The State Of The Economy

The Conservative Treehouse posted an article today about the revision of the third quarter economic growth numbers.

The article reports:

More signs the U.S. economy is very strong show up today as several key economic indicators defy prior economist predictions.   Staring with a significant upward revision by the Bureau of Economic Analysis for the third quarter GDP growth from 1.9% to 2.1%:

The revision to GDP reflected upward revisions to inventory investment, business investment, and consumer spending.

The increase in consumer spending reflected increases in both goods (notably recreational goods and vehicles as well as food and beverages) and in services (led by housing and utilities as well as food services). (link)

Additionally, the commerce department released data showing U.S. core capital goods orders increased 1.2% in November, the largest gain since January; and more data on home sales shows a whopping 31.6% increase year-over-year. 

U.S. consumers and home buyers are benefiting from low inflation and significant blue collar wage gains that are an outcome of a growing economy and a very strong jobs market.  The most significant wage growth is in non-supervisory positions.   The economic strength is broad-based and the U.S. middle-class is confident.

We live in a commerce based society. When Americans feel confident about their financial futures and buy things, the economy grows. When Americans stop buying things, the economy shrinks. The economy is cyclical and interdependent. When people are insecure about their financial futures, they take fewer vacations, they go out to dinner less frequently, they go to the movies less frequently, etc. Then the jobs in those economic sectors begin to go away–fewer employees are needed. We saw that in the recession of 1990, which was essentially caused by a tax on luxury goods that Congress told us would affect only the people buying those luxury goods. Well, when people stopped buying luxury goods because they didn’t want to pay the taxes on them, the people making those goods lost their jobs. When those people lost their jobs, they traveled less, ate out less, shopped less, etc. Then the people in those industries were laid off because they were not needed. The pattern here is obvious.

When people feel secure about their future, the economy grows. Recent rumors of recession were not taken seriously because Americans were getting raises and could see that more of their neighbors were working. The economy right now is on a good path. It will take some serious effort to mess it up.

A List The Media Does Not Want You To See

Breitbart posted an article today titled, “Five Times Hunter Biden’s Business Dealings Presented a Conflict of Interest for Joe Biden.”

Please follow the link to the article for the details, but here is the list:

1. Joe Biden’s top campaign contributor hired Hunter fresh out of law school.

The article notes that credit card issuer MBNA Corp. hired Hunter Biden for an undisclosed position, despite the fact that Hunter had no background in either banking or business. Hunter Biden left the company in 1998 to join the Clinton-era Commerce Department it was as a senior vice president.

2. Hunter Biden was on MBNA’s payroll while Joe Biden was writing bankruptcy reform legislation. 

3. Hunter Biden sought to monetize off his father’s political standing on Wall Street. 

In 2006, shortly before Joe Biden assumed the chairmanship of the Senate Foreign Relations Committee and launched his second presidential campaign, Hunter purchased a hedge fund called Paradigm Global Advisors with his uncle, James. Although neither had a strong background in finance, James and Hunter believed they could leverage Joe Biden’s political connections to their benefit.

“Don’t worry about investors,” James Biden, the former vice president’s younger brother, purportedly told Paradigm’s senior leadership upon taking over the fund, as reported by Politico. “We’ve got people all around the world who want to invest in Joe Biden.”

This sort of philosophy might explain why many of our Congressmen enter Congress as members of the Middle Class and leave as millionaires.

4. Hunter Biden’s firm scored a $1.5 billion deal with the Bank of China only days after his father paid an official visit to the country. 

Peter Schweizer’s book Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends gives the details of the transaction.

5. The Obama-Biden administration helped facilitate the sale of U.S. company with insight into military technology to BHR and a Chinese state-owned defense firm. 

…The sale required approval from the Obama-Biden administration’s Committee on Foreign Investment in the United States (CFIUS) as AVIC was a subsidiary of the Chinese government and Henniges produced “dual-use” anti-vibration technology with U.S. “military applications.” CFIUS, which is made up of representatives from 16 different federal bodies including the departments of State, Treasury, and Defense, is required to review any transaction with national security implications.

When the AVIC and BHR’s bid was first announced, alarm bells went off in certain sectors of the defense industry. In particular, many noted that AVIC was “reportedly involved in stealing sensitive data regarding the Joint Strike Fighter program,” which it later “reportedly incorporated … into China’s J-20 and J‑31 aircraft.”

Despite the national security concerns, CFIUS approved the deal with AVIC purchasing 51 percent of the company and BHR taking ownership of the other 49 percent. Upon purchase, an industry newsletter stated the deal was the “biggest Chinese investment into US automotive manufacturing assets to date.”

