The Real Numbers

Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

The Economy Under President Trump

I am not an economist, but I have learned over the years to listen to the people with the best track records on analysis. One of those people is Stephen Moore, who posted an article at The Wall Street Journal yesterday.

The article reports:

Liberals are tripping over themselves to explain why the economy has performed so much better under Donald Trump than it did under Barack Obama. The economy has grown by nearly 4% over the past six months, and the final number for 2018 is expected to come in at between 3% and 3.5%. The U.S. growth rate has doubled since Mr. Obama’s last year in office.

When Mr. Trump was elected, many Democratic pundits predicted an economic and stock-market meltdown. Then the economy started surging and they abruptly changed their tune, arguing that Mr. Trump was simply riding a global growth wave. That narrative was shattered when U.S. growth kept steaming ahead even as global growth—especially in China and Germany—stalled.

The people who predicted an economic crash if President Trump was elected are now saying that the tax cuts have given us a ‘sugar high’, and the market will crash when the sugar wears off. That makes about as much sense as President Obama taking credit for the move toward American energy independence.

The article continues:

The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.

This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.

The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.

Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.

The article concludes:

Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.

The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.

When you decrease taxes and regulations on businesses, we all gain. That combination, if allowed to continue, will bring us continued economic growth.

Putting Politics Before The Welfare Of Americans

Yesterday Investor’s Business Daily posted an editorial about the coming Congressional session. The title of the editorial is, “Market Turmoil Shows Why Trump’s Pro-Growth Policies Must Continue.”

The editorial explains:

Kudlow (President Trump’s top economic advisor, Larry Kudlow) tried to calm the waters. “Corrections come and go,” he told reporters at the White House. “I’m reading some of the weirdest stuff how a recession is in the future. Nonsense. Recession is so far in the distance I can’t see it. Keep the faith. It’s a very strong economy.”

Let’s be clear. Economic forecasts have been overly pessimistic for most of the Trump administration, with actual results consistently coming in “unexpectedly” higher than forecast. And Kudlow is right. There’s no sign of a recession on the horizon.

The editorial points out the indications of a strong economy and the steps needed to keep it strong:

Unemployment is at 50-year lows. Wages are growing at the fastest rate since the financial crisis. There are a million more job listings than officially unemployed people. Productivity grew 2.2% in the third quarter, after jumping 3% in the second quarter — the fastest growth rate in four years. Small business optimism and the IBD/TIPP Economic Optimism Index remains at record highs.

After eight long years of sluggish growth under President Obama, the economy has been booming.

Still, the Fed has been raising interest rates, and as we’ve pointed out repeatedly in this space, the risk is always that they will go too far, too fast, and crash the economy. The trade war with China is taking its toll. And the economic expansion is old. The last recession ended 113 months ago, making this the second longest in the post-World War II era.

Which is all the more reason for the federal government to continue wringing every bit of growth-inhibiting policies out of the system. For his part, Trump needs to get a trade deal in place with China when he meets with President Xi Jinping at a G-20 summit later this month. And he needs to continue to deregulate where he can.

Unfortunately the Democrats in Congress have little interest in continuing the policies that have resulted in the current economic growth. They will make every effort to roll back the tax cuts and increase the size and spending of the federal government. Hopefully their efforts will not be successful.

Plymouth Rock Began As A Socialist Colony.

The new Democrat party has moved left very quickly in the past two years. The term Democratic Socialist has been used to describe some of the young Democrats just getting their footing in the party. Actually, Socialist would probably be a better description. These young Democratic Socialists are a tribute to the damage done in recent years by our education system. They have not been taught the failures and atrocities associated with Socialism and believe that it is a fair system. They are not familiar with the Pilgrims early socialist experiment.

OffTheGridNews has a brief description of what happened:

Since the Pilgrims did not have enough funds to outfit for the journey and establish a colony, they sought help from the Virginia Company of London and the Virginia Company of Plymouth, companies known as “adventurers,” which were organized to fund and equip colonial enterprises.

One of the key points of the contract between the Pilgrims and the Adventurers said that all colonists were to get their food, clothing, drink and provisions from the colony’s “common stock and goods.” In addition, during the first seven years, all profits earned by colonists would go into the “common stock” until they were divided.

“Today we would call this a socialist commune,” Patton wrote. “In other words, the Pilgrims accepted the socialist principle, ‘from each according to his ability, to each according to his need.’ Each person was to place his production into the common warehouse and receive back, through the Governor, only what he needed for himself or his family. The surplus after seven years was to be divided equally, along with the houses, lands, and chattels, ‘betwixt the Adventurers and Planters.’”

The Pilgrims actually wanted to own their own lands and homes and to work two days a week for their own gain, but the adventurers would not allow it.

Once the agreement was signed, two ships were outfitted for the journey, the Speedwell and the Mayflower. But the Speedwell proved unseaworthy, so everyone still willing to make the journey—102 persons—crowded aboard the Mayflower and set sail.

