While the media moans and hand-wrings over the latest Tweet from our socially-active President, they continue to miss the biggest stories of the day.
Thursday’s moves marked the latest feat for a rally that has repeatedly wrong-footed skeptics and sent stock indexes around the world to multiyear highs. The Dow industrials hit five thousand-point milestones last year, the most such records in its 120 years…
“The turn of the calendar year doesn’t change the dynamics of economic growth and earnings growth,” said Kate Warne, investment strategist at retail brokerage Edward Jones. “We shouldn’t be surprised that markets continue to move higher because fundamentals continue to be positive and investor optimism is actually improving rather than investors becoming more cautious.”
Now, to be fair, i’ve always argued that the President has relatively little to do with how well/poorly the economy does. However, President Trump may be proving this belief wrong. Normally, we would say that the legislature has a far greater impact on how the economy is performing than the President does. For Obama to wreak havoc on our economy, he needed a Democrat legislature to rubber stamp his agenda (which they did). But for Trump to solve many of our economic ills, it seems the most important ingredient that was needed was his force of will.
From the day after he was elected, the economy has shown signs of life that we’ve not seen for over a decade. The economy has been growing at a brisker pace than at any time under Obama or even under the last few years of George W. Bush. Much of this is thanks to the fiscal promises that President Trump has made. He promised to cut regulations, he promised not to raise our taxes, he promised to cut our taxes, he promised to support increased competition in the marketplace, he promised to defend American trade interests, and he promised that unlike the Obama administration, his administration would always be pro-growth and pro-business. All of these factors combined to make the economy more secure and more ready to invest than it had been in over a decade.
Now, the legislature’s move to support the President’s policies by cutting taxes for 85% of Americans and making our business tax rate far more friendly have added to the economic momentum and making 2018 look very promising indeed.
In fact, December posted another strong month of new jobs and the unemployment rate continues to collapse. The private sector added 250,000 new employees to the rolls in December, blowing past the economic estimates and proving that once again our economy was being underestimated:
Companies hired 250,000 new workers to close out the year, well above Wall Street expectations of 190,000. The month was the best for job creation since March and topped the 185,000 in November, a number that was revised lower by 5,000.
The total brought 2017’s private payroll growth as gauged by ADP and Moody’s to 2.54 million, an average of 212,000 a month.
Job growth was broad-based, as professional and business services led the way with 72,000 new positions. The education and health services sector was next at 50,000 and trade, transportation and utilities contributed 45,000. Wall Street-related payrolls grew by 19,000…
By size, businesses with between 50 and 499 employees added 100,000 jobs while small firms hired 94,000 and large companies contributed 56,000 to the total.
But 2017 has an even more amazing number to describe how well the economy has been doing of late. Companies cut fewer jobs in 2017 than in any other year since 1990
U.S. employers announced plans to cut 32,423 jobs in December, bringing the year’s total to a low not seen since 1990, global outplacement consultancy Challenger, Gray & Christmas reported Thursday.
“The tight labor market, coupled with uncertainty surrounding health care and tax legislation, possibly kept employers from making any long-term staffing decisions this year,” CEO John Challenger said in a statement.
If the economy can continue its strong run in 2018, and the GOP can continue pursuing pro-growth policies, the Democrats will be hard-pressed to win the midterm election in November. While things seem favorable for the Democrats now, a roaring economy usually makes voters slow to change political leadership. What it means is that the GOP should continue to look for ways, both big and small, to free up our economy and allow the American people to show how prosperous we can be.