Inflation Isn’t Over, And The Damage Will Continue

No one who has bought groceries recently or filled up their gas tank believes inflation is over. Yet recently economist Paul Krugman declared, “Inflation is over. We won.” I guess he doesn’t do the grocery shopping in his family. Yes, inflation has slowed. However, we are still dealing with the price increases that occurred in the past three years. If the baseline is where we were when President Biden took office, the inflation rate is somewhere over 15 percent. If we are talking about the past few months, the number is much lower. However, that number is in addition to the 15 percent that we have already been dealing with.

On Saturday, Real Clear Politics posted a commentary about the damage the Biden administration has done to the economy.

The commentary notes:

The truth is that the wild inflation, high interest rates, bank failures, and other economic harms of the last three years were all entirely avoidable and all entirely caused by President Biden and the Democrats’ arrogant and unwise policies.

This is not “Monday morning quarterbacking.” Some of us were saying this well before the fact. My May 7, 2021 column (“Joe Biden, Economy Killer”) accurately forecast the inflation, rising interest rates, and rising government debt service long before the Biden administration even acknowledged the risks were real.

The U.S. economy did not need another giant stimulus plan when Biden and the Democrats took control in 2021. The U.S. gross domestic product, knocked down by the COVID shutdown in the first half of 2020, had jumped up by a record 33% in the third quarter of 2020 and by another 4% in the fourth quarter, all before Biden took office. The S&P stock market had risen 16.3% in 2020. Employers were waiting for workers to come back to work, and another stimulus package had been passed with bipartisan support in the last quarter of 2020. Happily, the inflation rate was only 1.4% as 2020 ended, with a one-year Treasury rate of just 0.10% and a 10-year Treasury rate of just 0.95%

The commentary concludes:

The Congressional Budget Office last week revised its government deficit estimates upward, expecting $48.3 trillion of government debt by 2034. Interest expense on the federal debt this year has already jumped up to $870 billion, which is larger than the defense budget. Additionally, Biden’s higher interest rates will continue to increase debt service costs as old government debt rolls off and is replaced at higher costs. The risk is stark: a 3% higher interest rate on even the existing $33 trillion level of federal debt equates to $1 trillion of extra federal interest expense each and every year, on top of the already giant existing debt service number.

There is no painless way to pay down this deficit or cover this extra annual government interest cost. The need for billions and billions of extra tax money or budget cuts will fuel fierce political fights, populist divisions, and national anger for years to come. All this public unrest will also be the legacy of the bad Democratic economic policies since 2021. Professor Krugman, when it comes to Bidenomics, “We lost.”

I believe we can turn this around, but it will take an administration that includes people who have worked in the private sector and run businesses. Whatever administration is elected in November needs to include people hired for their qualifications and experience–not for any other reason.

Policies Have Consequences

We can all look back with nostalgia at the prosperity and low inflation we enjoyed under President Trump. One of the keys to that prosperity was deregulation that allowed business and the economy to grow.

In January 2021, Forbes reported:

According to the administration, agencies in the 2020 fiscal year issued 145 deregulatory actions and 45 significant regulatory actions, for an out-to-in ratio of 3.2 to one.

Of those deregulatory actions, 58 were deemed “significant” by agencies and the administration. Comparing significant-in to significant-out still gives a ratio of 1.3 to one.

This regulatory streamlining requirement was one of the earliest 2017 moves of the Trump administration, put in place by Executive Order 13771. A Biden administration will kill it on “Day One,” as the incoming supervisors like to say.

We have now had three plus years of the Biden administration’s economic policies. It has been a tough three plus years.

On Monday, Blaze Media reported the following:

A group of black voters told MSNBC last week why they are considering voting for Donald Trump in the 2024 election.

Reporting from Charleston, South Carolina, MSNBC correspondent Trymaine Lee spoke with black voters in a barbershop and discussed the “appeal” Trump has over President Joe Biden with black men specifically.

They explained:

    • Thomas Murray: “I just think that Donald Trump, in spite of all the craziness he may have in his head, reading some of the things that he talks about with business, I can kind of agree with as far as business-wise because I’m trying to grow my business. As far as Biden, I haven’t seen Biden really care about business like that. And my concern is having my business, so that I can build generational wealth, so my kids can see and have something to take upon when I’m not here.”
    • Kinard Givens: “A lot of my friends we’ve only voted once, and Trump is kind of all we know — Trump and Biden. And they’re like, ‘Well, we were broke with Biden. We weren’t with Trump.’ And that’s kind of the only thing that I’m hearing over and over again is that ‘with Trump, we had money.'”
    • Juston Brown: “A lot of people admire the persona and they want to be him. They want to enjoy the perks that he has. He seems to always be able to circumvent the rules.”
    • Anthony Freeman: “Donald Trump has a reputation of being the money man.”

As James Carville stated in 1992, “It’s the ECONOMY, Stupid!” That statement still holds true today.

Welcome To The New American Economy

Breitbart is reporting the following today:

New weekly jobless claims unexpectedly rose by 13,000 to 861,000 in the week that ended February 13, the Department of Labor said Thursday.

Economists had expected claims to fall to 768,00 from the 793,000 initially reported for the prior week. The previous week’s figure was revised up by 55,000 to 848,000.

…Jobless claims—which are a proxy for layoffs—remain at extremely high levels. Prior to the pandemic, the highest level of claims was 695,000 hit in October of 1982. In March of 2009, at the depths of the financial crisis recession, jobless claims peaked at 665,000.

Even when the economy is creating a lot of demand for workers, many businesses will shed employees as they adjust to market conditions. But in a high-pressure labor market, those employees quickly find jobs and many never show up on the employment rolls. What appears to be happening now is that many workers who lose their jobs cannot quickly find replacement work and are forced to apply for benefits.

How many workers in the energy sector have lost their jobs because of the Executive Orders signed by President Biden? How many workers in areas that support energy sector jobs have lost their jobs since January 20th? These high unemployment numbers may be partially a result of the coronavirus, but they are more than likely related to the Executive Orders and the economic policies of the Biden administration. Unfortunately we can expect more high unemployment unless the Biden administration changes its policies.

The Predicted Dark Winter

Issues & Insights posted an article today about recent statements from Joe Biden that the country is facing a dark winter.

The article notes:

“Before the surge in COVID cases we predicted, many predicted, and the deaths rise that we’ve seen in December … we head into a very dark winter ahead,” he said.