Patton wrote that after landing on Dec 21, 1620, the Pilgrims suffered horribly their first winter, with around half the colonists perishing. Aid from the now-famous native, Squanto, helped them survive with new planting techniques, but the harvests of 1621 and 1622 were still small.

The colony’s governor, William Bradford, wrote that its socialist philosophy greatly hindered its growth: Young men resented working for the benefit of other men’s wives and children without compensation; healthy men who worked thought it unjust that they received no more food than weak men who could not; wives resented doing household chores for other men, considering it a kind of slavery.

Governor Bradford wrote that to avoid famine in 1623, the Pilgrims abandoned socialism, Patton said.

“At length, after much debate of things, the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before. And so assigned to every family a parcel of land,” Bradford wrote.

The colonists, each of whom now had to grow their own food, suddenly became very industrious, with women and children who earlier claimed weakness now going into the fields to plant corn. Three times the amount of corn was planted that year under the new system.

Yes, America began as a socialist colony. When socialism did not result in prosperity, the Pilgrims switched to a free market economy and everyone prospered. We need to learn the lessons of history.

The Economic Numbers From October

First of all, the following chart is found at the Bureau of Labor Statistics website. It shows the Workforce Participation Rate in recent years.

The number 62.9 is not a great number, but it is a step in the right direction.

Below is a chart posted at the Bureau of Labor Statistics website showing the unemployment rate for October.

The fact that the unemployment rate remained steady as the labor participation rate increased is good news for Americans. It means that there is continued growth in the job market.

Today The Wall Street Journal posted more good economic news:

Strong hiring and low unemployment are delivering U.S. workers their best pay raises in nearly a decade.

Employers shook off a September slowdown to add 250,000 jobs to their payrolls in October, above monthly averages in recent years, the Labor Department said Friday. With unemployment holding at 3.7%, a 49-year low, and employers competing for scarce workers, wages increased 3.1% from a year earlier, the biggest year-over-year gain for average hourly earnings since 2009.

…The share of Americans in their prime working years, between 25 and 54, who are working or looking for work rose to the highest rate since 2010 last month, at 82.3%.

President Trump touted the figures in a tweet Friday, just days before midterm elections that will decide control of Congress. “Wages UP! These are incredible numbers,” Mr. Trump said.

Employers have added to their payrolls for a record 97 straight months.

This is the Trump economy. The Federal Reserve is beginning to raise interest levels to more normal levels, which may slow down the growth of the economy, but keeping interest rates at artificially low levels is not a good long-term strategy. We still have a need to control our spending and get the national debt under control, but strong economic growth and a lessening of the need for welfare programs should begin that process. There will be some adjustments along the way–low interest rates will no longer be keeping the stock market artificially high and rising interest rates may slow the housing market, but raising interest rates will also help bring us back to a more balanced economy.

If the Republicans hold Congress, the economic growth will continue. If the Democrats gain control of the House of Representatives, we will be in for a very bumpy economic ride.

When Success Becomes Political

It is in the best interests of all Americans for the country to prosper. Unfortunately, some of our politicians have forgotten that principal.

Stephen Moore posted an article at Townhall today with the following title, “Why the Left Hates Prosperity,” It’s an interesting premise.

The article states:

Here is Moore’s rule of modern-day politics: The better the economy performs under President Donald Trump and the more successes he racks up, the more unhinged the left becomes. It’s a near linear relationship. And it goes for media as well.

That’s why the monthly jobs announcements and the quarterly GDP reports, like the one released Oct. 26, are the unhappiest days of the year for the Trump haters. News of 3.5 to 4 percent growth and 7 million surplus jobs are the bane of the resistance movement’s existence.

The usual charge against President Trump is the he has moved the Republican party to the far right and ended the days of compromise with the likes of Ted Kennedy. Just for the record, that wasn’t compromise–it was capitulation (aka losing).

The article continues:

Liberals want a return to the days when the GOP’s standard bearers were people like George H.W. Bush, Bob Michel, Bob Dole, John McCain, Mitt Romney, and most recently, John Kasich.

Think. What do all these Republicans have in common? Losing.

My intention isn’t to disparage these men. I have known all of them and respect them all — especially the noble war heroes. Michel was a Republican minority leader beloved by the left for years and years, precisely because he kept the House Republicans where they belonged — in the minority.

I think Mr. Moore is on to something here. As long as the Republicans were shooting themselves in the foot, the Democrats loved them. Donald Trump is not your average Republican. He is probably one of the few Republicans who would have stood strong during the nomination process of Justice Kavanaugh, That’s one of many reasons why Democrats hate him.

The article concludes:

Politics is a contact sport. There aren’t many moral victories in politics. And yes, it really all does come down to winning. As two-time winner Bill Clinton used to say, you can’t change the country if you don’t win.

The problem for the Trump haters, and the reason they are so spitting angry, is that Trump is changing the country for the better. According to a Quinnipiac poll, 7 of 10 voters rate the economy as good or great. Liberals are doubly angry and frustrated because they were so sure he would fail. Perhaps they are the ones who are intellectually inferior.

