Jul 18, 2019

Axios Future

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Today's Smart Brevity count: 920 words, <4-minute read.

What else should we write about this summer? Hit reply to this email or message me at steve@axios.com, Kaveh Waddell at kaveh@axios.com and Erica Pandey at erica@axios.com.

Okay, let's start with ...

1 big thing: The cost of the bacchanalia

Illustration: Rebecca Zisser/Axios 

Rarely has the U.S. and global economy been under such self-inflicted pressure, weighed down by a frenzy of deficit spending, attacks on trading partners, and a broadside to the fundamental system of business.

Why it matters: So far at least, global stock markets have seemed to shrug off the relentless jostling of the financial system, mostly by President Trump, with all three major U.S. exchanges rising again today. But experts tell Axios that investors ultimately will price in a costlier assessment of his "America First" policies.

Among the economic hits are:

  • The 2019 U.S. budget deficit is on track to exceed $1 trillion, its first time to cross that threshold since the aftermath of the financial crash, and national debt will reach $33 trillion in a decade, 50% higher than today.
  • The U.S. trade war with allies and rivals is attacking hundreds of billions of dollars of business, with no sign of a letup soon. And now Japan has started one, too.
  • Those wars are causing a massive disruption to the movement of stuff that big companies buy and sell, and the parts they use, forcing them into a costly reconfiguration of the essence of how they conduct business.

"The Trump tax cuts, lax regulation, and talking down the dollar are for the economy like drinking a lot of Red Bull. You get a lot of frantic energy, a low attention span, a crash later, and an elevated though small risk of a heart attack," said Adam Posen, president of the Peterson Institute for International Economics.

The big picture: No one knows how long the economy's resilience will hold up against the incessant pressure — or whether Trump will abruptly lift layers of it, such as his tariffs and other trade threats.

And Trump's aggressive policies are hardly alone in weighing on the economy — one force is the length of the expansion, already the longest in U.S. history and bound eventually to peter out of its own accord.

  • Notwithstanding Trump's $1.5 trillion tax cut in 2017, businesses are barely investing in new projects, with capital spending growing at just 3% this year, compared with 11% in 2018.
  • Factory production has fallen for two straight quarters.
  • That has put a damper on U.S. growth. In the second quarter, U.S. GDP grew at a 1.6% annual rate, down from 3.1% in the first quarter. China and other major economies are slowing, too.

Economists say that the U.S. economy is currently being propped up by services and consumer spending. "The secular stagnation world we are in was already pushing down on investment. Trump's policies are driving it towards zero," Posen said.

Karen Dynan, an economics professor at Harvard, said she's surprised the financial markets have "not shown greater concern." But she and other economists pointed to Wall Street's repeated failure in recent decades to foresee coming disaster.

"They weren’t exactly flashing red before the financial crisis."
— Karen Dynan

The bottom line: "Markets don’t respond until there’s a meaningful crisis. We aren’t there yet," said Ian Bremmer, president of the Eurasia Group. "The tariff 'war' has been mostly talk, interest rates are low so debt doesn’t feel urgent. [But] that’s not sustainable."

2. A time of ticks

Photo: Cole Burston/Toronto Star/Getty

The blacklegged tick — and the many diseases it carries — is becoming a bigger health concern. And now the tiny bug is in Congress' sights, reports Axios' Alison Snyder.

Driving the news: In 2017, there were a record of 59,349 cases of tick-borne disease in the U.S. alone, an increase that led Congress to decide last week to investigate the source of the infestation.

Reality check: There's evidence that the Lyme disease-causing bacterium — Borrelia burgdorferi — has been in North America for 60,000 years.

  • That would make "a lame bioweapon," says Rick Ostfeld, who studies the arachnids at the Cary Institute of Ecosystem Studies.
  • Among the reasons: Lyme disease isn't communicable. Ticks themselves don't move much in their entire lives, and each new generation has to bite the right infected host to maintain that infection.

The bottom line: Climate change, reforestation in the Northeast, development that drives out predators of mice that harbor the disease, and a boom in deer that are hosts to ticks are all thought to be creating opportunities for them to expand their range and spread disease.

  • "The world is getting tickier for sure," says Ostfeld. "That's especially true for the U.S."
3. Fewer opioids, more fentanyl

Photo: Spencer Platt/Getty

Opioid overdose deaths fell last year, the first drop in almost 30 years. But the number of Americans dying from fentanyl and other synthetic drugs continued to soar, Axios' Sam Baker reports.

4. Worthy of your time

Detroit. Photo: Patrick Gorski/NurPhoto/Getty

The change in global supply chains (The Economist)

The abandoned home crisis (Kim Hart — Axios)

If you're a mountain lion, how people sound (Ed Yong — The Atlantic)

Sharpest London home price drop in a decade (Bethan Staton, Judith Evans — FT)

The soaring comeback of California condors (Maanvi Singh — The Guardian)

5. 1 potty thing: Smart diapers

Photo: Friso Gentsch/Getty

We've got smart watches, smart speakers and smart thermostats. Then there are the things that are probably just fine the way they are — like diapers, writes Erica.

Think again. Legacy diaper company Pampers wants to get in on the "internet of things" craze with a nappy that comes with a video camera, sensors and an accompanying app, reports Fast Company.

  • The new product, Lumi, can figure out when your baby's diaper needs changing and alert you. It can also sync data on a baby's' sleep patterns to parents' phones.

Our thought bubble: Come on. It's poop. Don't put sensors on your kid's butt.