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?<\/p>\n
The Conservative Treehouse<\/a> posted an article about the current state of the economy.<\/p>\n The article reports:<\/p>\n The Bureau of Economic Analysis (BEA) released significant wage and salary data<\/a> yesterday which held stunning upward revisions for 2018 and 2019.\u00a0\u00a0 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%.<\/strong><\/p>\n Within the revised BEA data<\/a>, we find employee compensation rose 4.5% in 2017 and 5% in 2018.\u00a0 Importantly the growth trend continued into 2019, with compensation increasing 3.4 percent in the first six months alone.\u00a0 Year-over-year wages and salaries were revised upward to 5.3% for May, and 5.5% in June.\u00a0 These are stunning increases in worker pay.<\/strong><\/p>\n There are various economic indicators we have shared through the years, but wage growth is one of the more critical.\u00a0 First, wage growth lags behind business activity \u2013 workers don\u2019t get pay raises until after business volume demands\/provides it.\u00a0 Second, wage growth is generally uni-directional \u2013 once businesses hike pay, the increases cement.<\/strong><\/p>\n The wage growth is across the board–it has not impacted only the wealthy.<\/p>\n The article concludes with a summary of President Trump’s overall economic strategy:<\/p>\n The U.S. consumer is driving the economy.\u00a0 The jobs and labor market remains strong.\u00a0 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\u2019s trade policies (tariffs).\u00a0 Their efforts increase the value of the dollar and we are importing deflation.<\/strong><\/p>\n Simultaneously, global manufacturers -multinationals- need access to the U.S. consumer market.\u00a0\u00a0 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.\u00a0 Simply, the multinationals are trying to figure out where to put their investment capital for the highest return.<\/strong><\/p>\n 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.\u00a0 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.\u00a0 That\u2019s why the USMCA is critical.<\/strong><\/p>\n CTH still predicts POTUS Trump will eliminate the uncertainty as soon as the USMCA is ratified.\u00a0 I suspect President Trump will drop massive tariffs on all Chinese goods.<\/strong><\/p>\n 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.<\/strong><\/p>\n Once the USMCA is signed, Trump will blow the dam by triggering the tariffs.\u00a0 This will move all of the multinationals who are in a \u2018holding pattern\u2019, and capital investment will flow fast.\u00a0\u00a0 The China exodus will benefit North America (USMCA) and those ASEAN nations who have partnered with Trump and made proactive trade agreements.<\/strong><\/p>\n This is the reason it is good to periodically get politicians out of the White House and elect a successful businessman.<\/p>\n","protected":false},"excerpt":{"rendered":" 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 … Continue reading