Econ DA - DDI 2023

***Econ DA***
1NC
Rate Hikes DA---1NC
The economy is on the positive trajectory now – inflation is falling, the labor market is steady, and unemployment is low Sheidlower, 7/12 --- Noah Sheidlower is the Economy Fellow with Insider. Before joining Insider, Noah received his Bachelor's in Sociology and English from Columbia University. (Noah Sheidlower, "The economy is doing exactly what we need to avoid a recession and keep booming", 7-12-2023, Business Insider, https://www.businessinsider.com/inflation-slowing-strong-labor-market-avoiding-recession-fed-economy-2023-7)//EG
The economy is doing what it needs to do to achieve probably its best possible near-term outcome: inflation falling while keeping unemployment low, all the while staying out of a recession through the rest of this year. Recent data shows the labor market has performed well, inflation continues to cool after being at such a high rate, and the housing market is showing some signs of resilience. This may be music to the Federal Reserve's ears, as the central bank considers whether to slow the economy even further. The Fed's ideal "soft landing" is a balancing act between slowing the economy to bring inflation down while ensuring growth stays strong and unemployment doesn't get too high. That's exactly what's happening in the economy right now. The job market is cooling down but still strong Hiring slowed dramatically in June, while still remaining high compared to before the pandemic, adding 209,000 nonfarm payroll jobs, nearly 100,000 less than the revised growth in May. Job creation on the whole has slowed from the year's highs in January, with some industries such as retail losing jobs from May to June. The latest jobs report is "mostly what the Fed wants to see, which is the labor market sort of coming back into balance, no longer overheating and being sort of sustainable, steady, robust, those kinds of words, rather than sort of exceptionally hot and supply constrained," Julia Pollak, chief economist at ZipRecruiter, told Insider on Friday. Additionally, the most recent Job Openings and Labor Turnover Survey for May reveals job openings are still high, while continuing their overall downward trend, echoing the job growth figures in showing a cooling but still-strong labor market. And despite a year of the Fed raising interest rates to fight inflation, unemployment is still remarkably low. The unemployment rate fell in June to 3.6% after rising by 0.3 percentage points in May. Other measures also show that the job market is still very healthy. The prime-age employment-population ratio, the share of people in the 25 to 54 age range with a job, surged from 80.7% to 80.9%, the highest since April 2001. Nick Bunker, economic research director for North America at the Indeed Hiring Lab, told Insider that the slowing but still good employment data suggests the US is heading toward stronger and more sustainable growth. "It's just a matter of, is this pace of moderation quick enough for the Federal Reserve?" Bunker said. "Is this a trend that'll have more time to play out, or will tighter monetary policy or some other stumbling block get in the way of seeing how painless this recalibration can be?" Inflation is coming down as fast as it went up Inflation as measured by the Consumer Price Index rose by just 3.0% in June from a year prior, a great sign for Americans' wallets and the lowest rate since March 2021. Inflation had been dramatically cooling before the latest report out Wednesday. The year-over-year change in this index has slowed ever since peaking back in June 2022 at 9.1%. Core CPI, which excludes food and energy, has been extremely high, but it also cooled in June. After a year-over-year increase of 5.3% in May, the index rose by a smaller 4.8% year over year in June. Wage growth as seen by year-over-year changes in average hourly earnings has also plateaued. Despite that plateau, the fall in inflation means that real wages are up on average. Data from the National Federation of Independent Business released Tuesday revealed the number of small businesses that raised their prices fell in June to the lowest level since March 2021, dropping to just 29%. This suggests small businesses have adjusted to still-rising prices, despite about 90% of owners reporting they had few or no qualified applicants for job openings.
[Insert Link]
Rate hikes would be detrimental to the economy – stock market, bonds, and mortgage loans prove.
Curry 23, (Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for Bankrate and LendingTree) “What Happens When The Fed Raises Interest Rates?," Forbes Advisor, 6/21/23, https://www.forbes.com/advisor/investing/fed-raises-interest-rates/ // EE
Higher market interest rates can have a negative impact on the stock market. When Fed rate hikes make borrowing money more expensive, the cost of doing business rises for public (and private) companies. Over time, higher costs and less business could mean lower revenues and earnings for public firms, potentially impacting their growth rate and their stock values.
