Suppose we completely ignore Trump in this thread - pretend it were President Hillary in the White House or someone else, but with the exact same economic data (Dow Jones above 26,000, unemployment below 4 percent)…how good or bad is the U.S. economy right now?
Without a doubt, there are still “millions of Americans somewhere who are still suffering or not truly benefiting from the economy” - but that would always be the case no matter what. Is this a “truly” good economy or is it a mirage?
On an A-F grading scale, are we in an A- economy at the moment? B+?
Quite clearly the top line numbers are great. Inflation 0.9%, GDP growth 3.2%, unemployment 3.6%, employee income is growing, etc. You just can’t look at those numbers and conclude that the economy is doing anything other than roaring. So, A+. We haven’t seen numbers like this in a generation.
That said… How much of it is a bubble driven by high deficit spending, artificially low interest rates (if they are), and other exogenous factors? That’s really where the debate should be, IMO.
We should be very concerned that this is a debt-driven expansion. Since 2008, when interest rates were driven to zero and have remained very low since, global debt has exploded. That’s governmental, corporate, and private debt. If inflation ever shows up and interest rates start to rise it could trigger a lot of business failures and insolvencies at the local, state, and federal government levels.
So I’d say the economy is booming, but extremely fragile. It looks a lot like pre-2008, except without the room to manoever in a crisis.
The U.S. economy is booming hugely by most measures, driven in part by technology and companies like Facebook. The reasons for the boom are pretty clear. Our low interest rates might seem to imply an asset bubble, but the whole world economy is tightly linked and there is loose money worldwide, so capital continues to seek a home in the American boom. I can’t think of anything likely to stop the boom except a huge political (radical leftist policies might cause confidence to plummet) or geopolitical shock.
Interesting would be to chart a few of the most plausible paths from here; I hope the Board’s economists will present some of the likelier scenarios.
Productivity was up last quarter but has been relatively flat. We still have a bit of wiggle room to increase the labor force but not much. If the administrator puts a damper on immigration, I would expect that to limit growth in production unless we see a boost to productivity.
Debt drives expansion. There’s nothing wrong with debt per se, provided that it isn’t toxic debt.
It should also be pointed out that while wage growth is increasing at the lowest ends of the wage spectrum - a good thing - healthcare costs and real estate prices are exploding, which outpaces wage growth in a lot of cases. The post-2008 expansion hasn’t felt like an expansion for many people.
It probably wouldn’t take much of a downturn in growth to cause some serious economic distress, simply because in terms of wealth, the rich have benefited the most from the expansion.
Well, the DOW is almost certainly going to drop substantially tomorrow, but it is up. Not sure if that’s the measure it is assumed to be wrt ‘good’ or ‘bad’ though. Unemployment is certainly low.
I would say that the US is still benefitting from the fact that we are one of the best investments, world wide, so money continues to flow in, which helps. We also have put aside our snit with the EU and straightened out the whole NAFTA thing (which basically is the same as it was, but allowed Trump to declare victory). But with his tweets this weekend, Trump is upping the ante wrt China, and the repercussions of that decision is almost certainly going to sink the DOW tomorrow (coupled with the drop in oil as well of course). Our debt is huge, which is going to hurt us in the medium and long terms and will probably cripple any sort of economic expansion down the road. Everything, though, is probably going to hinge on how the trade war with China finally pans out and what we end up accepting or forcing the Chinese to concede depending on how it goes.
Personally, I give the economy a C-, but I’m not an economist so perhaps I’m missing the technical details. It seems…fragile…to me, with a lot hinging on the actions of a monkey at the controls as well as wonderful groups like the CCP who are, perhaps, even more stupid than trump is and seemingly more clueless as to what to do. Europe doesn’t seem all that strong either, South Korea is having issues, Japan is having issues, Canada doesn’t seem to be shooting up as folks predicted, nor is Australia…really, it all seems a bit like a house of cards at a time when the US has a bull in the china shop, so to speak.
The economy is great, low inflation, low unemployment, wages rising, productivity rising, labor force participation rising. I hope this shows the fretful how little the president matters to the economy.
Clouds on the horizon would be entitlements and deficits are out of control, a possible democrat takeover of congress and the presidency in 2020, conflict in the middle east could cause oil price to soar, and the biggest is that China’s growth is slowing down just at a time when they are politically consolidating power with Xie and the belt and road initiative is likely going to be a disaster.
So the president matters little to the economy, except if a Democrat takes over? Got it.
Right now unemployment is low but wages for the working class are still stagnant. I think the biggest problem is that the Republicans have eaten the seed corn. When things slow down, one tool in the box is to lower taxes to prime the pump and jump start the economy. But taxes are too low and really can’t be lowered should the economy slows down. Moreover, the corporate tax cuts did nothing to stimulate the economy, many companies simply bought back their own stock and very few invested their bonanza in equipment and hiring.
The president matters little because he can’t control fiscal policy without a huge majority in congress. If a party has both they can do all sorts of damage to the economy if they are so inclined.
You are mixing your metaphors. When the economy slows if the problem is a demand shock then the government can stimulate solely with monetary policy which is more effective. If the problem is a real shock then having a low corporate tax rate would help but in that case there is no reason to wait.
Or you can just lower corporate taxes because your corporate donors threaten to cut you off if you don’t, and then you drain the treasury without doing a whit of good for the economy.
Less than 10% of federal taxes come in from corporate tax, so probably isn’t going to have that big an effect. US corporate taxes are actually high comparatively speaking…it’s our income tax and payroll taxes that is generally where folks want to make tweaks, since they comprise over 80% of all tax revenue.
You seem to be arguing some other point than what started this discussion. The US lowering the corporate tax rate isn’t going to ‘drain the treasury’. Whether you think the current rate is what it should be is a completely separate issue, but the US does, in fact, have a higher corporate tax rate than many other countries…though, it’s complicated, since they often don’t actually pay that rate. But corporate taxes are just not a big part of the US tax revenue stream, nor really a big part of the tax revenue in other countries either.
I will grudgingly acknowledge that developments since Trump took office seem to have strengthened many economic indicators, adding fuel to what was already a strong economy under Obama.
I will also point out that the economy seemed to be sailing along at full speed in late 2007, too.
Trump inherited a good economy and hasn’t succeeded in fucking it up despite a couple of hairbrained ideas to supercharge it.
Absent a financial or geopolitical black swan, I doubt things are going to get fucked up enough between now and then to hurt him in 2020.
A dot-com or 2007 - 2008 type collapse isn’t in the cards, and the Fed should easily be able to just fiddle around here and there. The best you could have hoped for was a Bush I type recession. But there’s basically no inflation right now, which is a bit of a mystery.
The point of the OP isn’t how the economy will or won’t help Trump win re-election. (We did that one a few weeks ago.) It was to remove politics from the question of how good the economy is at the moment.
My answer: it seems good. But how it seems at any given point of time isn’t a good predictor of how we’ll view it in hindsight. Shit happens.
What do people think about the unemployment figures. What sorts of jobs have been created? I was driving about the other day, and was stricken by the number of “HELP WANTED” signs I saw in front of just about every small industry. I was mentioning that to another couple that evening, and they said something like, “Yeah, but those jobs don’t pay a living wage.” Which then led to a discussion of what constituted a living wage and how much unskilled labor ought to earn…
My ignorant impression is that MANY of the newer jobs are pretty low paying, with little promotion potential, possibly pt-time. Not exactly the basis for upward mobility and supporting a middle class existence/family. But - rather than any politics, my impression reflects my view of corporate efforts over the past decade+ to reduce workforce, wages, etc.