He also lamented the “grim” jobs report, which showed “an economy that is stalling.” Employment grew by only 245,000 in November, “well below the 440,000 expected by economists and a sharp drop from the 610,000 reported in October,” CNBC reported.

“We remain in the midst of one of the worst economic and job crises in modern history,” said the man who as vice president oversaw one of the weakest economic recoveries in U.S. history.

Apparently it never occurred to Biden and his handlers that government intervention, not the virus, caused 2020’s downturn. Nor have they even begun to understand that Democrats’ economic policies, filled with steep, punitive taxes, and impossible-to-jump regulatory hurdles, are a slow-motion march of the economic lockdowns that almost instantly paralyzed the economy this year.

A lack of optimism in a Biden economy is not ours alone.

“Wall Street investors largely believe a Joe Biden presidency could mean lower stock-market returns,” says another CNBC report, this one highlighting the network’s survey of “more than 100 chief investment officers and portfolio managers.”

“Two-thirds said the first four years of Biden will be worse for stocks than Trump’s term,” according to the results. 

The article explains why the stock market is important to all Americans:

Should we care about stock performance? Of course we should. Wall Street and Main Street USA meet at a large and busy intersection. More than half of the country – 55% – owns stock. That’s down from the two-thirds that owned stock in 2002. But still more than enough for stock performance to count.

The concerns cited by the CIOs and managers should be alarming even to those who aren’t shareholders. If Biden is able to reverse the Trump tax cut (and increase taxes by several trillion), as well as unwind the administration’s critical regulatory relief, the economy that was recovering strongly from the lethargic Obama years during Trump’s first three years will stagnate, likely even decline.

The article also notes the Biden policies that will have a negative impact on economic growth:

  • Biden’s New Green Deal Lite.
  • A government-run banking system that would “would undermine private banks, moving the U.S. closer to the socialist ideal of a nationalized financial sector.”
  • The possibility Biden will close the economy to the extent that he can, even though 2020’s lockdowns punished the economy and did nothing to stop the spread of the novel coronavirus.

The article concludes:

We’ve said before but it needs to be said again (and again): ”Every major policy Biden campaigned on is anti-growth. … Biden boasts of an FDR-scale agenda without realizing that it was Franklin Roosevelt’s reckless interventions that extended and deepened the Great Depression.”

A dark winter. A dark spring. Darkness until the Democrats are stripped of their political power to choke the economy. Bidenomics are not a promise but a threat.

A Republican Congress can mitigate the damage somewhat, but if Joe Biden and Kamala Harris are successful in implementing their economic policies, there will be a dark winter.

 

Getting It Wrong…Again

On Friday, Hot Air posted an article about some Democrat’s reaction to President Trump’s new policy regarding food stamps. I wish Democrats would get the facts before they start complaining.  On December 5th, I posted an article explaining the new policy. The new rules state that a person between the ages of 18 and 49 who are childless and not disabled must work at least 20 hours a week for more than three months over a 36-month period to qualify for food stamps. In the past, states could easily get around this requirement, but the President has altered the rules to make avoiding them much more difficult.

Meanwhile, some Democrats obviously did not look at the new rule carefully.

The article at Hot Air includes the following Tweets:

Please note–the new rule does not apply to people between the ages of 18 and 49 who have children. Both of these tweets are totally dishonest. Tweets like these are one of many reasons the country is so divided–when people lie and others believe them, it creates division. I am willing to bet that right now there are a number of Americans who believe that under President Trump, people will not be able to get food stamps if they have children and are not working. It should also be noted that incomes for middle income Americans have risen under the Trump administration. The middle class is profiting from President Trump’s economic policies in ways they have not prospered in years. If you want to see America continue to prosper, you only have one choice when you vote for President next year–President Trump.

 

It’s Hard To Remove A Sitting President When The Economy Is Good

It is hard to remove a sitting President when the economy is good. That rule applies to attempts to impeach the President, and the rule also applies to elections. One impact of a strong economy is that people who are making good money and feel relatively secure in their jobs are less likely to engage in class warfare. Class warfare is one of the Democrat’s most frequently used weapons.

Yesterday One America News posted an article about the current state of the American economy.

The article reports:

The latest macroeconomic data is suggesting the chances of a U.S. recession have reduced in recent weeks due to steady consumer spending. According to a recent poll by Morning Consult, consumer confidence has rebounded over the past four weeks due to ongoing job creation, gains in wages and a soft price inflation.

Even without a resolution of the trade negotiations with China, consumers are feeling confident.

The article concludes:

Retail sales have also increased going into the holiday shopping season, beating previous expectations. Consumer spending makes up for roughly 70 percent of America’s GDP growth. Many experts have tied the ongoing stable expansion to President Trump’s economic policies.

I think on the whole, this economy has been remarkable. It’s taken the headwinds of the trade wars pretty successfully…and we’re still chugging along at roughly two percent. I think that’s an accomplishment.” – Douglas Holtz-Eakin, President of the American Action Forum

A separate report from S&P Global found the probability of a U.S. recession in the coming year has dropped from 35 to 30 percent since August of this year.

I personally would like to see the probability of a U.S. recession at 0 percent, but I don’t know if I would trust the media to report that number even if it occurred.

The Numbers Are In

CNBC is reporting today that nonfarm payrolls rose by 128,000 in October, exceeding the estimate of 75,000 from economists surveyed by Dow Jones.

The article notes:

There were big revisions of past numbers as well. August’s initial 168,000 payrolls addition was revised up to 219,000, while September’s jumped from 136,000 to 180,000.

The unemployment rate ticked slightly higher to 3.6% from 3.5%, still near the lowest in 50 years.

The pace of average hourly earnings picked up a bit, rising 0.1% to a year-over-year 3% gain.

The article also reports:

Central bank leaders have largely praised the state of the U.S. economy, particularly compared with its global peers. The Fed earlier this week lowered its benchmark interest rate a quarter point, the third such move this year, but Chairman Jerome Powell clearly indicated that this likely will be the last cut for some time unless conditions change significantly.

“The October jobs report is unambiguously positive for the US economic outlook,” said Citigroup economist Andrew Hollenhorst. “Above-consensus hiring in October, together with upward revisions to prior months, is consistent with our view that job growth, while clearly slower in 2019 than in 2018, will maintain a pace of 130-150K per month. Wage growth remaining at 3.0% should further support incomes and consumption-led growth.”