Although the deal was approved by the Obama administration, it has not escaped congressional scrutiny. In August, Senate Finance Committee Chairman Chuck Grassley (R-IA) launched a probe into whether or not the CFIUS decision was influenced by either Joe Biden or former Secretary of State John Kerry, whose stepson was also involved in the venture.

“The direct involvement of Mr. Hunter Biden and Mr. Heinz in the acquisition of Henniges by the Chinese government creates a potential conflict of interest,” Grassley noted when launching the probe.

Become a public servant and help your family become wealthy. Somehow I don’t think that is what servanthood is about.

Revising The Numbers

Economists seems to have a problem lately correctly predicting economic growth. They always seem a bit surprised when the numbers come in higher than what they predicted. Well, it has happened again.

The Gateway Pundit is reporting the following today:

The fourth quarter GDP number was released on Thursday and beat expectations at 2.6%Economists expected a 2.2% GDP rate.

CNBC says the GDP report was only preliminary, it would mean average growth for the year was 3.1 percent.

...Ronald Reagan brought forth an annual real GDP growth of 3.5% . Barack Obama, with his abysmal policies, was lucky to average a GDP growth rate of slightly greater than 1%.

Obama ranked as the fourth worst presidency on record in GDP growth at 1.457% . Only Herbert Hoover (-5.65% ), Andrew Johnson (-0.70% ) and Theodore Roosevelt (1.41% ) had lower average annual GDP growth than Barack Obama.

The Commerce Department announced in the first quarter of 2016 that the US economy expanded at the slowest pace in two years with a GDP growth rate of an anemic 0.5% . The second quarter GDP growth rate was not much better at 1.2% . (The 3rd quarter GDP rate was not yet announced by the time we drafted our post before the 2016 election.)

…Barack Obama was the first President ever to never surpass an annual rate of 3% GDP growth!  This resulted in Obama being rated the worst economic President ever!

Obama’s Congressional Budget Office (CBO) forecast in 2016 that America would never see 3.0% economic growth again. They had given up and Hillary was their candidate.

President Trump did win the election in 2016 and his Director of the White House National Economic Council Larry Kudlow said in early December that the U.S. economy is growing at a rate greater than 3% –

This is good news for people in the job market and people entering the job market. Jobs are becoming more plentiful and salaries are rising.

Leadership Matters

Bloomberg is reporting today that real disposable income, or earnings adjusted for taxes and inflation, advanced 0.6 percent from the prior month, the biggest gain since April 2015, according to a Commerce Department report Thursday. Part of that I suspect is due to the tax cuts, but there are other things that have made this possible.

The article reports:

The data, covering the first month since the tax law was signed in December, reflected a $30 billion increase in one-time bonuses and a $115.5 billion annualized drop in personal taxes, the Commerce Department said. Such boosts to Americans’ wallets, along with a tight labor market, will sustain spending. Those items, plus rising prices, are likely to keep Fed policy makers on track for at least three interest-rate increases this year, including one that’s widely expected later in March.

 A separate Labor Department report on Thursday showed weekly filings for unemployment benefits fell to the lowest level since 1969.

 The reduction in taxes helped boost the saving rate to 3.2 percent, the highest since August, from 2.5 percent in December, which was the lowest since 2007.

Most Americans pay a higher percentage of their income in taxes than what Medieval serfs paid the lord of the manor to farm their land.

The article concludes:

The Fed’s preferred price gauge — tied to consumption — rose 0.4 percent in January from the previous month and was up 1.7 percent from a year earlier. Inflation has mostly missed the central bank’s 2 percent target since 2012, though policy makers expect it to rise toward the goal.

Excluding food and energy, so-called core prices rose 0.3 percent, matching the median estimate. The core index, which Fed officials see as a better indicator of underlying price pressures, was up 1.5 percent from January 2017, the same annual gain as the prior three months.

Adjusted for inflation, personal spending declined 0.1 percent in January from the prior month, the first decrease in a year. The weakness reflected a 1.6 percent slump in outlays for durable goods as auto sales cooled.

There are a number of reasons for the improvement of the economy–ending regulations that made it very difficult to start or run a business, putting more money in Americans’ pockets by lowering the individual tax burden, ending the financial penalties that were included in ObamaCare, lowering corporate tax rates to make American more competitive worldwide as a place to locate a business, and simply making it clear that America now welcomes businesses and is prepared to encourage entrepreneurship. Even if you don’t support President Trump, you need to acknowledge that he has been a successful businessman who is attempting to bring that success to America as a whole.