Political noise, again

Daily update

While we wait for the perfection of economists running everything, politicians are creating background noise. To the surprise of absolutely no one, Germany’s government lost a vote of confidence and February elections are now likely. Expect deep soul-searching about relatively insignificant changes in fiscal deficits.
Canada’s Finance Minister Freeland resigned, disagreeing with Prime Minister Trudeau on how to handle US President-elect Trump’s economic nationalism. This is not a parochial issue. Scapegoat economics and prejudice politics are increasing globally. Blaming foreigners for everything that is going wrong (economic nationalism) is a tempting political option. These political fault lines are likely to be repeated elsewhere.
UK labor market data is imprecise, but generally pointed to a solid labor market. Employment seems to be growing, as are real average earnings. Dire predictions in business sentiment surveys are not showing up in the data so far—there may be a lag, or it may be that surveys are influenced by something other than reality.
US retail sales are expected to improve again—US household consumption is breaking records in real terms (US consumers have never had it so good, but refuse to believe that). Retail sales contain only limited “fun” spending elements—restaurants and clothing—and so probably understate overall spending growth.