The economic policies of President Trump have resulted in significant economic growth for America. American workers at all levels are enjoying the benefits of these policies. The decision for the voters in 2020 will be whether or not they choose to continue this economic growth.

The Delusional Candidate

Yesterday One America News posted an article detailing some recent statements by presidential candidate Joe Biden.

The article reports:

Joe Biden is campaigning to roll back President Trump’s tax cuts. The former vice president made his case Wednesday in his hometown of Scranton, Pennsylvania.

Biden touted his middle class background and announced his intent to hike the corporate tax rate from 21 percent to 28 percent. He claimed the repeal would help the middle class by hitting the wealthy and corporations.

“The wealthy didn’t need [tax cuts] in the first place,” said Biden. “Corporations have spent them on stock buybacks.”

Then Joe Biden claimed that former President Obama is responsible for the current economic success in America:

“Donald Trump inherited a strong economy from Barack and me,” stated the former vice president. “Things were beginning to really move — just like everything else he’s inherited, he’s in the midst of squandering it.”

The article then notes the actual economic facts:

Recent data from the Census Bureau revealed the middle class has experienced an economic boom since President Trump took office. The average family income rose over $5,000 since 2017. Under the Obama administration, household incomes only grew by about $1,000 by the end of eight years.

The main things that increased in the Obama economy were unemployment and the number of people on food stamps. Admittedly, President Obama became President at a difficult economic time, but his policies resulted in the slowest and leanest economic recovery in American history. President Trump’s economic policies have resulted in economic growth in all segments of the economy. The middle class and all minorities are enjoying higher wages and more jobs. A return to the economic policies of President Obama would be a step backward–not a step forward.

The Impact Of The Policies Of President Trump

Yesterday Breitbart reported that Latino business owners are enjoying a 46 percent jump in revenue this year.

The article reports:

In May, Alfredo Ortiz of the Job Creators Network said that although Democrats claimed the Trump economy was no help to the Hispanic community, the facts revealed the opposite.

Ortiz wrote:

The fact is that Hispanics are flourishing in the Trump economy. Democrats asserting the contrary is a mere partisan talking point to try to deny Trump the Hispanic support he has earned and which may decide the presidential election outcome next year. Expect Democrats to increase their identity politics attacks in an effort to skew Latinos against Republicans over the next year and a half.

In September of 2018, Arora called the rapidly expanding Latino community a “powerful force” and stated that their businesses “contribute more than $700 billion to the economy annually.”

“The achievements of Latino small businesses are impressive when you consider it is often hard for them to gain access to capital. Yet they are making progress,” Arora concluded.

The Democrats will say anything to convince people that the Trump economy is not working for average Americans and minorities, but thinking Americans can look at the statistics and realize that the numbers show that average Americans and minorities are the people who have benefited from President Trump’s economic policies. If these groups want their prosperity to continue, they need to vote to continue those policies. I can guarantee that no Democrat running for President will continue those policies.

Good Economic News For Americans

According to Investopedia:

A FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use borrowers’ FICO scores along with other details on borrowers’ credit reports to assess credit risk and determine whether to extend credit. FICO scores take into account various factors in five areas to determine creditworthiness: payment history, current level of indebtedness, types of credit used, length of credit history, and new credit accounts.

Yesterday The Federalist posted an article about how the Trump economic policies have impacted the FICO scores of Americans.

The article reports:

Americans’ average FICO score has hit an all-time high of 706 on the personal credit rating scale. Ethan Dornhelm, the vice president for scores and analytics at FICO, told CBS News that a score of more than 700 basically qualifies individuals for just about any credit at favorable terms.

FICO scores range from 300 to 850. A score above 700 is considered great, and a score above 760 is considered excellent. This high national credit score may be largely attributed to the strong economy, with its historically low unemployment rate, and the Tax Cuts and Jobs Act.

“This record-long stretch of economic growth has helped minimize reliance on debt to pay the bills,” said Joel Griffith, a research fellow at The Heritage Foundation. “Low interest rates help ensure a greater portion of loan payment goes to paying down principal rather than merely making interest payments.”

Creditworthiness is now increasing, which means Americans have the ability to rely on their paychecks, not just borrowing from their futures, to fulfill their financial obligations.

Americans’ average FICO score hit a low during the financial downturn of 2008, with a score of 686. After the recession passed, the nation’s average FICO score continuously grew.

Is giving Americans more access to larger lines of credit such a good thing? According to Griffith and Federal Reserve Bank data, U.S. household debt is also declining. Even now that Americans are able to take on more debt, they are not. They’re paying off their credit cards and increasingly lowering their other debt.

Unfortunately, this national accomplishment has not been a topic discussed among 2020 Democratic nominees. Why have the Democratic presidential candidates shied away from talking about the economy? Because, they call for an economy that “works for everyone,” when the current system is working for more people than ever before.

A Gallup poll shows that 88 percent of Americans believe the current U.S. economy is either “fair,” “good,” or “excellent.” That’s because this economy has provided 5.1 million new jobs and dropped the unemployment rate to 3.7 percent — the lowest rate in nearly half a century.

Leadership and economic policies make a difference to ALL Americans. The tax cuts and economic policies of President Trump have ‘worked for everyone.’ The government cannot create an economy the ‘works for everyone’ by taking money from people who earn it and giving it to people who did not earn it. An economy  that ‘works for everyone’ is created when everyone has the opportunity to find a job or start a company and create their own success.

The Real Answer To Poverty

Breitbart posted an article today about the impact the economic policies of President Trump have had on poverty.

The article reports:

Black Americans are experiencing an economic renaissance under President Donald Trump.

Black unemployment hit a new low last week of 5.5% — the level once described in economics textbooks as “full employment” — and the gap between black and white unemployment shrank to its lowest margin ever.

This week, Census data showed that black poverty has dropped to its lowest level ever (18.8%). The reason: wages are climbing, even in low-wage jobs.

This is the Promised Land that left-wing activists have talked about for decades. Except they do not seem to have received the memo.

Listen to the Democratic presidential candidates debate, and you will still hear them complain that the economy is terrible, that the middle class is shrinking, that we need to redistribute income and wealth from the rich to the poor to over come the “white privilege” that is our country’s original sin, dating to slavery in 1619.

