Yes, our economy has improved. Hold your breath: it may improve more. Signs that it has improved include the following: Unemployment rates are at record lows in 14 states and the number of people drawing unemployment is the smallest since 1974. Not the percentage, but the number. We have twice the labor force today. Yet […]
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Yes, our economy has improved. Hold your breath: it may improve more.
Signs that it has improved include the following: Unemployment rates are at record lows in 14 states and the number of people drawing unemployment is the smallest since 1974. Not the percentage, but the number. We have twice the labor force today. Yet the number who draw unemployment is what it was 43 years ago. Miraculous.
Our GDP grew at 3.1 percent over the last three quarters. The government predicts it will hit a 3.3 rate for the last quarter. That would be the highest in 15 years.
The Feds also predict a 3.3 rate over the next year. Important supply chain figures are annualizing at 7.5 percent growth. This is a strong indication of healthy GDP in the future.
About 93 percent of our manufacturers say they are optimistic — the highest in 20 years. Last year, only 56 percent were optimistic.
Meanwhile, the index of small-business optimism is hitting record highs month after month.
The Congressional Budget Office credits President Trump’s tax cuts and policies for much of this success. It is hard to avoid that conclusion. It’s hard to avoid the reality that President Obama’s economic policies were flops.
Have you noticed how few of Obama’s advisers have touted their policies in books and articles?
They did do some bold work to halt the banking crisis. But having saved the patient, they then pulled the blankets over and nearly suffocated him.
They supported the Dodd-Frank legislation which smothered stretches of the economy. They pushed for humongous stimulus spending — for all those shovel-ready projects. They pushed for the Obamacare nightmare and its deadening regulations and taxes. They heaped regulations by the ton onto our businesses.
For what they sowed, they reaped anemic growth. They won’t tout their policies of old, because their predictions were ridiculous. In 2010, the White House predicted 2011 GDP would grow 3.8 percent. And that it would surge to 4 percent in 2012 to 2014. Never happened. They got 1.5 percent growth in Obama’s final year. Obama’s policies proved to be a dud.
His advisers learned little. They are blinded by their hatred of Trump. So much so, they predicted his free-market policies would fail.
One said it was “mathematically impossible” for us to get to the growth we have under Trump. Another predicted 10 years of growth of about 2 percent.
One said that Trump’s belief in 3 percent growth was like “believing in tooth fairies and ludicrous supply-side economics.”
Some mathematics. Some growth. Some tooth fairies. Some predictions.
Theirs was a failure to use common sense. When you dump tons of taxes and regulations on an economy, it will not grow rapidly. When you relieve an economy of such burdens, you have a better chance for expansion. They did not see this when they were in power. They are also blind to it now.
Now for the stock market. Does all this growth point to a surge in the stock market? Maybe not, for now. (Caution: Ignore my predictions for the market. Ignore everybody’s.)
The market loves profits. Many U.S. companies may see some shrinkage of profits over the next few years. For common-sense reasons. Tight labor markets lead to higher labor costs. Expanding economies lead to competition for capital. Capital costs (interest rates) are rising. Expansion leads to competition for materials. Some materials costs are rising.
In other words, costs for many companies are rising. This will squeeze their profits. Probably not dramatically, but enough to slow the stock market’s growth.
If that breathing spell comes about for stocks, I won’t be surprised. If our economy does not continue to expand at a healthy pace, I will be surprised.
And if Obama’s economic advisers hold their tongues, it will be one of their smarter moves.
From Tom…as in Morgan.
Tom Morgan writes about political, financial, and other subjects from his home near Oneonta. You can write to Tom at tomasinmorgan@yahoo.com. You can read more of his writing at tomasinmorgan.com
