FLASH: The notion that Mr. Hussein Obama is responsible for today’s good economy is Bunk!.
The US robust economy is the best it has been in more than 10 years, it is due entirely to President Trump’s policies which include shedding the former president’s policies.
Fact: Had Mr. Hussein Obama done nothing, the economy would have been in much better shape, as his policies resulted in the slowest US recovery in history .
When Mr. Hussein Obama entered office, the economy was in the middle of a severe recession mostly triggered by the 2007-08 financial crisis. In the past when the economy entered a deep recession, government policy is geared to increase growth, and the economy recovers quickly.
After the deep recession in Y 2009, Mr. Hussein Obama took action to cure what he perceived as social injustices, instead of stimulating growth. The result was that the economy never reached 3% growth.
He convince Congress to pass a massive spending bill. The bill did not stimulate growth. It did increase the annual deficit from $455-B in Y 2008 to $1.4-T in T 2009. The US is still struggling to get the annual deficit down.
Mr. Hussein Obama’s stimulus package increased unemployment compensation for the unemployed, increased spending on food stamps and welfare and provided healthcare for the unemployed. The effect was to allow workers to stay unemployed for longer instead of seeking employment, and slowed economic growth.
Mr. Hussein Obama said it was an injustice that all Americans did not have health insurance. And he convinced Congress to pass the Affordable Care Act (ACA).
Note: There were 21 new or increased taxes in the ACA. Those taxes reduced disposable income and further slowed economic growth.
Plus, the ACA eventually required all employers with at least 50 employees to provide health insurance for all employees who work at least 30 hours per week, or pay a fine in excess of $3,000 per employee per year. This added to the cost of labor for business and further slowed economic growth.
Mr. Hussein Obama said it was an injustice that banks took advantage of lower-income borrowers by granting mortgages the borrowers simply could not afford. He apparently believed this is what caused the financial crisis. To stop this kind of lending, Mr. Hussein Obama convinced Congress to pass the Dodd-Frank bill. The law eliminated predatory lending, and it reduced all bank lending.
Fact: when banks are not lending there is no multiplying effect of monetary policy. This minimizes the impact of the vast increases in the money supply. That added to the slowed economic growth.
Mr. Hussein Obama said it was an injustice that business took advantage of consumers. And so, he imposed thousands of new regulations on business which he said would protect consumers. These regulations added to the cost of business and further slowed US economic growth.
While economic growth hit 2.9% in Y 2015, the best growth rate during the Hussein Obama administration, growth slowed to 1.6% in Y 2016. During Q-4 of Y 2016, growth slowed to 1.2%, and the US economy was heading for recession.
Had Mr. Hussein Obama done nothing and not passed any legislation, economic growth would have been much better.
Every action Obama took, tended to slow economic growth. But the actions did tend to cure his perceived social injustices.
In January 2017, President Trump entered the Oval Office. He immediately eliminated thousands of counter-productive and growth-slowing regulations, and growth increased to 2.4%.
President Trump convinced Congress to cut taxes for all Americans. This increased spendable income for consumers and increased capital formation for corporations, and increase economic growth so that in Y 2018 growth increased to 2.9%. Had the Fed not increased interest rates 8X from the end of Y 2016 to the end of Y 2018, growth would have easily exceeded 3%.
President Trump also convinced Congress to repeal the growth stifling portions of Dodd-Frank.
Last year, the Fed cut interest rates 3X and stopped their policy of reducing their balance sheet which shrinks the money supply. This, coupled with the Fed’s realization that raising interest rates was counterproductive, is leading to higher growth this year.
This economy, with higher growth, lower unemployment, rising wages, and reduced income inequality is all a result of President Trump’s growth driving policies.
Again, the notion that Mr. Hussein Obama is responsible for today’s good economy is Bunk!
Highlights from today’s economic reports
- The Conference Board’s Leading Economic Index (LEI) increased 0.8% in January (consensus 0.4%) after decreasing 0.3% in December.
- The Key takeaway from the report is that it showed positive contributions from almost all components after the headline reading decreased in 4 out of the last 5 months.
- The Philadelphia Fed Index for February spiked to 36.7 (consensus 10.7) from 17.0 in January.
Thursday, the major US stock market indexes finished at: DJIA -128.05 at 29219.89, NAS Comp -66.21 at 9751.00, S&P 500 -12.92 at 3373.23
Volume: Trade on the NYSE came in at 926-M/shares exchanged
- NAS Comp +8.7% YTD
- S&P 500 +4.4% YTD
- DJIA +2.4% YTD
- Russell 2000 +1.7% YTD
HeffX-LTN’s overall technical outlook for the US major stock market indexes is Bullish to Very Bullish in here.
Looking ahead: Investors will receive Existing Home Sales for January Friday.
Making and Keeping America Great!