In 2021, Social Security’s total cost exceeded its total income (payroll taxes) for the first time since 1982. Disbursements are expected to continue to exceed program income for the foreseeable future, with money drawn from the trust funds to pay the difference. Current payments into Social Security being dispersed to current beneficiaries set the stage for financial difficulties when the demographics of the U.S. shifted to an aging population. By 2033, it is expected Social Security will only be able to pay 77 percent of scheduled benefits to retirees, unless something changes. The 2023 average monthly Social Security benefit for retirees was only $1,827. 2. Manufacturing, Sourcing, and Supply Chains COVID painfully demonstrated that if globally sourced supply chains were interrupted, it could have significant, negative effects on the economy through reduced product availability and resulting price increases. There are reasons why global supply chains were developed by U.S. corporations, including utilizing low-cost sourcing, offering consumers lower prices, increasing global competitiveness, and maximizing profits. Although COVID impacts have waned, global political turmoil has increased which eventually could cause further supply chain disruptions. Global supply chains, including sourcing from Southeast Asia, remain significantly important for many U.S. companies. The United States began a tariff and trade war with China in 2018 that included goals of shifting manufacturing jobs back to the U.S. and lessoning dependance on Chinese imports. Tariffs were placed on over approximately $350 billion of Chinese goods each year, with the tariffs largely remaining in place currently. The table below shows the ranking of countries by total year-to-date imports through August, 2023. Despite the tariffs and political tension, U.S. companies continue to rely significantly on China for sourcing. China remains in third place for total imports with a year-to-date total of $375.8 billion, ranking behind only Mexico and Canada. Note that Taiwan ranks eighth, with year-to-date total imports of $56.5 billion. Year-to-Date Imports of Goods by Country through August 2023 (Source: Foreign Trade Division, U.S. Census Bureau) Rank Country Billions of $ % of Total Trade 1 Mexico 316.7 15.5 2 Canada 279.9 13.7 3 China 275.8 13.5 4 Germany 107.1 5.2 5 Japan 96.0 4.7 6 Korea, South 76.1 3.77 7 Vietnam 73.0 3.6 8 Taiwan 56.5 2.8 9 India 55.6 2.7 10 Ireland 54.9 2.7 Any escalation of political tensions with China that adversely impacts trade could have a significant effect on American consumers. The chart below shows manufacturing employment in the U.S. since 1980. A long, gradual decline in manufacturing employment began in 1980. Although manufacturing employment rebounded slightly in the 1990s, the downward trend returned after the turn of the century with a sharp decline that generally continued through early 2010. After hitting a low of 11.5 million in early 2010, manufacturing employment steadily grew to 12.8 million in December 2019. The immediate impact of the 2018 Chinese tariffs on U.S. manufacturing employment? Not much. Manufacturing employment in December 2019 was relatively unchanged from its December 2018 level of 12.8 million. Despite the growth in manufacturing employment during the economic expansion, the manufacturing sector ended the decade with almost 1 million fewer employees than what it had before the financial crisis. Manufacturing employment was
Central Wisconsin Report - Spring 2023
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