All of that is untrue. The economy continues to perform well, despite media-hyped fears of recession. Yes, the pace of hiring is slowing in some sectors, but that is partly because of the scarcity of labor — which is also driving wages up. Yes, the trade war is hurting some individual businesses, and China is retaliating against American agriculture — but the trade war has failed to drive up prices so far, as many people (including me) had expected.

The article notes:

While funding for historically black colleges and universities (HBCUs) declined under President Barack Obama, for example, “under the Trump administration, federal funding for HBCUs has increased by more than $100 million over the last two years, a 17% increase since 2017.”

The above information is a surprise to me. It totally goes against anything the mainstream media is telling us about President Trump. The article reminds us that President Trump’s economic policies have benefited all Americans–a strong economy is the best solution to poverty in minority communities.

The article concludes:

Limited government allows black Americans to do for themselves what government fails to do for anyone.

The Democrats do not get it. They are talking reparations — the brainchild of Al Sharpton, one of the worst racial demagogues in the country, whom Obama rehabilitated to provide political cover within the black community.

The frontrunners, including former vice president Joe Biden, promise to raise taxes, kill the energy industry, and bring back hyperregulation. They claim to be fighting racism. Trump has shown black Americans there is a better way.

Obviously this is not a message Americans will hear from the mainstream media. However, voters are perfectly capable of seeing the positive economic changes in their own lives and the lives of the people around them. That is one of the main reasons the media is trying to convince voters that a recession is right around the corner. Will voters believe what they see or what the media tells them? What voters believe will determine whether or not our economy continues to prosper.

Economic Policies Matter

As the Democrat presidential candidates continue their debates, all of us need to step back and consider the consequences of economic (and other) policies. For instance, Medicare for all sounds like a really good idea–until you consider that the one place the government has been running healthcare for a while is the Veteran’s Administration. That hasn’t worked too well. Guaranteed income for all also sounds like a great idea–until you begin to calculate how much it will cost. Income inequality is a problem–it is most prevalent in our largest cities that have been under Democrat control for decades. So what has been the result of President Trump’s economic policies?

The Conservative Treehouse posted an article about the current state of the economy.

The article reports:

The Bureau of Economic Analysis (BEA) released significant wage and salary data yesterday which held stunning upward revisions for 2018 and 2019.   Wage growth of 5.5% combined with low inflation remaining at 1.4 percent; the disposable income of U.S. workers jumped to a stunning 4.1%.

Within the revised BEA data, we find employee compensation rose 4.5% in 2017 and 5% in 2018.  Importantly the growth trend continued into 2019, with compensation increasing 3.4 percent in the first six months alone.  Year-over-year wages and salaries were revised upward to 5.3% for May, and 5.5% in June.  These are stunning increases in worker pay.

There are various economic indicators we have shared through the years, but wage growth is one of the more critical.  First, wage growth lags behind business activity – workers don’t get pay raises until after business volume demands/provides it.  Second, wage growth is generally uni-directional – once businesses hike pay, the increases cement.

The wage growth is across the board–it has not impacted only the wealthy.

The article concludes with a summary of President Trump’s overall economic strategy:

The U.S. consumer is driving the economy.  The jobs and labor market remains strong.  Wage growth is rising in proportion to the diminished availability of the labor pool. Price inflation is low because manufacturing economies (EU and China) are devaluing their currency, and subsidizing their industries (China), in an effort to avoid Trump’s trade policies (tariffs).  Their efforts increase the value of the dollar and we are importing deflation.

Simultaneously, global manufacturers -multinationals- need access to the U.S. consumer market.   As President Trump applies a series of strategic global trade moves, intended to draw manufacturing back to the U.S., those multinationals are in somewhat of a holding pattern for further investment.  Simply, the multinationals are trying to figure out where to put their investment capital for the highest return.

Example: The U.S. economy is strong, unemployment is low and wage rates up; so if China is a non-option, the profit determination shifts.  Where to manufacture? It might be more profitable for a multinational in either Southeast Asia or North America. The key is which country has a long-term agreement with the U.S.  That’s why the USMCA is critical.

CTH still predicts POTUS Trump will eliminate the uncertainty as soon as the USMCA is ratified.  I suspect President Trump will drop massive tariffs on all Chinese goods.

Think of China like a big lake filled with U.S. economic value. Through his Asian discussions with Vietnam, S Korea, Malaysia, Singapore, Australia, Japan, et al, President Trump has stealthily built a thin levy, an ASEAN dam of sorts, that will direct the China lake of economic value into Southeast Asia.

Once the USMCA is signed, Trump will blow the dam by triggering the tariffs.  This will move all of the multinationals who are in a ‘holding pattern’, and capital investment will flow fast.   The China exodus will benefit North America (USMCA) and those ASEAN nations who have partnered with Trump and made proactive trade agreements.

This is the reason it is good to periodically get politicians out of the White House and elect a successful businessman.

The Economy Is Humming Along

CNBC is reporting today that the economic news for April is very good.

The article reports:

The U.S. jobs machine kept humming along in April, adding a robust 263,000 new hires while the unemployment rate fell to 3.6%, the lowest in a generation, the Labor Department reported Friday.

Nonfarm payroll growth easily beat Wall Street expectations of 190,000 and a 3.8% jobless rate.

Average hourly earnings growth held at 3.2% over the past year, a notch below Dow Jones estimates of 3.3%. The monthly gain was 0.2%, below the expected 0.3% increase, bringing the average to $27.77. The average work week also dropped 0.1 hours to 34.4 hours.

Unemployment was last this low in December 1969 when it hit 3.5%. At a time when many economists see a tight labor market, big job growth continues as the economic expansion is just a few months away from being the longest in history.

The growth in the economy is the result of economic policies put in place by President Trump–tax cuts, revised trade deals, cuts to regulations, and generally making the economy more welcoming to companies who want to do business in America.

The article concludes:

GDP increased 3.2% during the first quarter, far exceeding expectations, while productivity during the quarter jumped 3.6% for its best gain in five years. Pending home sales rose 3.8% in March, providing some hope in the real estate market so long as rates are held in check.

Earlier this week, the Federal Reserve held the line on its benchmark interest rate, characterizing economic growth as solid even as inflation remains tame. The central bank watches metrics like the nonfarm payrolls report closely for clues both on job creation and wage pressures.

