Best Economy Ever?

1175528394One of the many issues with our current President is that he makes exaggerated claims, and plain flat out lies. He is not the first President to do so. Yet the pace at which he lies erodes our confidence in anything he is saying. The majority of American people, including many of his supporters, agree. Those who support him look past the lies, while those who do not  use it as one of the many reasons they seek his removal. Impeachment was never going to end with his removal, though a strong turn out on November 3 could. Time will tell.

We heard many false claims at the State of the Union address. Many were about the economy.  All things being equal, a strong economy that we are experiencing is an advantage to the incumbent.

Our economy is generally strong on many dimensions. However, it is not the “best economy ever” as claimed, nor does it need to be to get an incumbent reelected. So where is it falling short of best ever, and why exaggerate about a generally strong economy?

1. Gross Domestic Product (GDP)

GDP data shows decent growth at 2.3% in 2019, but far weaker than the “4% or more” growth that was promised. Not bad, but not even on par with the Obama administration last three years. So on this dimension we are not accelerating our growth.

2. Financial markets

Year 1 of the Trump Presidency was very strong for the financial markets, year 2 was very weak, year 3 very strong. All in all, the growth of the combined 3-year period was good, but not historic. It was surely good for those of means who are investing. But remember participation in the growth in the financial markets is far more relevant to those of means. A strong stock market put few $ in the pocket of an hourly worker with no/little investments. I never bought “trickle down” even a little bit. And here too market growth is less than in the Obama years.

3. Employment

Here there is a very good story with unemployment at 3.5%. This is a 50 year low. Most people who seek a job can attain one. Alas most job growth is on the low end/minimum wage type. That’s OK particularly as minimum wages have risen in many geographies as many states have come face to face with the inequities of historically low minimum wages.

4. National Debt

This is an issue we have chosen not to solve, at least yet. $1 Trillion+ annual debt and rising is an issue that needs to be solved. The hocus pocus of the 2017 Tax Cut was that economic growth would fuel increased tax revenues. It was a bogus assumption, and we all knew it. So national debt is an issue our next Administration will need to deal with, whether there’s a new Administration or not.

So, the real answer to the question how the economy is doing is measured by the pocketbook of the U.S. citizens. There’s a mixed story. The wealthy are doing very well (see #2) but the gap between rich and poor is increasing. That’s a real problem. Many people are still struggling paycheck to paycheck to make ends meet. The level of poverty is not declining.

So how are we really doing? Good. OK enough to re-elect the President? Perhaps, but there will be several other issues (like healthcare) that will play a role. But best economy ever? Nope.

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