This presentation discusses both economic as well as government policies for USA (United States). The focus will be on the following areas: 1. Debt to GDP 2. Budget deficits 3. Trade 4. Retail Sales 5. Income inequality 6. Banking Sector 7. Taxation 8. Debt Holders 9. Nearshoring 10. housing 11. Household debt

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: paul_young_cga@Hotmail.com