Written by Nick Howard
In the wake of the most recent jobs report, from April 2019, one can again see great examples of the continuing growth of the United States’ economy and the benefits to producers and consumers that the Trump Administration’s policies have reaped. Beyond political debates, there has been very steady job growth, wage growth, unemployment decline, and economic growth overall that have been consequences of the policy of this administration. I believe that this deregulatory, pro-business, pro-consumer type of policy is incredibly beneficial to the American people and it will continue to benefit them for the near future.
In a 2016 interview just hours after the presidential election results were announced, Paul Krugman, economics expert and writer for the New York Times said himself, “We are very probably looking at a global recession, with no end in sight.” Mark Cuban, a wealthy business owner, namely of the professional basketball team Dallas Mavericks, proclaimed, “In the event Donald wins, I have no doubt in my mind the market tanks.”(“Breitbart News Network.”) It is quite interesting to me how exactly sure these people can be that someone would absolutely destroy an economy by embracing the free-market. So what happened?Well, it’s no secret they were wrong - about as wrong as one can possibly be indeed. Upon entering office, consumer confidence jumped to its highest level since 2000. GDP has grown at a steady three-plus percent rate since 2016. Unemployment for women is at its lowest since 1953; african americans record low, latino lowest ever. There have been an average 213,000 in monthly job gains over the past year. Overall the unemployment rate is at its lowest since 1969. Donald Trump took many steps in having less government regulation - cut economic regulation by 74% after his first year in office compared to the year previous(“Trump Has Set Economic Growth on Fire. Here Is How He Did It.”).
In even bigger news, the April jobs report was released this past week by the Bureau of Labor Statistics and even more growth was seen. It boasted a whopping 263,000 more jobs added along with 3.2 percent GDP growth in the first quarter of 2019. The other component of economic growth and recovery was a 3.2 percent increase in hourly earnings over the past year(“U.S. Bureau of Labor Statistics.”). Not only is GDP growing steadily, but so are wages for hard-working Americans overall. It’s important to note that if nominal wages rise, there will be less output and less GDP growth - but if there is a steady increase in wages that is not too rapid that would cause major inflation or a decrease in output, it benefits both the producer and consumer. These are, in fact, the best wage gains since the recession ended in 2009 - or in other words, we hit a trough in the business cycle in 2009 and recovery has been great recently.
Above all, Donald Trump passed incredible corporate tax-cuts that slashed the corporate tax rate in America from 35 percent, down to 21 percent. The kicker here is that businesses are able to keep a whole lot more of their profits - there was a surge in corporate profits - and produced a trickle down effect from these tax cuts that extremely benefits the consumer. If producers are able to keep more of their profits, it allows them to have more producer surplus beyond their costs of production, and can charge lower prices and pay higher wages in order to benefit or trickle money down to the consumer - where they would have more consumer surplus. This is exactly what Trump was going for and it is seen with a nice growth in wages and less of an increase in price level. In terms of Keynesian Economics, the Trump administration has used fiscal policy action in order to not only stabilize the economy - but allow it to thrive. By cutting business taxes by 14%, business owners now have more money to invest in new technology and equipment(i.e. Capital goods) and therefore increase long-term potential output, or GDP growth. Increases in investment spending and consumer spending(due to an increase in consumer confidence and a subsequent decrease in taxes) are direct influencers of a country’s GDP and would stimulate more growth in the short-run and potential growth in the long-run.Many critics have raised the question of how sustainable this economic growth under the Trump administration is. It is true that during the business cycle of the free market, growing economics do see a peak, and then fall into recession where they reach a trough, or a low point, and proceed to run it all over again. But, I believe that since this growth has been steady, the economy will just keep growing and thriving where it’s at until there are significant regulatory measures to slow it down or stop it - which isn’t happening soon. In fact, the Federal Reserve is at a point where it does not want to take any monetary policy action because the economy is growing so steadily. They do not want to conduct open-market operations or anything else to manipulate the target federal funds rate in the short-run because they are at a point where they don’t need to and will “wait and see”(“US Job Growth Surges in April, Beating Expectations with 263,000 Added.”). The labor market in america is also growing at a healthy pace so people will be ready to step up to these new jobs added.