Fed Chairman Jerome Powell said current indications point to a prolonged period of holding pat on increases or decreases in rates. President Donald Trump has said he wants the Fed to cut rates by a full percentage point.

The economy plays a big role in deciding elections. None of the policies espoused by the current group of Democrat Presidential candidates for 2020 will continue this economic growth.

How Is The Trump Economy Doing?

The Washington Examiner posted an article today about the impact of President Trump’s economic policies on the economy during the past two years.

The article reports:

President Trump has had a tumultuous two years in office, but as he starts to ramp up his reelection campaign, he can boast of having presided over the lowest recorded average unemployment rate of any of his predecessors at this point in their presidencies.

On Friday, the Bureau of Labor Statistics reported that the unemployment rate had held steady at 3.8%. That brings the average unemployment rate for the first 26 months of Trump’s presidency, from February 2017 through March 2019, to 4.1%.

Starting with the presidency of Dwight D. Eisenhower in 1953, there has never been a president who oversaw such a robust employment market at this point in his presidency. This is demonstrated in the chart below. The official BLS unemployment data go back to 1948, and thus is not available for the comparable period in the Harry S. Truman era or earlier.

Since the economy is a strong player in presidential elections, these numbers are important.

The article concludes:

The strong economic performance will also be a test of a lot of models predicting the outcome of elections. Many analysts rely heavily on the state of the economy when predicting whether an incumbent will get reelected. However, typically, when the economy is strong, it is also associated with a solid presidential approval rating. Yet Trump has polled consistently lower than other presidents, despite the strong economy.

For instance, take Eisenhower and Richard Nixon, whose unemployment rates came closest to Trump, at 4.4% and 4.5%, respectively. At the comparable points in their presidencies, according to Gallup, Eisenhower was polling at 71 percent and Nixon, while less popular, was still at 50%. In contrast, Trump is currently polling at 39%.

That’s why predicting the 2020 election is so perilous, especially with the Democratic nomination battle so wide open. It’s easy to come up with a scenario in which Trump loses reelection despite having the strongest presidential term for employment in recorded history, because he turns off voters in many other ways. On the other hand, it’s also possible to imagine an outcome in which the strength of the economy convinces voters to get past their objections with Trump and stay the course rather than risk radical change being promised by Democrats.

The strong economy may be the reason the Democrats are trying to get so much mileage out of the Mueller Report. It may be their only hope.

Trying To Drive A Stake Through The Establishment

On March 22, President Trump nominated Stephen Moore to serve on the Board of the Federal Reserve. The establishment began their attack almost immediately. Why? Because Stephen Moore is a respected economist who will rock the boat of the establishment. He supports the economic policies of President Trump (which incidentally have been successful in reviving a struggling economy). The negative reports and personal attacks are all through the mainstream media–very little is being said about the accomplishments of Stephen Moore.

In December 2018, World Net Daily posted an article by Stephen Moore titled, “Fire the Fed.” Stephen Moore called on Chairman Powell to resign in wake of interest-rate hike.

In the article, Stephen Moore states:

In one of the most remarkable Abbott and Costello routines in modern times, the economic wizards at the Fed again raised interest rates on Tuesday. Their crackerjack logic for doing so is to steer America on a course toward recession so they have the tools in hand to end the recession they themselves created. Can anyone tell us who’s on first?

Worse, this Fed move doubles down on its blunderous interest rate rise in September. President Donald Trump turned out to be exactly right: The central bank pullback on money would slow growth and crush the stock market in order to combat nonexistent inflation.

…Since its peak on Oct. 3, which, not coincidentally, was right after Powell gave a speech suggesting that the Fed might be through tightening money, the Dow has fallen by more than 3,500 points. Market fears about his bad judgment have cut the value of all U.S. stocks by about $4.5 trillion, which is enough to buy 16,000 Boeing 787 Dreamliners.

The Fed economists use twisted logic that the economy is “strong enough” to absorb the rate hikes – which is simply an admission that their policy will slow growth.

Stephen Moore needs to be on the Board of the Federal Reserve. His presence might prevent the Federal Reserve from raising rates just before the 2020 election in order to cause a recession. Just as the Federal Reserve kept rates low during the Obama administration to give the appearance of a healthy economy, they may raise those rates in the coming year to give the impression that President Trump’s economic policies are not working. They need a watchdog.

Economic Policies Impact All Of Us

The Trump economy has been good for everyone. Taxes are lower, wages are moving up, unemployment is low, and the workforce participation rate is moving up. Wages on the lower economic scale have seen a marked increase in the past year. However, one thing that impacts government spending as well as being an indication of economic conditions  is food stamps. Yesterday Breitbart reported that the most recent USDA data revealed that 37,911,631 people received food stamps through the Supplemental Nutrition Assistance Program (SNAP) in December 2018, marking the lowest level of overall participation in the nation’s food stamp program in nearly ten years. That is good news for the people who no longer need food stamps, and it is good news for taxpayers who fund food stamps.

The article reports:

The last time overall participation in food stamps reached this level was in October 2009, when 37,672,818 people were on the government dole, according to USDA data.

…After 2013, SNAP enrollment plummeted once state legislatures passed laws requiring food stamp recipients to work, attend school, volunteer, or participate in job training for a set number of hours per week to receive benefits.

Food stamp enrollment dropped even further under President Trump’s administration partly because of the administration’s efforts to reform welfare programs like SNAP at federal and state levels of government and an improving economy spurred by Trump’s tax reform package.

The article concludes:

According to the latest USDA data, 4.2 million Americans have dropped off of the food stamp rolls during Trump’s presidency.

President Trump also signaled that he is looking to limit dependency on welfare programs like food stamps even further.

The president recently told Breitbart News in an Oval Office interview that he does not want any immigrants coming into the U.S. to be dependent on welfare programs.

“I don’t want to have anyone coming in that’s on welfare,” Trump told Breitbart News last Monday.

The asylum program was not meant to be a free lunch. There is a difference between people coming here to work and people coming here for free stuff.

The Numbers On The Economy

On March 13th, CNBC posted at article about the impact of President Trump’s economic policies on wages.

The article reports:

The recent jump in paychecks has come with an unusual characteristic, as workers at the lower end of the pay scale are getting the greater benefit.

Average hourly earnings rose 3.4 percent in February from the same period a year ago, according to a Bureau of Labor Statistics report last week. That’s the biggest gain since April 2009 and seventh month in a row that compensation has been 3 percent or better.

