Yesterday, we learned that the economy grew at a rate of 4.1% in the second quarter of this year. I predicted that the left would quickly tell us why this was no big deal. I was correct. To be fair, my prediction hardly qualifies me as a prophet. Anyone with even half a brain understands that if there is any good news about President Trump and the country, the media and the Democrats rush to do two things. First they deny that the news is important, and second, they deny that Trump or the Republicans had anything to do with it.
In any event, here's the take of one of the bastions of Democrat/media groupthink, the Washington Post. It reported that the 4.1% growth of GDP was no big deal. After all, it was only one quarter, and what counts is "sustained" economic growth. Somehow, the WaPo ignored the fact that in the last five quarters (the complete quarters since President Trump has been in office) the growth rate for the GDP has been about 3.0%. That's higher than any year under Obama. It's also the level that the Democrat/media chorus told us could never be attained.
Back to the WaPo. They next told us that the GDP was up because of people rushing transactions to beat the tariffs of the "Trump trade war". That also makes no sense. In computing the GDP, exports are added to GDP while imports are subtracted from GDP. Tariffs that were threatened or which were actually put in place are, at this point, reciprocal. In other words, each time the USA put a tariff on Chinese goods, the Chinese also put a tariff on American goods. The same thing happened with the EU and our other trading partners. So the possibility of tariffs being put in place by the USA would encourage importers to rush to get their goods into the country before the taxes hit. That reduces GDP. On the other hand, the possibility of tariffs being put in place by our trading partners would encourage exporters to rush to get their goods out of the country before the taxes hit. That increases GDP. But here's the point: America imports substantially more goods than it exports. A big increase in exports and imports due to trade war fears would cause a DECREASE in the GDP not an increase. In other words, without the trade war fears, the growth in GDP might have hit 4.5% or even 5%.
Next the WaPo tells us that while the Trump policies may have caused an increase in the growth rate of the US economy, over the long term those policies won't work. Basically, the WaPo says that lower taxation will mean bigger deficits and that will raise interest rates and slow the economy. This argument at least has some economic plausibility. Of course, interest rates have been rising throughout the last few years. It's the policy followed by the Federal Reserve (which operates independently from the White House.) Since the tax cuts, however, the rates set by the market really haven't risen. The debt markets focus on all the data regarding the creditworthiness of governments. Somehow, however, the rates have not gone up as the WaPo predicts they will. What is happening is that since US rates are higher than rates in Europe and Japan, money is coming here and that keeps our rates down. There are also probably another 30 factors that are affecting American interest rates. The WaPo analysis is just way too simplistic.
The actual truth is that the economy grew at 4.1% last quarter. That's great news. It's also great news that is primarily due to the change in American economic policy under Trump. No matter what the WaPo says, that is the truth.
In any event, here's the take of one of the bastions of Democrat/media groupthink, the Washington Post. It reported that the 4.1% growth of GDP was no big deal. After all, it was only one quarter, and what counts is "sustained" economic growth. Somehow, the WaPo ignored the fact that in the last five quarters (the complete quarters since President Trump has been in office) the growth rate for the GDP has been about 3.0%. That's higher than any year under Obama. It's also the level that the Democrat/media chorus told us could never be attained.
Back to the WaPo. They next told us that the GDP was up because of people rushing transactions to beat the tariffs of the "Trump trade war". That also makes no sense. In computing the GDP, exports are added to GDP while imports are subtracted from GDP. Tariffs that were threatened or which were actually put in place are, at this point, reciprocal. In other words, each time the USA put a tariff on Chinese goods, the Chinese also put a tariff on American goods. The same thing happened with the EU and our other trading partners. So the possibility of tariffs being put in place by the USA would encourage importers to rush to get their goods into the country before the taxes hit. That reduces GDP. On the other hand, the possibility of tariffs being put in place by our trading partners would encourage exporters to rush to get their goods out of the country before the taxes hit. That increases GDP. But here's the point: America imports substantially more goods than it exports. A big increase in exports and imports due to trade war fears would cause a DECREASE in the GDP not an increase. In other words, without the trade war fears, the growth in GDP might have hit 4.5% or even 5%.
Next the WaPo tells us that while the Trump policies may have caused an increase in the growth rate of the US economy, over the long term those policies won't work. Basically, the WaPo says that lower taxation will mean bigger deficits and that will raise interest rates and slow the economy. This argument at least has some economic plausibility. Of course, interest rates have been rising throughout the last few years. It's the policy followed by the Federal Reserve (which operates independently from the White House.) Since the tax cuts, however, the rates set by the market really haven't risen. The debt markets focus on all the data regarding the creditworthiness of governments. Somehow, however, the rates have not gone up as the WaPo predicts they will. What is happening is that since US rates are higher than rates in Europe and Japan, money is coming here and that keeps our rates down. There are also probably another 30 factors that are affecting American interest rates. The WaPo analysis is just way too simplistic.
The actual truth is that the economy grew at 4.1% last quarter. That's great news. It's also great news that is primarily due to the change in American economic policy under Trump. No matter what the WaPo says, that is the truth.
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