I strongly suggest that you follow the link and read the entire article–there is a lot of insight in what Mr. Moore is saying. No one likes to lose, but at least the Republicans were gracious about it–too gracious.

Results vs. Spin

The American economy has done very well under President Trump. The fact that many Americans now have jobs, bonuses, and pay raises has not gone unnoticed by many voters. Many Americans have simply tuned out the constant anti-Truemp drumbeat of the mainstream media. Voters are looking at the economic results of the Trump administration–not the spin of the media.

Yesterday The Gateway Pundit reported:

Trump approval hits 50% after tumultuous week of violent attacks that shook the nation.

The latest Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 50% of Likely U.S. Voters approve of President Trump’s job performance. Forty-nine percent (49%) disapprove.

President Barack Obama had an approval rating of 44% on October 29, 2010 before his party suffered HUGE losses in the 2010 midterm elections.

And that is despite an attacking media that is 92% negative in its Trump coverage.

The mainstream media has become so biased that they are not taken seriously. If they want to regain some of their status, they might try simply reporting the news and letting people form their own opinions.

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.

The Trump Economy Continues To Make News

Yesterday The Conservative Treehouse posted an article about the growth of the American economy under President Trump.

The article reports:

The Bureau of Labor Statistics has released some remarkable economic data today. There are more than seven million current job openings [See Here] and the year-over-year average wage gains are 3.3% [See Here]

I suggest you follow the link and read the entire article. It is a fairly detailed analysis of what has happened due to de-regulation and tax cuts.

The article concludes:

The investing class economy, ie. another name for a ‘service-driven economy’, has been the only source of historic reference for approximately three decades. These talking heads convinced themselves that a “service driven economy” was the ONLY economy ever possible for the U.S. in the future.

Back in January 2017 Deutsche Bank began thinking about it, applying new models, trying to conceptualize and quantify MAGAnomics, and trying to walk out the potential ramifications.  They began talking about Trump doubling the U.S. GDP growth rate when all U.S. investment groups couldn’t yet fathom the possibility.

It’s like waking up on Christmas morning every day to see the pontificating Fed struggling to quantify analysis of their surrounding reality based on flawed assumptions. They simply have no understanding of what happens within the new dimension.

Monetary policy, Fed control over the economy, is disconnected and will stay that way for approximately another 12-14 months, until Main Street regains full operational strength –and– economic parity is achieved.

As we have continued to share, CTH believes the paycheck-to-paycheck working middle-class are going to see a considerable rise in wages and standard of living.  How high can wages rise?… that depends on the pressure; and right now the pressure is massive.  I’m not going to dismiss the possibility we could see double digit increases in year-over-year wage growth in multiple economic sectors in several regions of the U.S.

Remember, as wages and benefits increase – millions of people are coming back into the labor market to take advantage of the income opportunities.  The statistics on the invisible workforce varies, but there are millions of people taking on new jobs in this economy and the participation rate is growing.

It is time that the average working American got a few economic breaks. President Trump is providing those breaks.

What Results Look Like

During the final weeks of the mid-term election campaign, you will hear Democrats say, “The tax cuts were only for the rich–they didn’t help anyone else.” A misinformed friend of mine posted that on Facebook recently. So let’s look at the facts.

The Conservative Treehouse posted an article yesterday about the impact of the Trump Tax Cuts on average Americans.

The article quotes a Business Insider article that reports the following:

  • Walgreens Boots Alliance announced that it will make investments around $150 million to boost mainly its in-store wages in fiscal 2019 in the light of favorable tax reforms.
  • Walgreens CFO said Thursday that the increase in store wages was “in light of the favorable tax reforms in the US.”

…The pharmacy-chain owner Walgreens Boots Alliance announced Thursday that it will make investments of about $150 million to boost mainly its in-store wages in fiscal 2019 in wake of  President Donald Trump’s tax reforms.

The announcement marks a 50% increase in company’s investment towards wages which was announced in March. At the time, Walgreens said it would invest around $100 million per annum to increase wages beginning later this calendar year.

“We will be making select incremental investments of around $150 million in fiscal 2019, mainly in store wages, but also to fuel our new community health care initiatives, and you can view these in light of the favorable tax reforms in the US,” Walgreens CFO James Kehoe said Thursday, on the company’s fourth-quarter earnings call. 

The article at Business Insider explains how the tax cuts have impacted the average worker:

In December 2017,  the Trump administration slashed the federal corporate tax rate from 35% to 21% and allowed a one-time repatriation of overseas cash. The bill also allows companies to bring overseas profits back home to invest in domestic projects or repurchase of shares.

Kehoe said the investments will result in a headwind of approximately $0.12 a share, or two percentage points of earnings-per-share growth for the coming fiscal year. 

US retailers are scrambling to keep workers as they look for opportunities with higher pay and attractive benefits. The US unemployment rate fell to a 48-year low of 3.7% in September. According to the Bureau of Labour statistics, there were 757,000 retail-job openings across the United States in July, which is about 100,000 more than a year ago.

