Only a few weeks ago, if you listened to the Democratic political operatives in the mainstream media – er, I mean “journalists” – the US economy was collapsing, spiraling into a recession, and President Trump’s “only” accomplishment was going to be a giant dumpster fire heading into the election.
Back in September, I dropped my basket on registered-Democrat family members (yeah, I actually have a few of those, believe it or not) on this very topic. Recessions do not sneak up on you absent some life-altering global catastrophe (and if one of those occurs, it will not be a subject of partisan debate). You do not see freeways packed with Amazon and Target semi trucks and restaurants with lines out the door when the economy is in turmoil. People you know start getting laid off and saving every penny they have.
It’s the dumbest of dumbass political talking points in a year with no shortage of spectacularly dumbass talking points. And, in general, it’s a bad idea to get your financial markets commentary from millennial journalism majors with six figures of student debt. Yeah, I know that’s cruel, but so is outright lying to people about the state of the economy so your lefty political lords will pat you on your head.
So here we are at the end of 2019, and GDP figures were just revised upward. That’s despite a 40-day strike at Government Motors and the grounding of Boeing’s 737 Max airliner, both major employers with a major impact on the economy.
Literally every asset class has proven to be a winner this year, which is an unbelievably rare event in the financial markets. The highest-returning asset was crude oil, in a year when the United States finally became an energy-independent net exporter for the first time in 70 years.
The S&P 500 is up more than 25% this year. The tech sector is up over 40% this year. Communication services, industrials, financials, real estate, and consumer sectors are all up more than 20% this year. No kidding, we could have a repeat of the Great Recession and the stock market would still be in positive territory – that’s how well the market has performed under Trumponomics.
Oil, gold, and corporate bonds have all returned double-digits this year. You’d actually have to work hard to lose money in this market (but I’m sure some hedge funds have managed it, lol).
And at this point, you have to be brain-dead to think tax reform has not had an incredibly positive impact on domestic investment and employment.
It is no exaggeration to say that we are currently living in the strongest labor market in the history of the United States. Unemployment is at historic lows and wages have finally started to grow under President Trump in the first sizable increases since the financial crisis in 2008. (And no, the financial crisis was not an example of a recession that sneaked up on the country. The country was already in a recession in 2007. The financial crisis was a quite predictable puke, and betting against real estate minted a number of billionaires.)
Most of the benefit from wage growth under President Trump, moreover, has been in the lower half of earners in the country, not the self-proclaimed elites (see the chart below from Goldman Sachs). When Emerson polls tell you that more than a third of black voters now support President Trump, look at the inversion here in hourly earnings growth beginning in late 2017 – early 2018. And the trend is persistent. Income inequality has decreased under Trump, not increased. Unless you think statistics from the federal Department of Labor are a vast right-wing conspiracy (and I’m sure MSNBC can find some panelist to argue as much).
But probably a third of the country – the same people who have spent well over a hundred days now bitching and moaning about a ten-minute phone call, nuking millions of taxpayer dollars in the process – think the country is in the throes of some economic Armageddon. They truly believe this garbage…. as they go out and buy a new iPhone or a $50 metal thermos for the sake of conspicuous sustainability (the struggle is real).
When this country does eventually experience a recession – and there’s no telling when that will be, as there is no law that expansions have an expiration date and the US has already proved incredibly resilient to global economic headwinds – these folks are really going to get a lesson in economics. Because, baby, this is as good as it gets.
One can only imagine that this delusion belongs to a very small portion of the electorate, considering that Baby Yoda now has more social media interactions than the entire Democratic field, and it isn’t even close. Not even Hunter Biden knocking up a stripper in flyover country while simultaneously banging his brother’s widow and then claiming in court filings that he’s broke and can’t pay child support, even though everyone knows a corrupt Ukrainian company was paying him at least $50,000 a month and that’s no malarkey, can get people to care enough about Democratic candidates to chatter about them on social media. That’s a fine proxy for how well the doom and gloom is selling (graphic courtesy of Axios), and that’s pretty much the only public policy suggestions they have.
Americans are headed into what should be a financially merry holiday season. I’m not sure toxicity is going to be a winning strategy politically. But I do look forward to watching them try.