President Trump’s Policies Restore Economic Prosperity
After about 19 months in the Oval Office, US President Donald Trump’s economic policies have begun to return the US to real economic prosperity.
The U.S. Bureau of Economic Analysis (BEA) announced that in Q-2 of this year GDP grew at a 4.1% annual rate.
It has been 13 years since the US economy has had annual growth of at least 3%, which is still below the long term US average growth rate. It has been nearly 20 years since the annual growth rate was at least 4%.
That represents the longest period of economic stagnation in US history.
In fact former US President Barack Hussein Obama is the 1st President in history to serve a term in office without having at least 1 year where economic growth was at least 3%. Mr. Hussein Obama averaged economic growth of just above 2% annually, claiming that this was his “new normal.”
The poor growth has caused numerous economic and social problems.
For the last 10 years recent college graduates had a difficult time finding at least one good job offer. Many new college grads were forced to accept positions for which they were over qualified and did not need the expensive college degree.
Because the grads accepted these jobs, workers with less than a college degree saw no opportunities. Millions of these workers became discouraged and dropped out of the labor market, resulting in a record low labor force participation rate.
The poor economy led to worker dissatisfaction for those underemployed and a reliance on government assistance to simply sustain themselves, for those discouraged workers. This eventually angered those people which helps explain why there is so much anger present in the US today.
Fortunately, President Trump has made economic growth his top priority. His efforts are paying off.
Mr. Hussein Obama’s poor economic performance was due to a different set of priorities. His Top priority was to cure perceived social injustices, rather than setting growth as the Top priority.
Mr. Hussein Obama believes it is injustice that every American did not have health insurance, that is was an injustice that food stamps and welfare were not more widely available.
He believes that it is an injustice that some workers made 100X’s more than other workers. That is is an injustice that big banks were able to grant mortgages and loans to people who really could not afford them, as espoused by the Clinton and Bush administrations. As Mr. HusseinObama addressed each of those perceived injustices, he added burdens to the economy which slowed the nation’s GDP.
It is no wonder that Mr. Hussein Obama felt 2% growth was the new normal.
GDP has further been reduced because hundreds of billions of dollars annually flow out of the US as a result of these lopsided trade agreements. President Trump, a businessman and not yet a seasoned politician, and he wants the trade issue solved quickly instead of kicking the can down the road as previous Presidents have done.
As it is now, if a European company manufactures a car in Europe and sells it in the US, the company pays a 2.5% tariff. If an American company makes a car in the US and sells it in Europe, a 10% tariff is charged.
The result: Americans buy lots of their cars and the Europeans buy few of ours.
The situation is worse with China and our NAFTA trading partners Canada and Mexico.
President Trump imposed crippling tariffs on the EU which accomplished his goal. His tariffs created a sense of urgency which brought the EU to the bargaining table fast. The US and the EU agreed to work toward toward goal of having no tariffs on anything. This is what free and fair trade looks like.
Mexico has recently expressed their interest to renegotiate NAFTA and Canada will follow. US tariffs will cripple China’s debt heavy economy which President Trump knows will bring China to the bargaining table.
Shayne and I believe the US is likely see GDP growth greater than the 4.1% seen in Q-2. Business investment is increasing, workers incomes are increasing, foreign markets are opened up to US goods and the regulatory and tax climates are opening the way to future growth.
Although there will be Quarterly fluctuations, GDP will likely grow by at least 4% for the foreseeable future. That will lead to a return of American prosperity.
Americans that have forgotten what true prosperity feels like are beginning to remember it now.