“If the cost of borrowing money from a bank increases, the opportunity to expand investment in capital goods by a corporation stalls,” says Dan Chan, a Silicon Valley investor and a former pre-IPO employee of PayPal. “The interest rate may be so high that many companies will not be able to afford to grow.”
More immediate is the impact Fed rate increases have on market psychology, or how investors feel about market conditions. When the FOMC announces a rate hike, traders might quickly sell off stocks and move into more defensive investments, without waiting for the long, complicated process of higher interest rates to work their way through the entire economy.
With Bonds, It Depends
Bonds are particularly sensitive to interest rate changes. When the Fed increases rates, the market prices of existing bonds immediately decline. That’s because new bonds will soon be coming onto the market offering investors higher interest rate payments.
To reflect the higher overall rates, existing bonds will decline in price to make their comparatively lower interest rate payments more appealing to investors.
“When prices in an economy rise, the central bank typically raises its target rate to cool down an overheating economy,” notes Chan. “Inflation also erodes the actual value of a bond’s face value, which is a particular concern for longer maturity debts.”
Mortgages and Home Loans Become More Expensive
Rising rates have an indirect impact on long-term home loans like a 30-year, fixed-rate mortgage. The rates charged for shorter-term loans with adjustable rates, like home equity lines of credit (HELOCs) and adjustable-rate mortgages (ARMs), rise immediately following Fed rate increases.
The rates banks charge for a 30-year, fixed-rate mortgage reference the yield on 10-year Treasury bonds. Typically the 10-year yield is more directly influenced by Fed rate policy, although the fed funds rate is only one factor among many that feed into 10-year yields.
Economic decline and national debt undercuts US Leaderships-Leads to deterrence and assurance failures
Landry Signé 12[Landry Signé, "The Real National Security Threat: America's Debt",7-10-2012, Brookings, https://www.brookings.edu/articles/the-real-national-security-threat-americas-debt/, 1LEE]
Economic renewal and fiscal reform have become the preeminent issues, not only for domestic and economic policy but for foreign policy as well. As the former chairman of the Joint Chiefs of Staff, Adm. Michael G. Mullen, was fond of saying, national debt has become perhaps our top national security threat. And neither major presidential candidate is doing enough about it. This issue needs to be framed as crucial not just for our future prosperity but for international stability as well.
The United States has been running trillion-dollar deficits, resulting in a huge explosion in the country’s indebtedness. Publicly held debt now equals 70% of gross domestic product, a threshold many economists consider significant and highly worrisome. Making matters worse, half of our current deficit financing is being provided by foreigners. We are getting by with low interest rates and tolerable levels of domestic investment only because they find U.S. debt attractive, which may not last.
According to the nonpartisan Committee for a Responsible Federal Budget, President Obama’s long-term budget plan would allow publicly held debt as a fraction of GDP to rise further, up to 75%, within a decade. Mitt Romney’s proposal, featuring tax cuts and defense spending increases and as-yet-unspecified (and thus less than fully credible) entitlement reform, appears worse. It would probably drive publicly held debt to 95% of GDP over the same period. Put differently, though both are serious and pragmatic men, neither major party’s presidential candidate is adequately stepping up to the plate, with Romney’s plan the more troubling of the two.
Why is this situation so serious? First, we are headed for a level of debt that within a decade could require us to spend the first trillion dollars of every year’s federal budget servicing that debt. Much less money will be left for other things. That is a prescription for a vicious cycle of underfinancing for our infrastructure, national education efforts, science research and all the other functions of government that are crucial to long-term economic growth. Robust defense spending will be unsustainable too. Once we get in this rut, getting out will be very hard.