The surge in the number of retail jobs has allowed workers the opportunity to move around within the industry. As a result, companies are raising wages to try and retain workers. Earlier this month, Amazon hiked its minimum wage to $15 per hour, effective November 1. That followed wage hikes from places like Target and Costco

That is significant.

The Conservative Treehouse concludes:

Back in January 2017 Deutsche Bank began thinking about it, applying new models, trying to conceptualize and quantify MAGAnomics, and trying to walk out the potential ramifications.  They began talking about Trump doubling the U.S. GDP growth rate when all U.S. investment groups couldn’t yet fathom the possibility.

It’s like waking up on Christmas morning every day to see the pontificating Fed struggling to quantify analysis of their surrounding reality based on flawed assumptions. They simply have no understanding of what happens within the new dimension.

Monetary policy, Fed control over the economy, is disconnected and will stay that way for approximately another 12-14 months, until Main Street regains full operational strength –and– economic parity is achieved.

As we have continued to share, CTH believes the paycheck-to-paycheck working middle-class are going to see a considerable rise in wages and standard of living.  How high can wages rise?… that depends on the pressure; and right now the pressure is massive.  I’m not going to dismiss the possibility we could see double digit increases in year-over-year wage growth in multiple economic sectors in several regions of the U.S.

Remember, as wages and benefits increase – millions of people are coming back into the labor market to take advantage of the income opportunities.  The statistics on the invisible workforce varies, but there are millions of people taking on new jobs in this economy and the participation rate is growing.

Winnamins.  We’ll need lots of them…

Wow.

 

Why Are All These People In Djibouti?

This is a map showing the location of Djibouti:

Many years ago at a Marine Ball in New Orleans, I sat next to a young officer who had recently returned from Djibouti. I asked him what he had done there, and he responded very politely by telling me everything I wanted to know about Djibouti except what I had asked him. I wondered, but let it go. That was at least twelve years ago, and Djibouti is still an important place to the world’s most powerful nations. One look at its location explains why.

On Friday, the Center for Security Policy posted an article with the title, ” Arms Trafficking on the Rise in Djibouti.” So what is this about?

The article reports:

Attention was brought this week to the growing issue of arms trafficking in the East African nation of Djibouti, which has seen a spike in recent years. Driving the problem is the instability and ongoing conflict in neighboring countries such as Yemen, Somalia, and Sudan. The negative attention comes as Djibouti is trying to establish itself as a developed and economic upstart nation.

…Djibouti’s lack of internal conflicts, its surge of economic investments and its resulting economic growth, have all led to increased stability not present in its neighboring countries.  Driving these positive developments are its access to both the Red Sea and the Indian Ocean, resulting in its labeling by some as the “most valuable real estate” in the world.

Another major component of Djibouti’s growth has been the military presence of several major world powers within its border such as the United States, France, China, and Japan. France was the first power to establish a military base there as the former colonial power in the region, although budget constraints will require them to close this in the near future. The United States has a strong military presence in Djibouti as the central location of its African-based operations known as AFRICOM. The only foreign bases of both China and Japan are in Djibouti, and India is looking to build a base there in the coming years. The main interest of these countries in Djibouti is the country’s strategic positioning near the Bab-el-Mandeb strait and the Horn of Africa.

…China has the largest presence in Djibouti, given its large development and business presence, and owns a significant amount of the nation’s debt. To this point, the United States sought reassurance earlier this year by the Djiboutian Foreign Ministry that Djibouti’s relationship to China would not overshadowed their agreement with the United States. Despite these assurances, concern over China’s heavy presence in Djibouti, and its ability to remain a neutral partner, continues to increase.

As Djibouti’s economy and international profile continue to grow, interest in the strategically located African nation will continue to increase from world powers and transnational criminals alike who look to profit from the country’s exponential rise.

Stay tuned. This growing country in one of the most unsettled regions of the world is very strategically located. The military buildup by foreign interests in Djibouti is not accidental.

Winning

Yesterday The Conservative Treehouse reported the following:

The National Federation of Independent Business (NFIB) just released another survey.  The Small Business Optimism Index has soared to 108.8 in August; that’s an all-time record in the survey’s 45-year history, topping the July 1983 highwater mark of 108.  This incredible surge in economic outlook began with the era of President Donald J Trump.

The article includes the following chart:

Wow.

The article further reports:

According to the release:

“At the beginning of this historic run, Index gains were dominated by expectations: good time to expand, expected real sales, inventory satisfaction, expected credit conditions, and expected business conditions,” said NFIB Chief Economist Bill Dunkelberg.

“Now the Index is dominated by real business activity that makes GDP grow: job creation plans, job openings, strong capital spending plans, record inventory investment plans, and earnings. Small business is clearly helping to drive that four percent growth in the domestic economy.”

  • 26% of companies plans to increase employment.
  • 38% of companies have current job openings.
  • 34% of companies consider this a good time to expand.
  • 34% of companies expect the economy to improve.

