Renowned economist Deirdre McCloskey shares her perspective on the power of small states and individual freedom. Plus, a market outlook for next week, including the key factors of a rate cut, FIIs, and economic data. Also, retailers report resilient consumer spending despite economists predicting a slowdown. And, a grocer-turned-House GOP member denounces Kamala Harris' price control scheme.
Sources:
https://english.elpais.com/economy-and-business/2024-08-25/deirdre-mccloskey-economist-big-states-prevent-people-from-growing.html
https://pune.news/business/market-outlook-rate-cut-fiis-and-economic-data-key-factors-for-next-week-218973/
https://www.investopedia.com/retailers-say-consumer-spending-still-strong-economists-predict-slowdown-8696584
https://nypost.com/2024/08/24/us-news/grocer-turned-house-gop-member-denounced-kamala-harris-price-control-plan/
Outline:
(00:00:00) Introduction
(00:00:44) Deirdre McCloskey, economist: ‘Big states prevent people from growing’
(00:02:47) Market Outlook: Rate cut, FIIs and economic data key factors for next week
(00:05:33) Economists Have Been Predicting A Spending Slowdown—These Retailers Don't See It
(00:07:53) Grocer turned House GOP member denounced Kamala Harris price control...
Simply Economics
Economist Deirdre McCloskey on Small States and Individual Freedom, Market Outlook for Next Week
Renowned economist Deirdre McCloskey shares her perspective on the power of small states and individual freedom. Plus, a market outlook for next week, including the key factors of a rate cut, FIIs, and economic data. Also, retailers report resilient consumer spending despite economists predicting a slowdown. And, a grocer-turned-House GOP member denounces Kamala Harris' price control scheme.Sources:https://english.elpais.com/economy-and-business/2024-08-25/deirdre-mccloskey-economist-big-states-prevent-people-from-growing.htmlhttps://pune.news/business/market-outlook-rate-cut-fiis-and-economic-data-key-factors-for-next-week-218973/https://www.investopedia.com/retailers-say-consumer-spending-still-strong-economists-predict-slowdown-8696584https://nypost.com/2024/08/24/us-news/grocer-turned-house-gop-member-denounced-kamala-harris-price-control-plan/Outline:(00:00:00) Introduction(00:00:44) Deirdre McCloskey, economist: ‘Big states prevent people from growing’(00:02:47) Market Outlook: Rate cut, FIIs and economic data key factors for next week(00:05:33) Economists Have Been Predicting A Spending Slowdown—These Retailers Don't See It(00:07:53) Grocer turned House GOP member denounced Kamala Harris price control...
- Duration:
- 11m
- Broadcast on:
- 25 Aug 2024
- Audio Format:
- mp3
Good morning, and welcome to Simply Economics. It's Sunday, August 25th. On today's show, Deirdre McCloskey Economist discusses how big states prevent people from growing, and we take a look at the market outlook for next week with rate cuts, FIIs and economic data as key factors. Plus, despite economists predicting a spending slowdown, these retailers don't see it. This coverage and more, up next. I'm David, and you're listening to Simply Economics. I apologize, but there seems to be an error in the provided text. The closing sentence is incomplete, making it difficult to create a coherent transition to the opening sentence about Deirdre McCloskey. If you could please provide the complete closing sentence, I would be happy to assist you in creating a smooth transition between the two topics. Well, David, McCloskey is a die-hard liberal who believes the state is the great enemy. In her view, big states prevent people from growing and thriving. She's a fierce advocate of free markets and limited government intervention in the economy. This perspective aligns with her admiration for Adam Smith, the 18th century economist widely regarded as the father of modern economics. McCloskey holds Smith in such high regard that she crosses herself whenever she mentions his name. Interesting. And what about McCloskey's personal life? It sounds like she's been through a lot of changes and challenges. Absolutely. McCloskey underwent a gender transition at the age of 53 while married with two children. Sadly, her children have since broken all ties with her, and she doesn't know her grandchildren. Despite these painful experiences, McCloskey remains optimistic about the future of humanity. Her faith in the Episcopal Church seems to provide a source of strength and resilience. It's certainly a unique perspective, coming from someone who has been through so much personal transformation alongside her distinguished career in economics. Did McCloskey always hold these liberal economic views? Interestingly, no, in her youth, McCloskey was actually a follower of Marx. But over time, her views evolved and she became a staunch liberal. She even taught alongside Milton Friedman, one of the most influential free market economists of the 20th century. McCloskey's intellectual journey is a testament to her willingness to challenge her own beliefs and adapt her thinking based on evidence and reason. Deirdre McCloskey's unique perspective, shaped by her life experiences, provides a thought-provoking lens through which to view economics, politics, and the human condition. Thank you for sharing those insights from her recent interview in Madrid. Shifting gears to the financial markets, Indian equity markets extended their winning streak for a second consecutive week, hitting a three-week high. The nifty advance by 1.15%, while the sensex gained 0.81%, closing at 24,823.15 and 8186.21, respectively. The rally was driven by improving global sentiment following better-than-expected U.S. economic data and growing expectations of a U.S. rate cut in September. For more on this, let's bring in our correspondent. What key factors will investors be watching in the week ahead? Several important economic data points, both globally and domestically, are set to shape market sentiment in the coming days. On the global front, investors will closely monitor the U.S. durable goods orders for July, initial jobless claims, Japan's unemployment rate, industrial production, and consumer confidence data, as well as U.S. personal spending and income figures. These indicators will provide insights into the health of major economies and guide market improvements. Domestically, India's first-quarter GDP numbers, scheduled for release on August 30, will be a crucial factor. The data will offer a snapshot of the country's economic performance and could significantly impact market momentum. Additionally, the activities