The American economy had been growing rather slowly, since the economic recovery beginning in 2009. Many pundits and politicians claimed a growth rate of 2%, was the new norm for an advanced economy, like the United States. The election of President Trump in the November elections of 2016, has changed that paradigm, as the domestic economy comes roaring back.
The Trump growth agenda was relying on two basic principles. These were business deregulation and a massive tax reform, which would end up lowering taxes on both individuals and corporations. The combination, has powered a surge in new economic growth.
The results can be seen in the United States reclaiming its number one spot after ten years, as the most economically competitive nation globally.
The United States has once again, pushed ahead of Singapore, Germany, Switzerland and Japan in respective order.
The World Economic Forum in reporting the resurgence of the United States economy, attributes the new competitive status, to a vibrant entrepreneurial culture, the strong labor market and its sound financial system.
Trump speaking to automobile workers in Michigan, March 2017
Overall satisfaction among Americans with the direction of the country, is now at a 12 year high.
As to be expected, those voters who identify as Republicans, are near 90% in their support of President Trump. Much of that enthusiasm is no doubt, based on the resurgence of economic growth.
The opposite is true for the Democratic Party, where support of the President is at abysmal levels.
American GDP (Gross Domestic Product) growth has been rather sluggish, since the end of the financial crisis and the Great Recession in 2008 and 2009. There had not been a single occurrence, that growth reached at least 3% for the entire year.
Comparison of the contributions to real GDP growth from major GDP components in Q2 2018 vs. an average from Q1 2014 to Q1 2018.
Growth for the second quarter reached 4.2%, the highest rate of expansion since 2014. This was after an increase of 2.2% in the first quarter. More importantly, the forecast is for at least 3% growth for the next quarter. This makes an annual rate of 3%, far more likely for 2018.
The stock market has seen gains well over $11 trillion USD (United States Dollar), since the election of President Trump. Since his inauguration, the Dow Jones Industrial Average is still up +28%, the S & P 500 remains higher by near +22% and the high technology composite the NASDAQ, near 35%.
Corporate revenues expanded over 20% on an annual basis, with profits up over 17% in the last year.
Unemployment in the United States, is reaching historical lows. It has now dipped to just 3.7%, which is considered by many analysts, to actually be full employment. It is at a 45 year low. There has now been a total 116 months of private sector job growth.
Joblessness in the minority community, has dipped to unprecedented levels. African unemployment is at the lowest point, since the statistic was created in the 1960’s.
Unemployment for adult Hispanics first tracked in 1973, dropped to 4.6% in July, the lowest rate on record. As a comparison, the rate of joblessness for Hispanics under President Obama, was more than double the present level, at a punishing 9.4%.
Among women, unemployment has dropped to its lowest level in 65 years. Youthful unemployment (those aged 16 to 24) at 9.2%, was at the lowest point in 52 years this past summer.
Voters over time, are giving President Trump increasingly more credit for the robust economy. It has now reached at least 50% of the electorate. Yet, near 40% will still insist, it has more to do with the economic policies that former President Obama had put in place.
Self-identified Democrats (blue) versus self-identified Republicans (red) (January–June 2010 data)
Political support for Trump in the minority precincts, have increased dramatically. From the 2016 election, it has gone from 28% to 39% among Hispanics. A recent poll, put approval for administration policies among this group at 47%.
Support from African Americans has been even more striking. It went from 15% to 29%. Some recent polls have it as high as 36%.
There has been an amazing 400% increase in black ownership of businesses, under the Trump Administration.
Unemployment for women in the United States, has inched down to 3.6%, the lowest rate in 65 years.
If the present upswing in minority support, proves to hold true through the 2018 elections, it makes a Republican hold in the Congressional elections,much more possible. The main stream media narrative of a political Blue Wave (strong voter support for Democrats), will prove to be just a fantastical myth.
Logo of the American Democratic Party
It is already seems quite certain that not only will Republicans hold onto their present control of the Senate at 51 members, but are likely to grow their majority by several more.
The near toxic political environment, is the reason that a large number of voters refuse to give more credit to the current President, for the present upswing in the economy. The majority of them are current supporters of the Democratic Party and some independents.
After the 2016 election, if the economy had headed for recession instead of growth, there is no doubt that these voters would have laid near 100% of the blame on President Trump. That is why one can easily determine, that their current position is based more on politics, than economic considerations.
Line chart showing unemployment rate trends from 2000-2017, for the U3 and U6 measures.
There has been the creation of 4.2 million new jobs, in a little over 18 months. In 2018 alone, an average of 215,000 jobs have been created monthly. Total employment in the United States is now at 156 million, the highest on record. Worker participation is at 62.7%.
There has been 96 consecutive months of job growth in the United States.
Although some pundits will argue that although the employment numbers do look good, it is the type of jobs being created, that leads one to have cause for concern. They insist that most of the new opportunities, are in the lower paying service industry. Again, the evidence indicates the opposite.
There has been an expansion of over 600,000 jobs in manufacturing, alone. The return of jobs in this sector have particularly, taken a number of skeptics by surprise.
Former U.S. President Obama.
There has not been comparable monthly growth in this sector, for a total of 14 years.
When referring to employment in manufacturing, former President Obama himself stated emphatically “Those jobs aren’t coming back”. He went on to ridicule anyone, who believed otherwise. Yet, the growth in this sector is now eight times the rate, that existed under his administration.
For the electorate, it is often the perception of how the economy is doing, that is important. In 2011 for example, 83% of all Americans knew someone in their circle, who was looking for a job. Last November, a year after the election of President Trump, that number had dropped to 53%. The current statistic is 46%.
Not surprisingly,job satisfaction among American workers reached 51% in August, the highest rate since 2005.
Amazingly, there are now more employment opportunities available in the United States at 7.136 million, than current job seekers at 6 million. This phenomena measured in the Job Openings and Labor Turnover Survey (JOLTS), started six months ago and is now at its highest level ever, as the American labor market continues to tighten.
In the fast growing states of Florida and Texas alone, each of them created more than 400,000 jobs in the last 12 months, an all time record.
Long stagnant individual wages have finally started to rise, along with gains in productivity. They are now growing at 2.9%, the highest rate since 2009.
U.S. real median household income (1984–2016)/
The United States Census Bureau has recently released data, that shows the median household income climbed to $61,000 USD last year, back to levels not seen since before the 2008 financial crash.
Consumer confidence hit a 18 year high as of September and is still rising.
Correspondingly President Trump reached a 47% approval rating among Americans, higher than President Obama at this point in his Presidency.
The longest running business cycle in the United States ever ran from March 1991 to March 2001, for an amazing 120 months,with an annual growth rate of 3.6%.
Deficit and Debt Increases 2001–2016.
The last recession ended in June 2009. Since last spring, the present economic recovery has been the second longest on record. If growth continues to July 2019, it will be the longest run of an American business cycle since records have been kept, dating back to the 1850’s.
There is however, a number of factors that will have a growing impact on future growth in 2019. Together, these can derail the economy, despite its present strength.
Personal and corporate tax cuts with ever higher government spending, is adding to the rapidly expanding federal debt. If you add in the fading boost from fiscal stimulus and ongoing higher interest rates collectively, these trends are putting an ever increasing burden on domestic economic growth.
Abroad there is a slowing global economy, caused by a higher valued American dollar which is compounding debt issues in emerging markets. Rising disputes in the arena of trade, is raising concerns among investors almost everywhere.
These international events will sooner or later, wash up on American shores.
However, for the present, the American economy remains the envy of the world and continues to outperform competitors, as well as analyst expectations.