So Now Do You Believe?

It's a funny thing.  I have been writing for months now about how the US economy is stagnant.  During the fourth quarter of 2015, we had very slow growth.  Initially, the government said that it was between 0 and 1 percent growth on an annualized basis.  The latest estimate for that quarter is a 1.4% growth rate.  The response to my discussion of that slow growth was a torrent of email and other communications telling me that this was a bogus statistic.  According to these people, the GDP statistic was temporarily out of whack or it did not measure the economy accurately or there were other problems with it.  Then came the GDP estimate for the first quarter of 2016.  If that prior statistic had been wrong, then there should have been a big bump in the 2016 number to catch up on missed growth.  Instead we got another paltry number showing growth on an annualized basis of less than 1%.  It didn't matter to the complainers.  They once again told me that the GDP statistic was wrong.  It didn't matter that the source of the numbers was the Obama administration itself; the numbers were skewed lowed than reality, or so I was told.  Well, today we got the April employment figures.  The economy created fewer jobs than any month for the last half year.  On top of that, the numbers for the prior two months were adjusted down.  The totals were very disappointing.  It's important to remember that job growth is a lagging indicator compared to GDP.  In other words, the growth of GDP either speeds  or slows a few months before that change is reflected in the numbers of jobs created.  Today's job numbers confirm that the American economy is stagnant.

The point of these numbers is to raise the alarm.  With slow growth, there is no way in which the USA can ever get out from under its huge debt.  Without a strong economy, we cannot continue to pay Social Security and Medicare and all the other entitlements.  Without a strong economy we cannot continue to fund our military defense to the level that is essential.  If the economy falters, we cannot rebuild our infrastructure.  All that free stuff that Bernie Sanders wants to give out--you can forget about it if the economy is sinking.

So what are the plans from the candidates to fix our economic problems?  Hillary Clinton wants to continue all the Obama policies which have failed.  It's much like going to your doctor who tells you that the cancer you have is continuing to spread and then adds, "so far, so good."  Donald Trump has some strong pro-growth measures to stimulate the economy back to life.  Trump, however, also has the wild card of his views on trade.  They have nowhere near the impact that his taxing, regulatory and fiscal policies would have, but trade is important nevertheless.  It's hard to know how Trump's plans to renegotiate the trade treaties will impact the economy since we don't know what changes would be made.  Nevertheless, the bulk of Trump's proposals are likely to push growth back into the economy, something that is essential for the future of this country.