What has set this rise apart is that it’s the first time during an economic recovery that began in mid-2009 that the bottom half of earners are benefiting more than the top half — in fact, about twice as much, according to calculations by Goldman Sachs. The trend began in 2018 and has continued into this year, and could be signaling a stronger economy than many experts think.

The article concludes:

“Taken together, our findings suggest a relatively optimistic consumption outlook given solid income growth across income levels,” Choi wrote. “Even if employment growth slows as labor supply constraints start to bind, this should be partially offset by the continued firming of wages, particularly among lower income workers with higher marginal propensities to consume.”

One danger is that higher wages could start to eat into corporate profits, which have doubled since the financial crisis.

However, it could take years for that to be a significant factor, according to an analysis by AB Bernstein.

“While pressure on capital share is likely to remain, that doesn’t mean that profits are going to fall – in fact profits can lose share at a rate up to about 100bps per year [1 percentage point] and still expect to have positive profit growth,” Philipp Carlsson-Szlezak, chief U.S. economist at AB Bernstein, said in a note. “In other words, overall expansion of net value add can be strong enough to protect profit growth even in the face of a rising labor share.”

Carlsson-Szlezak said wage pressures more likely would be felt at a sector level in industries where labor takes a bigger share of output. For example, information technology and extraction likely would feel the least effects, while hospitality and retail would be hit hardest.

The piece of the puzzle that is missing to ensure a continuing strong economy is getting the federal deficit under control. Unfortunately Congress has been unwilling to do this. If it is not done fairly quickly, all of the positive economic growth we have seen under President Trump will evaporate.

Let’s Talk About The Rebuttal

It’s not easy to give the rebuttal speech to the State of the Union. Chances are that you don’t have a copy of what you are rebutting. I guess you can make changes at the last minute, but the majority of your speech has to be written before you have a clue what it is supposed to be about. It’s not a great place to be. That said, however, I would like to take issue with some of the comments made by Stacey Abrams last night. Much of what she said was only half of the truth, and some of what she said was simply not true.

Time posted a transcript of her speech. I would like to talk about sections of that speech.

Ms. Abrams stated:

Just a few weeks ago, I joined volunteers to distribute meals to furloughed federal workers. They waited in line for a box of food and a sliver of hope since they hadn’t received a paycheck in weeks. Making their livelihoods a pawn for political games is a disgrace. The shutdown was a stunt engineered by the President of the United States, one that defied every tenet of fairness and abandoned not just our people – but our values.

It was nice of her to give out meals, but she failed to mention that all of those furloughed workers received every penny of their back pay. The simply got an extra paid vacation.

She further stated:

In Georgia and around the country, people are striving for a middle class where a salary truly equals economic security. But instead, families’ hopes are being crushed by Republican leadership that ignores real life or just doesn’t understand it. Under the current administration, far too many hard-working Americans are falling behind, living paycheck to paycheck, most without labor unions to protect them from even worse harm.

The Republican tax bill rigged the system against working people. Rather than bringing back jobs, plants are closing, layoffs are looming and wages struggle to keep pace with the actual cost of living.

We owe more to the millions of everyday folks who keep our economy running: like truck drivers forced to buy their own rigs, farmers caught in a trade war, small business owners in search of capital, and domestic workers serving without labor protections. Women and men who could thrive if only they had the support and freedom to do so.

Hasn’t she read the economic numbers? On December 20th, The National Review reported:

A recent Wall Street Journal economic analysis of current jobs reports found that worker wages were starting to rise above inflation and that the biggest percentage gains were showing up in the paychecks of the lowest income workers. In other words, income inequality with respect to take home pay was shrinking.

…Remarkable, too, about this chart is that every group that was least likely to vote for Trump has seen an abnormally large gain in jobs and wages. Our supposed racist president has delivered outsized economic gains for blacks and Hispanics — with both groups now experiencing the lowest unemployment rates in at least a half century. So much for Trump’s policies benefiting only white America. The rich are clearly not “the big winners” from Trump’s economic policies.

Contrast that with the economy when Democrats were in charge:

The poor and unskilled that Mr. Obama was supposed to lift out of poverty saw their incomes fall by 7.4 percent for those with less than a high school diploma and 8.2 percent for those with only a high school diploma. In dollar terms, between the time the Obama recovery began in June 2009 and until June 2014, median black household income fell by nearly $3,000, Hispanic households lost nearly $2,500, and female-headed households lost roughly $1,500. In 2015 and 2016, income gains were thankfully reversed for these demographic groups, but many still lost ground over eight years. The income gains under Mr. Obama were mostly concentrated in those Americans in the top 20 percent of income. This is why the income gap between rich and poor rose nearly every year under Obama.

Ms. Abrams, if you truly cared about the success of the middle and lower classes, you would support the policies of President Trump. President Trump’s economic policies have worked. President Obama’s economic policies failed miserably. I would also like to note that illegal immigration depresses the wages of unskilled workers. The Democrat party sold out the working man a long time ago.

 

The Workforce Participation Rate

Yesterday CNS News posted an article about the January Workforce Participation Rate. This is the number of people in America either working or looking for jobs. When President Obama took office in January 2009, the Workforce Participation Rate was 65.7. That number dropped to a low of 62.4 in September 2015 and began slowly climbing, reaching a high of 62.9 in September 2016. The number hovered around there for a while until finally reaching 63.2 in January 2019.

Here is the chart from the Bureau of Labor Statistics:

The article at CNS News reports:

The Labor Department’s Bureau of Labor Statistics said the economy added 304,000 jobs last month, higher than analysts were expecting.

The number of employed Americans, 156,694,000, was slightly below last month’s record (156,945,000), and the unemployment rate increased a tenth of a point to 4.0 percent.

But the labor force participation rate increased a tenth of a point to 63.2 percent — the highest it’s been on President Trump’s watch.

The CNS News article included an excerpt from the Congressional Budget Report released this week:

According to CBO:

Employment: Nonfarm payroll employment is projected to grow by an average of 148,000 jobs per month in 2019, a decline from 213,000 jobs/month in 2018 but “still a healthy pace of job growth at this stage of the business cycle.”

Unemployment rate: The unemployment rate, now at its lowest point since the 1960s, is projected to fall from 3.8 percent in the fourth quarter of 2018 to 3.5 percent by the end of 2019. The anticipated decline in the unemployment rate reflects a continued increase in the demand for labor, which will reduce the number of unemployed workers in the labor force this year.

