The supposedly smart people said Donald Trump would destroy the U.S. economy if he were elected president.
They were wrong. On Thursday, the Dow broke 25,000 for the first time in its history – a meaningful expression of investor confidence in the future. Trump’s policies of deregulation, which have been moving ahead at full steam even before the tax cut bill passed just before Christmas, have helped push the stock market up by a third which, economist Arthur Laffer estimates, works about to about a $6 trillion increase in the nation’s net wealth.
That may not be historic – there may be periods in which wealth has increased at a faster rate – but it sure is impressive. Especially since the same smart people who’ve been telling us Trump would wreck the economy spent the Obama years explaining annual growth at less than 3 percent (and likely closer to 2) was the new normal.
It’s still a little early to proclaim “happy days are here again” but, as the Magic 8 Ball puts it, “all signs point to ‘Yes'” as far as whether there will be a period of protracted economic growth. That means jobs are coming and coming back as businesses expand, and it means greater opportunity for all Americans, not just the wealthiest, who, the so-called smart people are trying to get us to believe in a feverish effort to take the bloom off the rosy projections, are the only ones who are benefiting from this return to prosperity
“It’s true that rich people with stocks are benefiting greatly from the Wall Street surge,” says renowned economist Steve Moore, but the middle class is benefiting as well. According to figures he provided, 55 million Americans have 401K plans and another 25 million have Individual Retirement Accounts, most of which is invested in stocks. That means, he says, “retirement savings are in a lot better shape than they were a year ago.”
There’s more to come, at least on the administration side. The work being done by Secretary Ryan Zinke and the Interior Department to make America open to energy exploration is going to pay dividends long after Trump is out of office. As we’ve already found from fracking (which is another area in which Trump policies are the polar opposition of Obama’s and Hillary Clinton’s), expanded access to energy produced from traditional sources like oil and natural gas brings down the price. It also, lest anyone forget, produces a national security dividend: The more energy we get here at home, the less we have to spend on protecting regimes in politically unstable parts of the world where we’d otherwise have to go to get the fossil fuels that affect prices on the margin when demand starts to increase as the economy picks up.
The news on the jobs front is equally hopeful. Layoffs are down to their lowest level since 1990 and job growth, while not yet as high as was seen at the end of the Obama years, continues to be steady. “With a new tax code that’s built for growth, 2018 stands to be an even better year for creating good-paying jobs, increasing paychecks, and helping our businesses compete and win here at home and around the world,” said House Ways and Means Committee Chairman Kevin Brady in a statement attributing the good news to the impact of the Tax Cuts and Jobs Act.
As of now, the Trump tax cuts are only partly priced into the system. This week’s good news is a result of what’s been done in the regulatory arena and, coupled with the expectation of the new corporate income tax rate, which Congress set at 21 percent, is going to produce a business expansion that might allow things to really take off.