of foreign institutional investors and domestic institutional investors will play a vital role in shaping market trends. Market experts seem to have a positive outlook for the coming week. Alka Arora Chopra, director of Master Capital Services, noted that the Nifty 50 Index has shown strong performance closing near its all-time highs on the weekly charts. She expects the bullish momentum to persist, with a potential breakout above 24,900 likely to drive the index towards the 25,100 and 25,400 levels. On the downside, the 24,350 level is seen as critical weekly support. Pravesh Ghor, senior technical analyst at Swastika Investment Lited, believes the Indian stock market will follow the U.S. market's lead next week. The increasing likelihood of a soft landing for the global economy amid signs of economic softening is expected to influence market sentiment. Furthermore, commentary from central banks following the U.S. Federal Reserve's rate cut signal will be key in determining the market's direction. As investors navigate the complex interplay of global and domestic factors, the Indian equity markets appear poised for an eventful week ahead. With that, let's shift our focus to the retail sector. Despite economists predicting a slowdown in consumer spending, some retailers are still confident about their sales. During their most recent earnings reports, retailers like Walmart and Target said shopping hasn't slowed, it's just shifted. Here to discuss this further is our simply economics correspondent. So what are retailers seeing that has them optimistic about consumer spending? Well, David, major retailers like Walmart, Target and TJX, the parent company of Marshals, are all reporting strong sales growth and a resilient consumer. Walmart's CFO even said they aren't seeing any signs of weakness among their customers. This is despite record high inflation and interest rates that have eaten into household savings and forced more reliance on credit cards for purchases, but not all retailers had such positive outlooks. Correct? There seems to be a bit of a disconnect. That's right. While the big box stores and discount retailers are doing well, home improvement giant lows reported households are holding off on big ticket purchases. Amazon said customers are opting for cheaper products. And Keurig Dr. Pepper's CEO noted consumers are buying more at value-oriented stores. So it's not that people are necessarily spending less money overall, they're just being more selective about what they buy and looking for deals. Despite the optimism from some retailers, many economists still expect consumer spending growth to fall in the coming months. What's their rationale? Economists point to several factors that they believe will inevitably lead to a slowdown in spending. BMO's senior economist Jay Hawkins expects real consumer spending growth to moderate in the second half of the year amid slower job growth, rising unemployment and record high credit card debt. Interest rates also remain at two decade highs, which nationwide's chief economist, Kathy Bostjancik says will slow employment growth and cut into spending. Even the retailers acknowledge the unpredictable economy means they aren't immune to volatility. It will certainly be interesting to see how this all plays out with the consumer in the coming months. While retailers are encouraged by the current spending trends, it sounds like they are also wisely keeping a cautious outlook given the economic headwinds. Speaking of which, Vice President Harris recently unveiled a policy aimed at combating what the administration calls "price gouging" by limiting how much stores can charge for certain food items. The proposal has drawn sharp criticism from some, including Ohio Congressman Michael Ruhley, whose family has owned a grocery store chain for over a century. Ruhley warns the policy could have catastrophic consequences for businesses and consumers alike. For more on this, we're joined now by our correspondent. What more can you tell us about the specifics of this price control proposal and the Vice President's rationale behind it? The Vice President's plan would essentially put a cap on the price's retailers can charge for certain household staples in an effort to provide relief to consumers who have been hit hard by inflation in recent years. Proponents argue that some large food manufacturers have seen record profits during this inflationary period. For example, between 2019 and 2023, Hershey's profits jumped 62% while General Mills and Kraft Heinz both saw 48% growth. The administration seems to be making the case that these companies can afford to absorb some of the rising costs rather than passing it all on to consumers. But Congressman Ruhley, drawing on his experience in the grocery business, paints a pretty dire picture of what this policy could mean for the industry. What is his main concern? Ruhley warns that grocery stores, especially smaller independent ones, are already operating on razor-thin margins, with the average store making only about $1.50 in profit for every $100 that goes through the registers. He argues that if the government starts dictating the prices, stores can charge, many will simply not be able to stay in business. Ruhley points to the fact that within an 80-mile radius of where he sits, five grocery stores have already gone out of business in just the last two years. He fears these price controls could accelerate that trend. And beyond just the impact on grocery stores themselves, what does Congressman Ruhley foresee in terms of the availability of goods for consumers if these price controls are enacted? He paints a pretty stark picture, warning that price controls will lead to shortages of even the most basic household items. Ruhley uses the example of tied laundry detergent. If the government were to tell proctor and gamble, the maker of tied, that they have to keep their prices steady for the next four years, Ruhley argues the company would likely just choose to stop making the product altogether. He says under this policy, the US would start to resemble countries like Cuba or Venezuela that have struggled with severe shortages of consumer goods. Those were certainly some strong words from the Congressman, and it's clear this proposal is likely to face significant pushback from the grocery industry. We'll have to wait and see how the administration responds to these concerns and whether they move forward with the plan. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. [MUSIC] [BLANK_AUDIO]