CBO said the demand for labor and the resulting upward pressure on compensation also encourages people to remain in the labor force or rejoin it, making the labor force larger and thus moderating the decline in the unemployment rate.

Labor force participation: The labor force participation rate, which has hovered around 62.8 percent since 2014, is expected to remain close to that rate during the next two years.

CBO explained that the stability of the labor force participation rate in recent years reflects the balancing of two opposing forces: sustained economic growth, which continues to encourage additional workers to enter the labor force and currently employed workers to stay on the job; and long-run shifts in demographics (particularly the aging of the population).

Labor compensation. After several years of prolonged weakness, wage growth accelerated notably in 2018, CBO noted. Over the next few years, labor compensation is expected to rise further as employment remains at elevated levels and firms must compete for a relatively small pool of unemployed or underemployed workers.

In CBO’s projections, annual growth of the employment cost index for wages and salaries of workers in private industry averages 3.5 percent between 2019 and 2023, slightly more rapid than its 3.3 percent pace in 2018 and considerably more rapid than the 2.0 percent average from 2009 to 2017.

President Trump’s economic policies are working. If he is allowed to continue those policies with a Democrat House of Representatives, he will be re-elected in 2020, so prepare to see the House of Representatives attempt to roll back many of those policies.

How Is The Economy Doing?

The mainstream media spends a lot of time criticizing President Trump. He is characterized as someone who is totally incompetent, undisciplined in his decision making, volatile, stupid, uneducated, etc. Yet it is somewhat amazing what this man has accomplished in less than two years–with the drag of constant accusations and investigations, a hostile press that simply ignores anything he has accomplished, and a Congress that has been less than supportive.

The Conservative Treehouse posted an article today that highlights how the Trump economy is doing.

Here are some of the highlights:

As CTH anticipated the first tabulated holiday sales report via Mastercard® shows the results of a very strong consumer confidence level.  The first report highlights a very strong 5.1% increase in holiday purchases:

“Wall Street is running around like a chicken with its head cut off, while Mr. and Mrs. Main Street are happy with their jobs, enjoying their best wage increases in a decade”…

~ Craig Johnson, president of Customer Growth Partners

…Wall Street is being impacted by their multinational reliance which is heavily weighted toward global investments. Main Street is driven by the actual U.S.A. checkbook economic factors. This is the modern disconnect. After decades of Wall Street companies investing overseas, and generating investment products that are fundamentally detached from the U.S. economy, they do not benefit from a strong U.S. economy. However, Main Street directly gains from internal U.S. economic growth.

…If you understand the basic elements behind the new dimension in American economics, you already understand how three decades of DC legislative, monetary and regulatory policy was structured to benefit Wall Street and not Main Street. The intentional shift in monetary policy is what created the distance between two entirely divergent economic engines.

The support of Main Street instead of Wall Street is one of many reasons the Washington establishment hates President Trump. Under establishment politicians Wall Street and rich investors have done very well in recent years–at the expense of Main Street. President Trump has changed that. I strongly suggest that you follow the link and read the entire article at The Conservative Treehouse. It explains in detail how President Trump’s economic policies have changed the dynamics of the American economy.

The article concludes:

Bottom Line: U.S. companies who have actual connection to a growing U.S. economy can succeed; based on the advantages of the new economic environment and MAGA policy, specifically in the areas of manufacturing, trade and the ancillary consumer benefactors.

Meanwhile U.S. investment assets (multinational investment portfolios) that are disconnected from the actual results of those benefiting U.S. companies, and as a consequence also disconnected from the U.S. economic expansion, can simultaneously drop in value even though the U.S. economy is thriving.

The American economy is improving for average Americans. The elites who have profited greatly in recent years while the rest of us struggled do not like that. Be prepared for an outright onslaught of negative news about President Trump as the middle class continues to prosper.

Americans Often Vote With Their Feet

Yesterday The New York Post posted an article about New York City’s shrinking middle class.

The article reports:

After decades of sharp income erosion in the face of relentless taxes, escalating living costs and wage reductions through technological changes, the full extent of this shocking exodus is laid bare in the latest US Census data.

That shows the city is losing 100 residents each day — with departures exceeding new arrivals.

“The rich in New York City are getting richer; the poor are actually getting richer, but not rich enough to be middle class,” said Peter C. Earle, an economist at the American Institute for Economic Research, who has studied other data, noting the expansion in welfare and entitlement programs.

Earle said it isn’t unreasonable to assume middle-class incomes are falling even faster in New York City than in other major US cities, because of the city’s high — and rising — housing and other living costs.

New York City’s middle class comprises 48 percent of city residents, with median annual incomes between $30,000 and $60,000.

Thirty-one percent make lower incomes, and the ranks of the rich account for 21 percent of New York City residents.

By contrast, in the early 1970s, about 61 percent of New Yorkers were ensconced in the middle class; today, fewer than half are.

Recently Amazon opened a facility in Long Island City that received an estimated $3 billion in subsidies, increasing the tax burden on city residents. Although increasing the number of jobs is a good idea, having the taxpayers pay for those jobs is not.

The article concludes:

National chain-store locations have plunged in the city by 0.3 percent, to 7,849, this year, according to the Center for an Urban Future. And a record 18 chains, including Aerosoles and Nine West, vacated all their city sites in 2018.

One sector doing a booming “business” is food pantries. Despite a city unemployment rate of 4 percent, New York food pantries report elevated levels of demand, especially during the holiday season.

More than 1 million New Yorkers now worry they won’t have enough food for their families, according to recent studies.

Unless something changes in the economic policies of New York City, the city will no longer be the center of commerce and art that it has been. The voters in New York City need to take a good look at where there city is going and make the appropriate political changes.

Raising Interest Rates Is Not The Right Move

Interest rates were kept artificially low during the Obama administration. This resulted in lower interest payments on the national debt, which increased from $7.27 trillion in 2009 when President Obama took office to $14 trillion at the end of fiscal 2016. The current national debt is $16 trillion. Increasing interest rates from 2.25 percent to 2.50 percent increases the amount of money all taxpayers will have to pay as interest on that debt.

Breitbart reported today:

“In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2‑1/2 percent,” the Federal Reserve announced. The Fed indicated the possibility of just two rate hikes in 2019.