Second, such a chronic economic decline would undercut what has been 70 years of strong national political consensus in favor of an activist and engaged American foreign policy. One reason the United States was so engaged through the Cold War and the first 20 years of the post-Cold War world was fear of threats. But the other reason was that the strategy was associated with improvements in our quality of life as well. America became even more prosperous, and all major segments of society benefited.
Alas, globalization and automation trends of the last generation have increasingly called the American dream into question for the working classes. Another decade of underinvestment in what is required to remedy this situation will make an isolationist or populist president far more likely because much of the country will question whether an internationalist role makes sense for America — especially if it costs us well over half a trillion dollars in defense spending annually yet seems correlated with more job losses.
Lastly, American economic weakness undercuts U.S. leadership abroad. Other countries sense our weakness and wonder about our purported decline. If this perception becomes more widespread, and the case that we are in decline becomes more persuasive, countries will begin to take actions that reflect their skepticism about America’s future. Allies and friends will doubt our commitment and may pursue nuclear weapons for their own security, for example; adversaries will sense opportunity and be less restrained in throwing around their weight in their own neighborhoods. The crucial Persian Gulf and Western Pacific regions will likely become less stable. Major war will become more likely.
That causes nuclear war
Tønnesson 15 - Stein Tønnesson 15, Research Professor, Peace Research Institute Oslo; Leader of East Asia Peace program, Uppsala University, 2015, “Deterrence, interdependence and Sino–US peace,” International Area Studies Review, Vol. 18, No. 3, p. 297-311
Several recent works on China and Sino–US relations have made substantial contributions to the current understanding of how and under what circumstances a combination of nuclear deterrence and economic interdependence may reduce the risk of war between major powers. At least four conclusions can be drawn from the review above: first, those who say that interdependence may both inhibit and drive conflict are right. Interdependence raises the cost of conflict for all sides but asymmetrical or unbalanced dependencies and negative trade expectations may generate tensions leading to trade wars among inter-dependent states that in turn increase the risk of military conflict (Copeland, 2015: 1, 14, 437; Roach, 2014). The risk may increase if one of the interdependent countries is governed by an inward-looking socio-economic coalition (Solingen, 2015); second, the risk of war between China and the US should not just be analysed bilaterally but include their allies and partners. Third party countries could drag China or the US into confrontation; third, in this context it is of some comfort that the three main economic powers in Northeast Asia (China, Japan and South Korea) are all deeply integrated economically through production networks within a global system of trade and finance (Ravenhill, 2014; Yoshimatsu, 2014: 576); and fourth, decisions for war and peace are taken by very few people, who act on the basis of their future expectations. International relations theory must be supplemented by foreign policy analysis in order to assess the value attributed by national decision-makers to economic development and their assessments of risks and opportunities. If leaders on either side of the Atlantic begin to seriously fear or anticipate their own nation’s decline then they may blame this on external dependence, appeal to anti-foreign sentiments, contemplate the use of force to gain respect or credibility, adopt protectionist policies, and ultimately refuse to be deterred by either nuclear arms or prospects of socioeconomic calamities. Such a dangerous shift could happen abruptly, i.e. under the instigation of actions by a third party – or against a third party. Yet as long as there is both nuclear deterrence and interdependence, the tensions in East Asia are unlikely to escalate to war. As Chan (2013) says, all states in the region are aware that they cannot count on support from either China or the US if they make provocative moves. The greatest risk is not that a territorial dispute leads to war under present circumstances but that changes in the world economy alter those circumstances in ways that render inter-state peace more precarious. If China and the US fail to rebalance their financial and trading relations (Roach, 2014) then a trade war could result, interrupting transnational production networks, provoking social distress, and exacerbating nationalist emotions. This could have unforeseen consequences in the field of security, with nuclear deterrence remaining the only factor to protect the world from Armageddon, and unreliably so. Deterrence could lose its credibility: one of the two great powers might gamble that the other yield in a cyber-war or conventional limited war, or third party countries might engage in conflict with each other, with a view to obliging Washington or Beijing to intervene.
