News Flash: The economy is booming better than ever before. Thanks to Trump and his superior grasp on economic policy, we have been saved from the blight that was the Obama years and entered into a time of feasts and plenty. Astoundingly, we entered in to this period of prosperity on January 20, 2017 - conveniently at the same exact moment Trump was sworn in. Remember, as he explained in his inaugural address in front of the biggest crowds to have ever gathered in DC, we had just been in a period of turmoil.
Their victories have not been your victories; their triumphs have not been your triumphs; and while they celebrated in our nation’s Capital, there was little to celebrate for struggling families all across our land.
This American carnage stops right here and stops right now.
I have no doubt any ardent Trump supporter will read back on that speech and nod emphatically and give a good ole ‘Murica fist pump while thinking that Trump has delivered us from that carnage. And you know what? When I look at the various economic metrics, I cannot help but to think that we’re doing pretty darn good. However, unlike Trump and most of his supporters, I don’t have amnesia and I don’t suck at math. The fact of the matter is we’ve been on a pretty good trajectory for years before Trump assumed office and nothing significantly has changed that.
A little tangent before I go on. I have a lot of conservative friends - many of whom voted for Trump. I know a lot of you are very intelligent people who don't suck at math. You are the type of people I want to read this more than any others. I get where you're coming from - I grew up staunchly conservative and voted either Republican or Libertarian in every general and mid-term election from when I turned 18 until 2014. Through lots of discussion with those on the left and a ridiculous amount of research, I cast away the ingrained idea that "liberal" was a dirty word (that's a whole other post or two). Please read through this post and the various facts I cite. Question them, but also question your own point of view and the sources you may base your opinions on. Be willing to learn and ask questions. Be curious. Just remember, sarcasm is my love language.
JOBS, JOBS, JOBS! pic.twitter.com/wAkQMKdPXA— Donald J. Trump (@realDonaldTrump) March 14, 2017
Let us first look at one of the most popular metrics Trump likes to tout as his doing - jobs. As of June 2018, we had an unemployment rate of 4% which is close to the lowest we have had since 2000. Pretty impressive, right? That must mean Trump has been adding historic numbers of jobs. Well, not so fast. In 2017, fewer jobs were added than any year in Obama’s second term and both 2014 and 2015 outpaced the first half of 2018.
If Trump saved us from the disastrous Obama economy, how on earth could his job numbers pale in comparison to his predecessor? I mean, sure, not everyone could be handed an ideal scenario of a global financial meltdown and monthly losses of 800,000 jobs. Trump got shafted with inheriting one of the longest expansion periods comprising of 75 straight months of jobs gains. Thanks Obama?
Another Christmas miracle has been the wonders Trump has done for the stock market. Let's get real, we all love seeing the DOW smash through records. It was like every other week there'd be another 1000-point gain. And what better illustrates the forgotten man, middle-class success like record Wall Street gains? Let's put aside for a moment that only about half of US households own stock and the top 10% own about 81% of the total stock market wealth. If we look at the annualized return for the S&P 500 from January 2009 to January 2017, we get a rate of 13.83%. Not too stinking shabby given that the historical average has been around 10% since its inception.
Now, let's look at the phenomenal gains that have manifested during Trump's reign. Surely they will absolutely CRUSH Obama's results. From January 20, 2017 to July 05, 2018, the annualized rate of return for the S&P 500 is 13.67%. I guess this is a good time for another obligatory Trump tweet. There's one for every occasion.
The Fake News Media barely mentions the fact that the Stock Market just hit another New Record and that business in the U.S. is booming...but the people know! Can you imagine if “O” was president and had these numbers - would be biggest story on earth! Dow now over 25,000.— Donald J. Trump (@realDonaldTrump) January 5, 2018
One of my favorite topics to follow is that of GDP growth. It is an oft repeated criticism of those on the right that Obama was the first president to never hit 3% GDP growth in any year of his presidency. This is indeed a fact if you look at any calendar year of both terms, though he did have four occurrences of consecutive 4-quarter periods obtaining over 3% growth. The irony is that even with Trump's so-called stellar economic performance, he won't be hitting this benchmark in his first two years. According to the latest Federal Reserve prediction, it's likely that Trump won't hit this benchmark at all in his entire first term. This is a stark contrast with his absolutely ridiculous assertion that we could "go to 4 percent, 5 percent, and even 6 percent".
The interesting thing is that Obama had to deal with the reality of the deepest recession since the Great Depression and losing 3/4 million jobs a month while Trump inherited an economy at almost full employment with his party in full control of Congress. Even with half a year of the tax bill under our belts, the NY Fed predicts a 2nd quarter annualized increase of 2.8% and a Q3 rate of 2.7%. This is following a first quarter increase of 2.0%. On top of all of this, Trump thinks it's a great idea to go all-in on a trade war, despite the fact that there's basically a consensus that trade wars result in negative economic consequences. For example, there's an overwhelming agreement amongst economists and historians that the Smoot-Hawley Tariffs made the Great Depression worse. How on earth does Trump expect to reach growth of 3%, let alone the fantastical levels of 4, 5 or 6 percent? On top of that, I can only imagine what it will do to our deficit.
It's a shame the GOP has been working double time to sabotage and undermine the Affordable Care Act. I'm genuinely concerned about their ability to receive treatment for the relatively recent epidemic that has been spreading amongst their supporters. Haven't you heard? Most conservatives have fallen ill with a severe case of sudden onset amnesia. It wasn't long ago that there were record crowds protesting our president and calling for a fiscal revolution. Rallies were held all across the country to fight the out of control spending and accumulation of debt at the hands of our government. Trump called Obama the most "profligate deficit and debt spender". Obviously, it was completely Obama's fault that a crushing recession made revenues sink and he assumed the presidency with a $1.2 trillion deficit. But what's Trump's excuse?
We've been hearing for the last 18 months that the Trump economy is full steam ahead. If that's the case, why is our deficit ballooning again? The CBO projects that this year's deficit will be over $800 billion which is almost double the low of about $438 billion in 2015 under Obama. It's like Republicans spend so much of their time when they are out of power claiming that government can't do anything right and then they take the reins and prove themselves correct by passing a tax bill that absolutely explodes the deficit. It happened with the Reagan tax cuts and again with the Bush tax cuts. You would think that the GOP would get it through their heads that making drastic tax cuts results in significant reductions in revenue. Tax cuts do not pay for themselves. This past Monday, the CBO released their June 2018 Monthly Budget Review and we are on track of bringing in less revenue in FY2018 than FY2017. That hasn't happened since 2008-2009 when we had the Great Recession, but Trump and the GOP are accomplishing this in a booming economy with full employment. I'm shocked that there are not hordes of pissed off fiscal conservatives marching on Washington.
I truly hope we continue on our current path of economic success. We've had a great run and I just wish those who credit Trump would expand their perspective a bit to tip their hats at the solid foundation that Obama handed off. Unfortunately, with Trump expanding the trade war, I don't have much faith that we'll maintain the trend. We're already past due for a recession and I fear that Trump's obsession with the trade balance will be what nudges us in that direction. I'll be delighted if I'm wrong.