Isn't it remarkable that China's growth is so consistent?
A columnist from The Washington Post once opined that China "produces an astonishing number of astonishing numbers." Last week's GDP announcement, which helped push markets higher, may fall into that category.
China's official statistics agency reported the country's gross domestic product (GDP) grew by 6.7 percent during the first quarter of 2016. That didn't come as a big surprise because it's smack-dab-in-the-middle of the official Chinese government target of 6.5 to 7.0 percent GDP growth. The target was set last year when the government adopted its most recent five-year plan.
Not everyone thinks China's official statistics are on the money. The Conference Board (TCB), an independent global research association, has found:
"...an upward bias in the previously published GDP growth series of, on average, 2.6 percentage points per year since the start of Deng Xiaoping's so-called "reform era" that began in 1978, this percentage has not been constant over time. In fact, our alternative series indicates much larger volatility in the year-on-year estimates (sometimes even showing faster growth rates than the official estimates), suggesting that the impacts of external and internal shocks on the Chinese economy are much more pronounced than the official statistics convey."
In other words, China's growth may not be as steadfast and unwavering as the country's government would have us believe.
TCB estimated China's GDP grew by 3.7 percent during 2015, which was significantly lower than the Chinese government's 6.9 percent growth estimate. In fact, TCB expects the Chinese economy to grow by 3.7 percent in 2016, too. It's not 6.5 percent, but it's solid growth.
WHAT DO ECONOMISTS THINK? As they've traveled across the country, U.S. Presidential candidates have made a variety of economic proposals and promises. National Public Radio's Planet Money asked 22 economists from across the political spectrum for their two cents on the matter. Survey participants were given three options: good, debatable, or bad. Here are their opinions:
- End the "carried interest" tax break, which benefits hedge fund managers and private equity executives.
- Lower the corporate tax rate to 25 percent.
- Create a "National Infrastructure Bank" seeded with public money to help finance infrastructure projects:
- Make tuition free at public colleges and universities.
- Make tuition free at community colleges for students who contribute earnings from working 10 hours a week.
- Impose a "spectator tax." Stock trades will be taxed at 0.5 percent and bonds at 0.1 percent.
- Raise the federal minimum wage to $15 an hour.
- Remove single taxpayers who earn less than $25,000, and married taxpayers (and those filing jointly) who earn less than $50,000 - approximately over 50 percent - from the tax rolls.
- Everyone pays the same 10 percent tax rate. It retains some version of the earned income tax credit and deductions for lower-income families.
- Expel immigrants who are in the United States illegally.
We'll find out what the American people think later this year!
Quote of the Week
"And along the way I discovered that a lot of great originals in history were procrastinators. Take Leonardo da Vinci. He toiled on and off for 16 years on the Mona Lisa. He felt like a failure. He wrote as much in his journal. But some of the diversions he took in optics transformed the way that he modeled light and made him into a much better painter."
--Adam Grant, Organizational psychologist
Golf Tip of the Week
Use Visualization to Hone Your Short Game
Putting is all about depth perception, feel, and consistency in your shots. One of the best ways to help yourself execute a shot is by visualizing the stroke, path, and outcome you want to achieve before you're standing over the ball. If you can have an image in your head of what you want to accomplish, you're more likely to commit to your shots and execute confidently.
To visualize the shot, look around you and carefully study the environment. Ask yourself:
- How will the lie affect your shot?
- What path will the ball take?
- How will it drop into the hole?
If you can, create an image in your head of the ball's trajectory and visualize yourself hitting the shot successfully.
Financial Question of the Week
What are the benefits of Advanced Financial Planning?
Advanced Financial Planning is goal based planning which incorporates strategies designed for:
- Wealth Enhancement (income tax mitigation and cash-flow planning)
- Wealth Transfer (transferring wealth effectively to your benefiaries)
- Wealth Protection (risk mitigation, legal structures and transferring risk to insurance companies)
Advanced financial planning provides a review and recommendations pertaining to your complete financial picture. Incorporating advanced strategies into your plan helps you position yourself for financial success and to achieve your goals.
If you have questions, or would like further explanation of advanced financial planning techniques, please contact my office.