WCA July 2019

From the Americas

The moderation in spending reflected a decline in motor vehicle purchases and other goods, likely related to the 35-day federal government shutdown. There was also a slowdown in spending on services. The government said, while it could not quantify the full effects of the shutdown, it estimated that reductions in labour services supplied by federal workers and intermediate purchases of goods and services by non-defence agencies had subtracted three tenths of a percentage point from GDP last quarter. Hitherto increasing business spending on equipment dropped sharply, rising at only 0.2 per cent rate, the slowest since the third quarter of 2016. Spending was held down by particularly weak outlay on agricultural machinery and office furniture. Investment in structures contracted for the third successive quarter, while residential construction saw its fifth consecutive quarter decline at 2.8 per cent. However, government investment increased at 2.4 per cent, driven by spending at both state and local government levels. Technology ethics campaigners call for a change in incentives Ethicists told a meeting of Silicon Valley business leaders that technology firms should do more to connect people in positive ways, and steer away from trends that have tended to exploit human weaknesses. Tristan Harris and Aza Raskin are the co-founders of the non-profit Center for Humane Technology, who prompted Apple and Google to urge phone users to reduce their screen time. Now they want companies and regulators to focus on reversing what they called “human downgrading”, which they see as at the root of other worsening problems, by reconsidering the design and financial incentives of their systems. Mr Harris said Silicon Valley was too focused on making computers surpass human strengths, rather than worrying about how they already exploit human weaknesses. If that is not reversed, he said, “that could be the end of human agency,” or free will. The meeting involved a hand-picked audience of about 300 technologists, philanthropists and others concerned with issues such as Internet addiction, political polarisation and the spread of misinformation on the web. Mr Harris said that worsening problems include the spread of hate speech and conspiracy theories, propelled by financial incentives to keep users engaged alongside the use of powerful artificial intelligence on platforms like Alphabet Inc’s YouTube. YouTube and other companies have said they are cracking down on extremist speech and have removed advertising revenue-sharing from some categories of content. Active Facebook communities can be a force for good, but they also aid the dissemination of false information, the campaigners said, citing a vocal fringe that, by opposing vaccines, has led to an increase in diseases that were nearly eradicated. In an interview reported by Reuters , Mr Harris said that what he has called a race to the bottom of the brainstem – manipulation of human instincts and The work place

US economy First-quarter report shows growth despite volatile trade and government shutdown Writing for Reuters on 26 th April, Lucia Mutikani reported that US economic growth accelerated in the first quarter of 2019, but driven by a smaller trade deficit and the largest inventory of unsold merchandise since 2015, both temporary factors that are likely to reverse. In an advance report, the US Commerce Department said that gross domestic product increased at a 3.2 per cent annualised rate in the first quarter, boosted by an increase in government investment, but that consumer and business spending slowed sharply. Investment in homebuilding contracted for the fifth consecutive quarter. The report believes there is no looming recession, but it describes a slowing economy as the effects of the White House’s $1.5 trillion tax cut package begin to fade, and the effects of the Federal Reserve’s interest rate increases continue to linger. Fears of a recession were fuelled by a brief inversion of the US Treasury yield curve in March. “The gain in first-quarter GDP would seem to make a mockery of claims that the US economy is slowing as the fiscal stimulus fades,” said Paul Ashworth, chief US economist at Capital Economics in Toronto. “Looking beyond the headline number, however, there are plenty of causes for concern.” The economy grew at a 2.2 per cent pace in the October-December period. Economists polled by Reuters had forecast GDP increasing at a 2 per cent rate in the first three months of the year, with the economy recording ten years of expansion in July, the longest on record, peaking at 4.2 per cent for the second quarter of 2018. Federal officials are likely to shrug off the surge in growth in the last quarter and focus on a measure of domestic demand that increased at only a 1.3 per cent rate, the slowest since the second quarter of 2013. It increased at a 2.6 per cent pace in the October-December quarter. The Federal Reserve recently suspended its three-year monetary policy tightening campaign, dropping forecasts for any rate hikes in 2019. The US central bank increased borrowing costs on four occasions during 2018. Exports surged and imports declined in the first quarter, leading to a small deficit that added 1.03 percentage points to GDP after being neutral in the fourth quarter. Trade tensions between the United States and China have caused wild swings in the trade deficit, with exporters and importers trying to stay ahead of the tariff fight between the two. The standoff has also had an impact on inventories, which increased at a $128.4 billion rate in the first quarter, compared with a $96.8 billion pace in the October-December quarter. Part of the inventory build was due to weak demand, especially in the automotive sector, which is expected to impact on future production at factories. Inventories contributed 0.65 percentage point to first-quarter GDP after adding one tenth of a percentage point in the October-December period. Growth in consumer spending, which accounts for more than two thirds of US economic activity, slowed to a 1.2 per cent rate from the fourth quarter’s 2.5 per cent rate.

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Wire & Cable ASIA – July/August 2019