The state of our economy
By Patricia Patnode
Coronavirus has ushered in the end of an eleven-year bull market. Panic on Wall Street is rampant and investors are terrified. There is a lot to be concerned about, however, the fundamentals of the U.S. economy are strong, putting us in a hopeful position as the country faces the pandemic crisis.
When looking at the US economy, it’s easy to cherry-pick different numbers, averages and features of our monetary mechanisms to suit their opinion much like any other subject. However, when looking at the economic data, it is impossible to deny the good place that the United States economy is in right now.
The economy rises and falls according to the global market, labor force availability and thousands of other indicators. Fundamentally, all markets are mirrors of human behavior. For example, if people are afraid of traveling to China because of the Coronavirus, then that fear will be reflected in the market for plane tickets and other tourist services. Similarly, markets are greatly impacted by the regulation of a country’s government.
So what exactly has happened in the past four years since President Donald Trump took office? Lost in the wake of his loud tweets and political drama were massive changes to U.S. tax code and economic policy. In 2017, President Trump signed the Tax Cuts and Jobs Act which has increased the expensing limit for small businesses and incentivized owners to invest in their company through equipment, transportation or other asset purchases. The corporate income tax rate was also cut, making the U.S. tax rate drop below other international competitors. Additionally, small businesses were granted a 20 percent deduction on pass-through income.
Currently, U.S. unemployment sits at 3.6 percent, a 50 year low; about 7 million jobs have been added since 2017 and we have the lowest unemployment rate for Black, Hispanic, and Asian Americans in history. U.S. average hourly year-to-year wage increases took a massive hit between 2008-2009, but now they are finally returning to their pre-crisis level at above 3 percent change increase year-to-year.
The Bureau of Labor statistics also measures that attitudes of business owners and small business optimism broke a 35-year record in 2018 and still remains very high.
Everything described paints a very hopeful and successful economic picture. Still, some speak of an impending recession, claiming that optimism and this period of growth can’t last. Many are still skeptical from 2008, wary that any economic success is a Trojan horse carrying another disaster like the loan crisis that sent us spiraling over 10 years ago.
The U.S. economy at the beginning of the Trump Administration was still slowly climbing out of the 2008 market disaster. By 2017, the Trump Administration implemented meaningful legislation to make the economy more competitive through the Tax Cuts and Jobs Act and waged war on hundreds of U.S. regulations, maintaining the impressive ratio of repealing eight regulatory rules for every one passed.
It would be wrong to say that the economy under Trump is a result of the economic policy of the Obama Administration, as Trump has fought Obama’s economic, healthcare and trade policies since inauguration. Still, the economy was beginning to recover under the Obama administration, so it would be a fair analogy to say that President Trump took the ingredients that Obama bought, then made a cake, hosted a party and gave everyone who attended a check.