May 4, 2018

Economic highlights are indeed highlights

The latest economic data should hearten Americans that president Trump's Tax Cuts and Jobs Act of 2017 is working quite well thank you. Firstly the job situation is in fantastic shape.
The US unemployment rate fell to 3.9 percent in April 2018 from 4.1 percent in the previous month, and below market expectations of 4 percent. It was the lowest rate since December 2000, as 236 thousand people exited the labor force. The number of unemployed decreased by 239 thousand to 6.35 million and employment was almost unchanged at 155.18 million. Unemployment Rate in the United States averaged 5.78 percent from 1948 until 2018, reaching an all time high of 10.80 percent in November of 1982 and a record low of 2.50 percent in May of 1953.

And it's even better news in minority communities;
The unemployment rate for black workers dropped to 6.6 percent, beating the previous record low of 6.8 percent set in December.

The jobless rate for Hispanics fell to 4.8 percent, tying the record reached last year and in 2006.
Further, the United States is on the right path to become an energy super-power as well;
As global oil markets shift their attention from U.S. shale oil production back to a resurgent Saudi Arabia and Russia and geopolitical concerns bearing down on oil prices, Citigroup said last Wednesday that the U.S. is poised to surpass Saudi Arabia next year as the world’s largest exporter of crude and oil products.

The U.S. exported a record 8.3 million barrels per day (bpd) last week of crude oil and petroleum products, the government also said Wednesday. Top crude oil exporter Saudi Arabia’s, for its part, exported 9.3 million bpd in January, while Russia exported 7.4 million bpd, the bank added.
Even GDP

GDP is the ultimate indicator of economic success or failure.  While U.S. GDP results have lagged a bit behind expectations of late (achieving only a 2.3% growth in Q1 of 2017 versus 2.9% in Q4 of 2018), they are on track to blow past the 3% target set by president Trump, far exceeding the results of his predecessor.  That's not a partisan claim.  Hillary Clinton backer Warren Buffet says things are a lot rosier than the current GDP picture is indicating.
Warren Buffett, billionaire investor and CEO of Berkshire Hathaway, believes the economy is growing faster than 2 percent.

"The last seven or eight years have averaged 2 percent roughly," he pointed out in an interview with CNBC's Becky Quick that aired on Friday. "It's stronger than that right now."

But he said, "There's no way to calibrate it. They [the government] have their own problems with seasonal adjustments in the first quarter."
There's more.  The trade deficit narrowed by 15% in March. With wage growth stalling however, inflation becomes less of a concern and therefore a Fed rate hike is less urgent and therefore less likely to be something that puts a brake on the economy.  

President Trump faces an entirely different situation that president Obama faced.  Despite being blessed with near zero interest rates president Obama presided over an anemic GDP growth of below 3%, making him the first president ever to achieve that ignominious result.  Not only were Obama's results abysmal, they were 'achieved' during the most lenient monetary conditions ever enjoyed by an American president.  In other words he was an anchor on the economy.

President Trump was elected because at some visceral level, Americans understood this failure under president Obama.  President Trump will not fall into that same malaise category as did president Obama and therefore his presidency will be seen as a success beyond what he has so far achieved.

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