The holidays are just around the corner and to hear former President Obama talk, you’d think that he delivered an early Christmas gift to Americans in today’s surging economy. Sugar plum fairies must be dancing in his head, because the current prosperity clearly belongs to President Trump and the Republican Congress.
The Obama fantasy
Somehow Obama envisions that the current economic upswing is the result of policies he had in place for eight years, but which bore no fruit until he left office. More accurately, when Obama’s term was drawing to a close during the holiday season of 2016, he had delivered nothing but coal to Americans’ stockings.
Gross Domestic Product, which struggled to reach 2 percent his entire presidency, was sagging to 1.6 percent. Recall that virtually every quarter when GDP was announced in the media, descriptors such as “disappointing” and “unexpectedly low” were common.
As Investor’s Business Daily notes, most economic indicators were flat lined: GDP was declining, household income was flat, stocks were flat, unemployment had flattened but wasn’t improving.
President Trump’s inaugural speech had barely concluded when he began rolling back Obama’s tax and regulate policies. Regulatory reform came first, with tax reform collaboratively passed by Congress and the White House by the end of 2017.
The results have been stellar:
Since Trump took office, quarterly GDP growth has averaged 2.9%. Once the recession ended, the quarterly GDP growth averaged 2.2% under Obama.
Since Trump took office, the unemployment rate has been in a steady decline. Economic optimism — which languished for years — suddenly skyrocketed. The stock market took off. The U.S. reclaimed the No. 1 spot in global competitiveness. Family incomes reached all-time highs.
Now the unexpected descriptor is being applied in the opposite direction than with the lackluster Obama years, with CNBC saying last week that third quarter GDP was high, coming in at 3.5 percent which was “faster than expected.” Why would this be unexpected, given that second quarter came in at 4.2 percent?
President Trump will never get credit
Frankly, the main stream media will never give Trump credit for a surging economy or foreign policy successes such as progress in relations with North Korea. The MSM template is “Obama Good, Trump Bad” and so it is left to outlets such as IBD and a handful of others to shine the light on what really is happening.
Cornerstone preparing for the business cycle shift
The fact that President Trump has promoted growth policies has bolstered the health of the U.S. economy that will last for years should mitigate damage done by rising interest rates. Rising rates and the Fed soaking up some of the $4 trillion in liquidity from the economic meltdown have injected volatility into the markets and may eventually cause a recession. Were it not for tax and regulation reform, such headwinds would be more difficult for the economy to weather.
At Cornerstone Financial Services, Jerry Tuma and his staff are already beginning to position clients’ portfolios to positions designed to protect from a potential bear market in stocks and bonds. Listeners to Jerry’s weekly radio show know that Jerry sees the current market conditions as potentially forming a top. Whether the bear has or will start soon is uncertain, but Jerry wants to protect his clients’ assets as much as possible.
Contact our office for a complimentary portfolio review.
Register for our next Smart Money Investor Training workshop.
Listen to the most recent editions of Jerry Tuma’s Smart Money Radio on 660 The Answer in Dallas/Fort Worth.