Dollar Heg DA---1NC
The economy is on a positive trajectory now – inflation is falling, the labor market is steady, and unemployment is low
Sheidlower, 7/12 --- Noah Sheidlower is the Economy Fellow with Insider. Before joining Insider, Noah received his Bachelor's in Sociology and English from Columbia University. (Noah Sheidlower, "The economy is doing exactly what we need to avoid a recession and keep booming", 7-12-2023, Business Insider, https://www.businessinsider.com/inflation-slowing-strong-labor-market-avoiding-recession-fed-economy-2023-7)//EG
The economy is doing what it needs to do to achieve probably its best possible near-term outcome: inflation falling while keeping unemployment low, all the while staying out of a recession through the rest of this year. Recent data shows the labor market has performed well, inflation continues to cool after being at such a high rate, and the housing market is showing some signs of resilience. This may be music to the Federal Reserve's ears, as the central bank considers whether to slow the economy even further. The Fed's ideal "soft landing" is a balancing act between slowing the economy to bring inflation down while ensuring growth stays strong and unemployment doesn't get too high. That's exactly what's happening in the economy right now. The job market is cooling down but still strong Hiring slowed dramatically in June, while still remaining high compared to before the pandemic, adding 209,000 nonfarm payroll jobs, nearly 100,000 less than the revised growth in May. Job creation on the whole has slowed from the year's highs in January, with some industries such as retail losing jobs from May to June. The latest jobs report is "mostly what the Fed wants to see, which is the labor market sort of coming back into balance, no longer overheating and being sort of sustainable, steady, robust, those kinds of words, rather than sort of exceptionally hot and supply constrained," Julia Pollak, chief economist at ZipRecruiter, told Insider on Friday. Additionally, the most recent Job Openings and Labor Turnover Survey for May reveals job openings are still high, while continuing their overall downward trend, echoing the job growth figures in showing a cooling but still-strong labor market. And despite a year of the Fed raising interest rates to fight inflation, unemployment is still remarkably low. The unemployment rate fell in June to 3.6% after rising by 0.3 percentage points in May. Other measures also show that the job market is still very healthy. The prime-age employment-population ratio, the share of people in the 25 to 54 age range with a job, surged from 80.7% to 80.9%, the highest since April 2001. Nick Bunker, economic research director for North America at the Indeed Hiring Lab, told Insider that the slowing but still good employment data suggests the US is heading toward stronger and more sustainable growth. "It's just a matter of, is this pace of moderation quick enough for the Federal Reserve?" Bunker said. "Is this a trend that'll have more time to play out, or will tighter monetary policy or some other stumbling block get in the way of seeing how painless this recalibration can be?" Inflation is coming down as fast as it went up Inflation as measured by the Consumer Price Index rose by just 3.0% in June from a year prior, a great sign for Americans' wallets and the lowest rate since March 2021. Inflation had been dramatically cooling before the latest report out Wednesday. The year-over-year change in this index has slowed ever since peaking back in June 2022 at 9.1%. Core CPI, which excludes food and energy, has been extremely high, but it also cooled in June. After a year-over-year increase of 5.3% in May, the index rose by a smaller 4.8% year over year in June. Wage growth as seen by year-over-year changes in average hourly earnings has also plateaued. Despite that plateau, the fall in inflation means that real wages are up on average. Data from the National Federation of Independent Business released Tuesday revealed the number of small businesses that raised their prices fell in June to the lowest level since March 2021, dropping to just 29%. This suggests small businesses have adjusted to still-rising prices, despite about 90% of owners reporting they had few or no qualified applicants for job openings.
Aff’s spending undermines fed efforts to curb inflation
Miran 23- adjunct fellow at the Manhattan Institute and former senior adviser for economic policy at the U.S. Treasury.
Stephen Miran, "Filling the Punch Bowl," City Journal, 5-8-2023, https://www.city-journal.org/article/high-government-spending-undermines-feds-inflation-measures-- 嘉玮
In response to persistently high inflation, the Fed’s hiking cycle, bringing rates to roughly 5 percent, is the fastest and most aggressive in 40 years. Yet we’ve seen very limited e

Preview shortened. Download the file for the full document.