Economy is Booming, but Deficits are a Concern
Reno Gazette Journal September 15, 2019
The August jobs report showed that the US economy has created over 6.3 million jobs since President Trump took office. 4.2 million more Americans have entered the labor force since January 2017. Unemployment rate stands at 3.7%, and the stock market has gained almost 50% since election day. Nearly 7.5 million fewer Americans are on food stamps since President Trump took office. By every single measure, the Trump economy has been great to Americans.
During President Obama’s two terms, the growth was anemic at 1.9% a quarter on average, compared to 2.6% under President Trump (Source: Bureau of Economic Analysis). Household income rose just 0.6% a year on average under President Obama while it is rising at 1.1% under President Trump (Source: St. Louis Federal Reserve). Under President Obama, Labor force participation (percentage of American civilians over 16 who are working or looking for a job) hit levels not seen since President Jimmy Carter called 1600 Pennsylvania Avenue home. Since President Trump took office, 4.2 million more Americans have entered the labor force (Source: Bureau of Labor Statistics). Consumer Confidence Index which rarely touched 100 under President Obama now stands at over 135 as more Americans feel positive about their financial condition (Source: The Conference Board). Walmart sales have been increasing at a rapid pace, a clear indication that the Trump economy is benefiting the lower end of the economic spectrum.
A strong economy is the foundation for a strong country. President Reagan used America’s economic strength to bait Soviet Union into an arms race. Unable to keep up, the Soviet Union collapsed. President Trump is taking a similar approach with China. China is a different beast and it is highly unlikely that it will collapse but our actions have clearly disrupted the supply chain and has led to many major corporations shifting operations out of China and into other geographic locations. Toymaker Hasbro, Bath & Body Works parent company L Brands, and fashion designer Steven Madden have all recently outlined plans to substantially reduce their dependence on Chinese manufacturing in the next few years, according to CNBC. All that on top of Apple, Dell, HP and Google who have already announced such moves. As I outlined in my column in late-May, trade war is a strategic opportunity for the U.S. to curb China’s rise and a strong economy is key to winning that war.
One final point: President Obama added $8.6 trillion to the national debt. President Trump is expected to add $5 trillion in just his first term. That is an average budget deficit of over a trillion a year. The federal government should learn to live within its means. Deficit spending (“generational theft”, as the late Senator John McCain called it) is one of the few things that is bipartisan in Washington, D.C.
Having said that, for fiscal discipline to be successful, it must come from both sides of the political aisle. Nevada is an excellent example where one-sided fiscal discipline has proved to be a massive failure. Governor Sandoval did the responsible thing and built up the rainy-day fund. Governor Sisolak has conveniently raided that fund to increase his spending. As long as the liberal tax-and-spend behavior continues, there will be no incentive for Republicans to show fiscal restraint.