Economic policies make a difference.

This chart shows some other areas of progress:

This is President Trump’s recovery. If you would like this recovery to continue, I suggest you elect Republicans to Congress in November. If you elect Democrats, they will quickly end the tax breaks and other policies that have resulted in this exceptional economic growth.

About That Recovery

Yesterday The Wall Street Journal posted an article illustrating the timeline of the economic growth our country is currently experiencing. The article deals with the recent claims by former President Obama that he is responsible for the current economic growth and that the growth began under his leadership. In February 2018 The Washington Times reminded us that Obama Democrats told us that what looked like long-term stagnation under President Obama’s economic policies, with growth stuck at 2 percent on average for his whole eight years in office, was the New Normal that the American people were going to have to get used to, the best we could do now.

The Wall Street Journal reports:

Milton Friedman was the first economist to notice a pattern in American economic history: The deeper the recession, the stronger the recovery. The economy has to grow even faster than normal for a while to catch up to where it would have been without the recession. The fundamentals of America’s world-leading economy are so strong that the pattern held throughout the country’s history.

Until the past decade. The 2008-09 recession was so bad, the economy should have come roaring back with a booming recovery—even stronger than Reagan’s boom in the 1980s. But Mr. Obama carefully, studiously pursued the opposite of every pro-growth policy Reagan had followed. What he got was the worst recovery from a recession since the Great Depression.

Before Mr. Obama, in the 11 previous recessions since the Depression, the economy recovered all jobs lost during the recession an average of 27 months after the recession began. In Mr. Obama’s recovery, dating from the summer of 2009, the recession’s job losses were not recovered until after 76 months—more than six years.

The article concludes:

Obama apologists argued America could no longer grow any faster than Mr. Obama’s 2% real growth averaged over eight years. Slow growth was the “new normal.” The American Dream was over. Get used to it. Hillary Clinton promised to continue Mr. Obama’s economic policies. America’s blue-collar voters rose up.

The recovery took off on Election Day 2016, as the stock market communicated. Mr. Trump’s tax cuts and sweeping deregulation—especially regarding energy—fundamentally changed course from Mr. Obama. These policies have driven today’s boom, increasing annual growth to more than 3% within six months and now to over 4%.

Will Democrats ever figure out what policies create jobs, economic growth and rising wages? If not, they’ll wake up some Wednesday morning to find they have been routed in a fundamental realignment election, in which they have permanently lost the blue-collar vote—once the backbone of their party.

The truth is in the numbers. All of us need to be aware that what former Presidents say about today’s economic growth may not be true. Economic policies make a difference, and President Trump has illustrated that.

Good News For American Workers

The Washington Examiner posted an article today stating that a trade deal has been negotiated with Mexico. The deal did not include Canada, President Trump has indicated that he wants to cut a separate deal with Canada.

The article reports:

The main aspect of Monday’s deal with Mexico was raising to 75 percent, up from 62.5 percent, the amount of North American-made parts a car or truck must have to qualify as duty-free under NAFTA. The change will make it less economical for manufacturers to rely on supply chains that extend into Mexico. The Trump administration has long sought to force more manufacturing back into the U.S. Deal also requires at least 40 percent of auto content to be made by workers earning at least $16 per hour.

The article concludes:

The deal will likely increase pressure on Canada to agree to U.S. demands when three-way talks resume, mostly likely after López Obrador takes office.

“Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, told Reuters. “We are in regular contact with our negotiating partners, and we will continue to work toward a modernized NAFTA. We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”

America has made some bad trade deals in the past. NAFTA is one of them. It looked good on paper (to some people), but hurt American workers. I applaud President Trump’s efforts to protect the jobs of American workers and bring jobs back to this country.

First They Came For…

As we approach the mid-term election, there are a number of things to consider. One of the things to look at is the Right-Direction or Wrong Track poll done by Rasmussen. Right now 43 percent of Americans think we are headed in the right direction; 52 percent think we are headed in the wrong direction. In contrast, on October 30, 2016, 30 percent of Americans thought we were headed in the right direction, and 63 percent thought we were headed in the wrong direction. In early January 2016, 28 percent of Americans thought we were headed in the right direction, and 67 percent thought we were headed in the wrong direction. So where am I going with this? As Bill Clinton said, “It’s the economy, stupid!” Hopefully most Americans understand that if the Democrats are able to take control of Congress this year, the economic progress made by the Trump administration will end. Impeachment proceedings against President Trump will begin (it won’t matter whether or not there are any valid charges, the trial will begin). Any investigations into Uranium One, spying on political opponents, or politicizing the justice system will also end. That will mean the institution of a two-tiered justice system in America. If you are connected to the right people, you can pretty much get away with anything. That is what a Democrat victory in the mid-terms will bring us. The Democrats fear that the public will begin to realize this and will attempt to shut down conservative news.