The Dow Jones industrial average rose leading up to the announcement.

Predictions looked toward a likely rate hike ahead of the announcement and possible signaling to a slowing of potential future rate hikes. USA Today reported ahead of the announcement, “Most Wall Street pros expect the Fed, as it has signaled, to hike its key rate another quarter point to a range of 2.25 percent to 2.50 percent. This would be the fourth increase this year and ninth since late 2015.”

The Federal Reserve is not a government agency. They are supposed to be apolitical, but their actions in recent years bring that into question. Lower interest rates during the Obama administration kept the stock market high, paid dividends to those on Wall Street and any well-connected politicians. It provided the appearance of an okay economy despite decreases in the Workforce Participation Rate and the rapidly shrinking middle class. Since President Trump took office, the middle class is growing, and the Workforce Participation Rate is slowly climbing. This rate increase will increase the amount of money needed to pay interest on the national debt and will be a drag on the economy. I don’t mean to be cynical, but I believe that is by design. The Federal Reserve is part of the political establishment that does not want to see the economic success of President Trump’s economic policies. President Trump is not a member of the political establishment, and it will be more difficult to get rid of him in 2020 if the economy is growing. The rate hikes announced today will put a damper on economic growth. The question will be how much of a damper.

 

Another Bad Idea From A Socialist

On Friday, Investor’s Business Daily posted an editorial about Senator Bernie Sanders’ latest great idea–he wants to put all sorts of restrictions on Walmart until they start paying all of their employees $15 an hour.

The editorial states:

With typical Sanders subtlety, his new legislative proposal is called the “Stop WALMART act.”

Under it, big employers like Walmart would be banned from buying back shares in their own company unless they paid all their workers at least $15 an hour. They’d also have to cap CEO pay at 150 times the median employee pay, and provide seven days of paid sick leave. (Why Sanders doesn’t also include free lunches and bus tokens in his list of demands isn’t clear.)

Sanders says he’s building on the success of his Stop BEZOS act, which would have dictated that large companies “pay back” the cost of any government benefits received by any of their workers.

The editorial reminds us:

This is a company that employs 1.5 million people across the country. Some may not make what Sanders deems appropriate. But it’s good enough for many unskilled workers, who if they had a better offer would have taken it.

What’s more, Walmart’s relentless pursuit of lower prices not only helps middle class families stretch their hard-earned dollars further, but has helped hold down inflation economywide, according to economists who’ve studied the “Walmart effect.” That benefits everyone.

…If Sanders really wants to help Walmart workers, two proven things work. Cut taxes and deregulate the economy.

In the wake of the Trump tax cuts — which Sanders vehemently opposed — Walmart boosted its starting wage to $11 an hour, up from $9. It also handed out bonuses that started at $250 and climbed to $1,000 depending on years of service.

Meanwhile, the economic boom under Trump’s economic policies has cut the unemployment rate to 50-year lows. It’s also drawn millions back into the workforce, and sparked the fastest wage growth in a decade.

No mandates. No threats or browbeating. No central planning needed.

Walmart is probably not the ideal career for everyone. However, I personally know someone who was able to support himself at college by working there part time. They hired a young kid out of high school and helped him get an education. He didn’t make it a career, but it helped move him toward the career he wanted.

Since when does the American government have the right to target a specific company and tell them what they must pay their employees?

Good Economic News

The Gateway Pundit is reporting today that the third quarter GDP was 3.5 percent.

The article reports:

The US GDP for the third quarter was reported at a whopping 3.5% under the leadership of President Donald Trump. This was another BIG Trump win which doubles the first quarter growth of 2.2%. 

President Obama never reached an annual GDP Growth rate of more than 3.0%.  No President over the past century had not ever been held to GDP growth rates of less than 3.0% until Obama.

The article includes the following chart:

Note the large increase in GDP ratio to debt between 2007 and 2009. The way to bring that ratio back down is to grow the economy. It will be a slow process, but it can be done.

One thing to keep in mind when looking at the above numbers is what would have happened had Hillary Clinton been elected in 2016. The policies of President Obama would have continued–slow economic growth, high unemployment, increased dependency on food stamps, etc. One political theory that is embraced by some in the political left is Cloward Piven.

The Cloward-Piven strategy is a political strategy outlined in 1966 by American sociologists and political activists Richard Cloward and Frances Fox Piven that called for overloading the U.S. public welfare system in order to precipitate a crisis that would lead to a replacement of the welfare system with a national system of “a guaranteed annual income and thus an end to poverty”.

I believe that the outcome of the Cloward-Piven theory was the goal of the economic policies of President Obama and expected President Hillary Clinton. We have temporarily dodged that bullet, but we need to remember that there are powerful Americans working toward that end.

 

Sometimes The Facts Just Don’t Agree With The Spin

Investor’s Business Daily posted an editorial yesterday about some assertions made by former President Obama in a recent speech.

The editorial notes:

In a speech at a rally in Nevada, Obama claimed that the current economic boom has nothing to do with Trump’s economic policies.

“By the time I left office,” he said, “wages were rising, uninsurance rate was falling, poverty was falling. And that’s what I handed off to the next guy. So when you hear all this talk about economic miracles right now, remember who started it.”

Well, who did start it?

The editorial explains:

GDP growth was decelerating throughout 2016. Household income was flat. The unemployment rate was flat. The stock market was flat.

And, “by 2016, wage growth began to taper off quickly,” notes the American Action Forum’s Ben Gitis.

Even The New York Times, which has been gamely trying to grant Obama credit for the current boom, now admits that 2016 was an “invisible recession.”

“There was a sharp slowdown in business investment, caused by an interrelated weakening in emerging markets, a drop in the price of oil and other commodities, and a run-up in the value of the dollar,” it explained.

Slow Growth Expected

By the end of 2016, pundits and economists were widely predicting a new era of slow economic growth. Why? Because for eight years under President Obama’s leadership, the economy struggled to even top 2% annual growth. It never reached 3%. And every single year GDP growth missed the forecasts by Obama’s own economists.

So for Obama to claim that he handed Trump a thriving economy is 100% pure poppycock.

What’s more, Obama and other liberal Democrats insisted in 2016 that if Trump were elected, he’d send the economy into a tailspin.

There is a definite difference between words and results. Former President Obama can claim all the economic success he wants, but the numbers simply do not back him up.