that the most powerful cure for war and economic stagnation is direct exchanges between people around trade and ideas.

The latest signal of rising barriers is the England’s Brexit from the European Union. Though not necessarily a done deal, it is perilously close to happening.

An enthusiasm for erecting barriers is evident elsewhere, too. Donald Trump wants to build a wall along the border with Mexico, and Hillary Clinton came out against a free-trade deal whose formulation she once supported.

Consumer spending has been the main engine of growth in the U.S. for the past few years and is the case now, but that engine appears to have run slower than it has in the past. Retail sales for February were flat, fell 0.4% in January and March sales grew 1.7%. One big reason for March’s weak overall reading was a drop in auto sales which tumbled 2.1% in March and is still not showing much life. Auto sales continue to be disappointing, advancing only 0.1% last month.

American households have benefited from relatively cheaper gasoline and an improving labor market for more than a year. But wages have been growing only slowly, other measures of the economy have been mixed, and financial markets have been volatile in the last six months of 2016.

The present acrimonious political discourse is polluting our normal American ‘Can Do’ mentality. The sooner we find representatives worthy of our expectations, the better. Any suggestions are welcome. I keep reading that historically, there examples of an even worse environment, I am horrified of looking at the prospect of having to discover if this is true.

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