I say all that to predict the actions of the political left in the coming two months. The American Thinker posted an article today spotlighting a situation that should concern all of us. It is about the censorship of Alex Jones. I need to say up front that I am not a huge fan of Alex Jones, but whether you like him or not is not the point. The fact that he can be banned from certain areas of the Internet because of his views should give us all pause. As we approach the mid-term elections, I expect to see more of this. A lot of it is already happening. Please follow the link above to read the entire article. It reminds us of some of the abuses by the media that we have seen in recent years. The Internet has ended the liberal monopoly of the media– it was wounded with the advent of popular talk shows, but the Internet allows everyone to do their own research. Expect to have to look a little harder for your favorite conservative news source in the next few months. I believe PragerU is back on Facebook, but I am not sure for how long. That is only the tip of the iceberg.

Why Is The Good Economic News Always Unexpected When A Republican Is President?

Yesterday The Conservative Treehouse posted an article about the July Retail Sales Report.

The article reports:

The Commerce Department – Economic and Statistics Administration – released the figures from July 2018 retail sales today (full pdf available here), showing an incredibly strong .5% increase in spending in July, bringing a 6.4% increase year-over-year;  and the results have dropped the jaws of the “experts”:

“Economists polled by Reuters had forecast retail sales nudging up 0.1 percent in July.” (link)

“Retail spending in the United States increased a half-percent during the month of July — well beyond what experts predicted.” (link)

“U.S. retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong” (link)

The article explains the reason for the growth:

As a direct result of President Trump’s multifaceted economic strategy, manufacturing companies are having to look at TCO which is “Total Cost of Ownership”. You see, President Trump is not only approaching manufacturing growth policy from the trade-agreement and investment side, his policies also approach the larger impacts on raw material, energy and labor.

This multi-pronged policy approach forces companies to look at transportation and location costs of manufacturing. In combination with more favorable tax rates; if domestic costs of material and energy drop, in addition to drops in regulatory and compliance costs of operating the business, the total operating cost differences drop dramatically.

This means labor and transportation costs become a larger part of the consideration in “where” to manufacture. All of these costs contribute to the TCO. Transportation costs are very expensive on durable goods imported. If the durable goods are made domestically, the transportation costs per unit shipped drop significantly. The TCO analysis then further reduces to looking at labor.

U.S. Labor is more expensive, yes. However, if material costs, energy costs, regulatory costs, taxes and transportation costs are part of the TCO equation – then higher labor costs can be offset by the previously mentioned savings.

Economic policies matter. If you want to see this kind of growth continue, elect conservative Republicans to Congress in November. If you want to see this kind of growth come to a screeching halt, elect Democrats–they will take back the tax cuts, put back the regulations, and move to impeach the President. At that point, we will have at least two years of the same economic disaster we saw under President Obama.

Misplaced Values

How much is a human life worth? We live in a world where some countries kill their elderly simply because they are a financial burden on the younger generation. In some countries it is legal to kill children because they have birth defects or other issues. Who decides which lives have value and which do not?

On Monday, CNS News reported:

At the event promoting opposition to President Donald Trump’s Supreme Court nominee Brett Kavanaugh, the former First Daughter of President Bill Clinton credited legalized abortion for helping add trillions of dollars to the U.S economy because women who had abortions were more inclined to enter the labor force:

“Whether you fundamentally care about reproductive rights and access right, because these are not the same thing, if you care about social justice or economic justice, agency – you have to care about this.

“It is not a disconnected fact – to address this t-shirt of 1973 – that American women entering the labor force from 1973 to 2009 added three and a half trillion dollars to our economy. Right?

“The net, new entrance of women – that is not disconnected from the fact that Roe became the law of the land in January of 1973.”

Thus, no matter what other things Americans may care about, everyone should appreciate the economic value of legalized abortion, Clinton said:

“So, I think, whatever it is that people say they care about, I think that you can connect to this issue.

“Of course, I would hope that they would care about our equal rights and dignity to make our own choices – but, if that is not sufficiently persuasive, hopefully, come some of these other arguments that you’ve expressed so beautifully, will be.”

Could one on those aborted babies have grown up and found the cure for cancer, dementia, Parkinson’s Disease? Who did we kill? Could one of those babies have grown up to find the key to nonpolluting green energy, preventing some valuable species from going extinct, or finding a key to longer, healthier living? How much would those discoveries have added to the economy?

The article at CNS News includes an update:

In response to tweets critical of her remarks, Chelesea Clinton declared that “Pro-choice is Pro-life” and that “Reproductive rights have always been about economic rights.”

We have sold our souls for a mess of pottage.

Why Energy Independence Matters

The Washington Times posted an article today about Iranian military exercises in the Straits of Hormuz. The Straits of Hormuz is significant because 35% of all seaborne traded oil, or almost 20% of oil traded worldwide flows through the Straits of Hormuz. This is something to watch as the situation in Iran becomes more volatile.

