by Rick Manning
The incredibly positive economic data that keeps coming out from both private and public sector sources leads to one overriding question: Will the Trump economic detractors ever get tired of being wrong?
Over the course of the past six months, we have heard how tariffs against the Chinese would be passed along to the consumers in higher prices — yet the just released inflation data from the Labor Department’s Bureau of Labor Statistics shows that last month the Consumer Price Index increased a seasonally adjusted 0.2 percent for all items with the past six months showing a paltry 0.8 percent increase for all items.
The Federal Reserve target for inflation growth is 2 percent per annum and the past six months are tracking twenty percent below that target.
This is great news for the U.S. economy. Particularly when paired with BLS wage data which shows that wages have risen faster than inflation over the past year. Here is what the BLS report says: “Real average hourly earnings increased 0.2 percent, seasonally adjusted, from August 2017 to August 2018. The change in real average hourly earnings combined with the 0.3-percent increase in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period.”
This isn’t political hyperbole, but a real economic fact. On the whole, America has gotten a 0.5 percent raise over the past year as the Trump economy begins to kick into high gear. While this is not a huge amount of money, $5 for every $1,000 earned, it is a corner turned away from the stagnant wages of the past couple of decades.
If, as the Atlanta Federal Reserve’s GDPNow model for U.S. economic growth estimates, the nation’s economy grows at 3.8 percent for third quarter, it should give pause to the monetary interventionists at the Fed before they do any more interest rate tinkering.
Americans for Limited Government’s Vice President of Public Policy Robert Romanopoints out that even then it is not a slam dunk that our economy will grow in 2018 at the 3 percent level which used to be the norm due to the low growth number of 2.2 percent recorded in the first quarter.
Assuming the 4.2 percent Q2 growth rate estimate holds firm, the economy would need to grow by just shy of 4 percent in the third quarter in order for it to only need to record 3 percent growth in Q4 to reach that same 3 percent for the entire year. If the Atlanta Fed GDPNow model is right, America’s economy still needs a lot of work to get to what in golfing terms would be par.
All the economic numbers aside, the just invented by me BHO Index is perhaps the most telling indicator of how the economy is faring nationally and anyone can calculate it. To calculate how the economy is doing using this groundbreaking new analytic, all you need to do is listen to the latest speech of former President Barack Obama, and if he blames Trump for the economy, you know it is failing, but if as Obama did in his recent speech in Illinois, the former President takes credit for the economy, then you know it is booming.
Perhaps President Trump’s detractors should take their lead from Obama and at least have the intellectual honesty to admit that the economy is faring pretty darn well, and rather than trying to nitpick the numbers, look at what is going right and why, so they have credibility when they complain about those areas that are still lagging.
Maybe if they move past their blind hatred and fear of Donald Trump, they will find that his policies of lower taxes and regulations combined with an aggressive restructuring of our trade relations around the world have turned around an economy that has been stuck in a bi-partisan malaise for the past twelve years.
But this will only occur when these pundits and experts tire of constantly getting things wrong. Unfortunately, in Washington, D.C. and in other elite circles on both coasts, getting it wrong about President Donald Trump remains a thriving cottage industry as partisans on both the right and left desperately seek to defend their economic dogmas against the Trump results-oriented agenda.
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Rick Manning is the President of Americans for Limited Government.