There’s one thing that frustrates me more than anything — when constituents like to blame (or credit) economic performance on a President.
Since World War I, every Presidential administration presided over periods of growth and contraction. (Well, everyone except Lyndon Johnson). There have been various causes for recessions. Some include the bursting of speculative bubbles, bank runs, and changes in monetary policy. I find affixing blame or credit to a President to be foolish political fodder. Doing so only spreads ignorance instead of enlightenment.
I’m probably the only Democratic-leaning voter that actually does not blame Bush for the Great Recession. The Great Recession was an exercise in many things, but it was chiefly the result of the expansion of subprime mortgage debt (and consequently, the explosion of household debt). Even former Federal Reserve Chairman Alan Greenspan admitted in September 2007 he didn’t anticipate how bad of an effect the it would have.
Obama didn’t necessarily “handle” or “mishandle” the economy. Recovery was indeed sluggish at least in comparison to previous years; but I would affix that to psychological factors.
Both the left and the right have posted articles that have irked me in recent years. “It’s Bush’s fault!” “It’s Obama’s fault that the economy is sluggish.” The bullshit was never ending.
But hoo-boy. The post that was shared by a friend of mine on Facebook probably ranks as, by far, one of the stupidest I ever came across.
Joe Hoft — a self-described “International Financial Executive, Author, and Patriot” is your typical tribal conservative. If you go to his website, you’ll see a nice big American flag on top of various squared pictures of landmarks from around the world, such as the Sydney Opera House and The Great Wall of China. His content is typical tribal conservative fodder. Some people eat it up. If you do, more power to you.
The introduction was enough of a facepalm in itself:
President Trump’s first year was Historic! Never before has a President done so much for the economy. The stock market is at an all time high, there are more people working than ever before and the nation’s GDP has never been higher. Never before has a first year President done so much for the economy!
It’s hard to say he’s done anything. Maybe psychologically? Who knows? Moving on…
President Trump’s first year in office resulted in the greatest year in stock market history! The Dow ended up nearly 5,000 points for the year which was the highest increase in the Dow’s more than 100 year history. The Dow reached all-time new highs a record 71 times in 2017, breaking the record for the most all-time highs in a calendar year set in 1995.
This is sign of an overvalued market — something a few people have argued in favor of and against. I lean towards believing that the market is overvalued. Luis Zambrano over at Seeking Alpha wrote a wonderful treatise as to why using historical S&P, corporate earning, US dollar index, and other data to justify his conclusion. From an armchair stand point (I only have a bachelor’s of business in finance), investors have spent most of the year being bullish on tax reform. Without it, Goldman Sachs analyst David Kostin claimed a couple of months before Trump signed the tax cut into law, the market is overvalued. If anything, this more about psychology than real action.
Other things that were noted:
- Hoft wrote about the 1.9 million jobs that have been created this year. That’s slower than the pace set in recent years. However, that slower pace is to be a given because the US economy has reached full employment. Trump has not implemented any serious policy changes that could have had any immediate effect. If you want to give anyone credit, it should be the Federal Reserve for not trying to overly tighten monetary policy as the central bank relaxed post-Great Recession stimulus programs.
- He made a snarky remark in response to a comment former President Barack Obama made at a 2016 town hall that some jobs were not coming back (shortened to “jobs aren’t coming back” in conservative click bait headlines). This was largely in reference to manufacturing jobs. The truth is…no, they’re not back. Manufacturing jobs peaked in 1979, have declined since then, and will continue on a permanent downward trajectory as controlling labor costs continues to be a key financial performance benchmark.
- The GDP comment was probably the silliest. While Hoft correctly noted that annual average growth under Obama never reached 3%, the economy was far from being in a quagmire. However, there are numerous factors that contribute to GDP growth. Historic GDP growth rates have been higher (and more volatile). I mean hell, quarterly GDP in the past few years has been volatile. But correlation does not necessarily mean “credit” or “blame”. The most important thing that a President can do when it comes to the economy is not make mistakes. Despite three periods of contractions since 1988, the economy has indeed still expanded. The story going forward, however, will be income inequality, household debt, and consumer saving.
I don’t quite know why I wasted time on what was utterly a dumb post. You can read it for your self and see many things that could be debunked when context is thrown in.
However, the main takeaway is this: every President experiences economic peaks and valleys! Like I said, the only President not to experience a recession since since World War I was Johnson! I hope in the next few years going forward that this cultural practice eventually dies off.