This is today’s Dry Bones cartoon:

The Washington Times reports:

Iran’s navy sent dozens of small boats into the Strait of Hormuz on Thursday, dramatizing its ability to choke off the strategic Persian Gulf waterway — a move that could send global oil and U.S. gasoline prices soaring — and escalating the confrontation with the Trump administration for withdrawing from the 2015 nuclear deal.

U.S. officials said the naval exercise was Tehran’s way to show its capability to create a disruption in the waterway, through which some 30 percent of the world’s sea-transported oil passes daily. Officials at the Pentagon said they expected the exercise would last only a few hours, although it was unclear Thursday night whether it had ended.

“We are monitoring it closely, and will continue to work with our partners to ensure freedom of navigation and free flow of commerce,” said a statement by Navy Capt. Bill Urban, U.S. Central Command spokesman.

The development marked Iran’s latest escalation in response to Mr. Trump’s promise to begin reimposing harsh economic sanctions in the coming days that were suspended under the 2015 deal. One Pentagon source said the unexpected Iranian navy moves were meant to hammer home Tehran’s rejection of President Trump’s offer this week for direct, unconditional talks with Iranian President Hassan Rouhani.

The article details the unrest in Iran:

It is an increasingly delicate moment for Mr. Rouhani, who faces protests in Iran over the nation’s struggling economy, weak growth and declining currency.

The Rouhani government has been rocked by a string of protests in cities across the country over the failing currency, mismanagement and investor fears of U.S. sanctions, the first wave of which is set to begin Tuesday. The Trump administration is pressuring Iran’s other trading partners in Europe and elsewhere to curb trade and investment ties as well.

A report by the official IRNA news agency said about 100 people took to the streets Thursday in the northern city of Sari and that demonstrations broke out in at least three other cities. The agency reported that none of the protests had official permission and all were broken up by police.

Iranian dissident groups abroad have detailed multiple demonstrations in recent days, with harsh police crackdowns in response. The Associated Press cited videos circulating on social media purporting to show dozens of demonstrators setting fire to police vehicles and shouting “death to the dictator.” The authenticity of the videos could not immediately be verified.

One way for a dictator to unite his people is to unite them against a common enemy. This may or may not work in Iran since many of the younger people in the country are more inclined toward western ideas than the ideas of the mullahs.

The article concludes:

“Any disruption of oil supplies in the Persian Gulf would be a major threat to the global economy and would hurt U.S. trading partners, thereby damaging the U.S. economy,” said Amy Myers Jaffe, who heads the Program on Energy Security and Climate Change at the Council on Foreign Relations.

U.S. domestic oil and gas production and export increases in recent years “have not reduced the U.S. need to police the free flow of oil from the Middle East,” Ms. Myers Jaffe wrote in an analysis for the think tank this week. “An oil price rise due to the loss of supply in one part of the world is reflected in U.S. price levels as well all other locations across the globe.”

Rockford Weitz, who heads the Fletcher Maritime Studies Program at Tufts University, said that in the Strait of Hormuz, Iran “could damage commercial shipping with relatively cheap anti-ship missiles, fast patrol boats, submarines and mines.

“Even threats and modest disruption to commercial shipping could trigger economic damage in the form of higher marine insurance rates, crude oil supply concerns and unsettled stock markets,” Mr. Weitz wrote in an analysis published by Tufts last month.

We live in a fragile world–keep praying.

Good Economic News

Trading Economics is reporting today:

Labor Force Participation Rate in the United States increased to 62.90 percent in June from 62.70 percent in May of 2018 as the civilian labor force grew by 601,000. Labor Force Participation Rate in the United States averaged 62.99 percent from 1950 until 2018, reaching an all time high of 67.30 percent in January of 2000 and a record low of 58.10 percent in December of 1954.

CNBC is reporting today:

The employment part of the economy continued to power forward in June, adding another 213,000 jobs though the unemployment rate rose to 4 percent, according to a government report Friday.

Economists surveyed by Reuters had expected a nonfarm payrolls gain of 195,000 and the jobless rate to hold steady at 3.8 percent, which had been tied for the lowest since 1969.

Another solid month of job gains provided little help to wages. In addition to the payroll gains, average hourly earnings rose 2.7 percent year over year, a bit below expectations of a 2.8 percent increase.

Despite increasing talk about the economy being near full employment, hiring continues to grow. Along with June’s upside surprise, the Bureau of Labor Statistics revised April’s count up from 159,000 to 175,000 and May’s from 223,000 to 244,000, a total of 37,000 more than initially stated.

The report at CNBC also states:

While the meeting summary indicated a belief that the labor outlook “had continued to strengthen,” there also was concern that businesses are having a hard time filling jobs. While some of the Fed’s contacts indicated they are raising pay, the overall feeling was that wage pressures remain subdued, which was confirmed by Friday’s report.

The bottom line here is that the economy is improving. It may not be as rapidly as some would like, but it is moving in the right direction at a brisk pace. As Americans, we might want to look at the statement that businesses are having a hard time filling jobs. If businesses are having a hard time finding qualified workers, where is the problem? Have we created a society where it is more lucrative to stay home than to work, or is the problem in our education system? Why are our schools not turning out more skilled workers? What do we need to do to change that? Is it time to bring back vocational schools and apprenticeships? Answering those questions might create an economy that continues to thrive.

One Result Of A Strong Economy

On Monday, Breitbart reported that for the first time in eight years, the number of American households on food stamps has dropped below 20 million.

The article reports:

The latest data from the USDA reveals that the number of households on food stamps in February 2018 dropped to 19,992,124—the first time it fell below 20 million since September 2010, when 19,979,385 households were enrolled in the Supplemental Nutrition Assistance Program (SNAP).

The USDA notes that not only is the number of households receiving food stamps at a record low level, but the number of people enrolled in food stamps has also gone down. From January to February of this year alone, overall food stamp enrollment dropped from 40,640,170 to 40,032,131.

The downward trend in enrollment has only continued over President Trump’s first year in office, keeping on pace with the stable decline in SNAP participation since 2013.

The food stamp program is included in the Farm Bill which is currently in Congress.

The article reports:

Although the Trump administration is making it a priority to require food stamp recipients to work to receive benefits, the Senate version of the 2018 Farm Bill released Friday does not include the work requirements sought out by the Trump administration and the House Agriculture Committee.

The House’s version of the bill includes a provision that would require most adults ages 18 to 59 who enroll in food stamps to work, receive job training, or look for work under a case manager’s supervision.

It is time for the people the government is feeding to go to work. The idea that working people should pay exorbitant taxes to allow other Americans to live well without working is just ridiculous. It is time for the gravy train to end.

The Positive Economic News Continues

Yahoo News is reporting today that jobless claims expectantly fell last week. (Why was it unexpected–the trend has been going downward for a while?) Because of this, the Federal Reserve is expected to raise interest rates next week to keep the economy from overheating. I have mixed emotions about this. We do have to get back to reasonable interest rates, but it seems as if the federal reserve also has a habit of overreacting and slowing down (or speeding up) the economy a little too quickly.

This is a chart of interest rates starting in approximately 2008 taken from trading economics:

As you can see, the rates were kept very low during the Obama Administration in order to avoid an economic crash. Ideally, the Federal Reserve will raise them very slowly so as to protect the economic growth we are currently seeing.

Yahoo News reports:

The dollar was trading lower against a basket of currencies. Prices for longer-dated U.S. Treasuries rose marginally and stocks on Wall Street were mixed. The labor market is considered to be close to or at full employment. Nonfarm payrolls increased by 223,000 jobs in May and the unemployment rate dropped to an 18-year low of 3.8 percent.

The jobless rate, which has declined by three-tenths of a percentage point this year, is now at a level where the Fed projected it would be by the end of this year.

The number of people receiving benefits after an initial week of aid increased 21,000 to 1.74 million in the week ended May 26. The four-week moving average of the so-called continuing claims dropped 13,250 to 1.73 million, the lowest level since December 1973.

…The strong job market conditions were also underscored by the publication on Thursday of the Labor Department’s Contingent and Alternative Employment Arrangements survey, which showed 1.3 percent of U.S. workers in May 2017 held jobs they considered temporary or did not expect to last beyond a year.

That is a decline from 1.8 percent in February 2005 when the government last conducted a similar survey.

When self-employed individuals and independent contractors were included, the share of workers was 1.6 percent in May 2017, down from 2.3 percent in February 2005. Most contingent workers were under the age of 25.

The Labor Department will publish its Contingent Worker Supplement report in September. It is expected to shed light on the so-called gig economy.

Like him or not, President Trump is a successful businessman who understands how economics works. It might be a good idea in the future to elect businessmen to the presidency instead of politicians.

James Pethokoukis On The Economy

James Pethokoukis, columnist for American Enterprise institute, was on the Bill Bennett radio show this morning talking about the economy.

Some of his statements:

Last year the economy grew at a rate of 1.1 and we generated about 150,000 jobs a month. No one thought that was a good year. …If anything goes wrong, we do go back into recession. …I think it’s a pretty fragile situation. …This is a very, very weak recovery. …We should be adding 250,000, 300,000, 400,000 jobs a month, which we would be if the economy was growing faster.

A caller remarked:

If President Obama is trying so hard, why have we not had a budget?

The President talks about saving the automobile industry.  What about the bond holders that were swept under the rug and lost all their money because all the money was given to the unions?

Mr. Pethokoukis commented that the President will be coming out with a plan today to extend the Bush tax cuts on taxpayers earning less than $250,000. Mr. Pethokoukis pointed out that the plan the President is proposing represents a $70 billion tax increase on those earners, many of which are small business owners. There is no way that helps the economy.

Mr. Pethokoukis also reminded us that during the 1983 recovery from the Jimmy Carter recession, we have one month where the economy gained one million jobs.  A recovery after a severe recession should post that kind of numbers—not the numbers we are currently seeing.

Don’t be fooled by the campaign rhetoric—the Obama economic plans have not worked.

Enhanced by Zemanta