In the end, the Trump Administration’s economic policies have benefited the United States so much because they have been embracing free market capitalism more than any administration since Ronald Reagan in the 1980’s. By cutting many regulations that put pressure on businesses, lowering taxes, and adding jobs, they have been truly making the most of an economic system that has made the most money for the most people out of any other country in the history of the world. The growth has been so great that former president, and big Donald Trump critic, Barack Obama was taking credit for the economic growth since 2016, saying in a speech, “By the time I left office … the economy was growing. And by the way that growth has just kept on going…Right now Republicans are all ‘Look the economy’s so good’, Where do you think that started? When did that start?”(“Obama Swats Trump and the GOP for Taking Credit for Economic Growth.). Quite frankly, after a slow recovery from recession, it’s hard to credit oneself for a surge in consumer and business confidence, after leaving office - not to mention a litany of other records set since 2016. In essence, business is booming in the United States of America, and there are no signs of letting up - thanks to some economic policy that has Made the Economy Great Again.
Works Cited
Breitbart News. “Breitbart News Network.” Breitbart, 6 May 2019, www.breitbart.com/.Henney, Megan. “US Job Growth Surges in April, Beating Expectations with 263,000 Added.” Fox Business, Fox Business, 3 May 2019, www.foxbusiness.com/economy/april-jobs-report.
JeffCoxCNBCcom. “Trump Has Set Economic Growth on Fire. Here Is How He Did It.” CNBC, CNBC, 7 Sept. 2018, www.cnbc.com/2018/09/07/how-trump-has-set-economic-growth-on-fire.html.
Oprysko, Caitlin. “Obama Swats Trump and the GOP for Taking Credit for Economic Growth.”
POLITICO, 2 Nov. 2018, www.politico.com/story/2018/11/02/obama-trump-economy-republicans-
959046.
“U.S. Bureau of Labor Statistics.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, www.bls.gov/.
While I agree that on the macroscopic scale the economy is doing very well, looking fundamentally at what the economy is meant to do and "how" it is good reveals gaps in this success. For instance the corporate tax cut you mentioned allows businesses to keep more of their profits which according to macroeconomic theory should mean more investment into capital goods but has instead gone into stock buybacks, where corporations buy their own stock to reduce the quantity and increase the price, primarily benefiting the large stockholders most of whom are already incredibly rich. While many of the indicators are good there are problems in that over 40% of American adults would have trouble covering a surprise $400 emergency expense. This is a very real problem given the how our healthcare system works. Fundamentally the focus for our economy now should be how to spread out the gains. Current CEOs make over 360 times what their average workers make. If all the wealth of the United States were distributed equally each family would have a net worth of $760,000 but in reality the bottom 50% of families average just $11,000 net worth. These are systemic issues that aren't going to be resolved if the economy continues on its current trajectory.
ReplyDeleteAlso I would recommend staying away from siting Breitbart as a news source as it is not reputable.
DeleteI was waiting for someone to say this so thank you! Not reputable in the slightest. Fox News is a bit iffy as well.
DeleteI thought this was an interesting article. While I don't agree with Trump on everything, his policies have seemed successful so far in spite of his more protectionist views and our current trade war with China, and I hope this growth will be sustainable. Obviously the growth hasn't helped everyone and I think Jamie is correct in noting the current buybacks going on, but one definitely can't deny the unemployment rate being so low which is certainly a testament to the government at least a little bit.
ReplyDeleteI don't really pay attention to politics that much but I found this article to be very interesting. I'm sure there are lots of opinions on all of his decisions based on what you want and/or believe whats best for the economy, so this is a topic that could have a lot of discussion about because someone will always have another opinion. The unemployment rate was a good topic to add in since we learned about that not to long ago. Well done.
ReplyDeleteI love the article, and I still can't believe people manage to overlook the economic achievements of the President and the nation as a whole due to individuals having issues with his personality traits. We must look aside of his public declarations for a moment, and realize that just in April, the U.S. economy has added 263,000 jobs and lowered the unemployment rate to 3.6% all according to Fox News. This 3.6% unemployment rate is the lowest ever since October of 1969. All in all, the U.S. economy is thriving under President Trump and proved a lot of economists who predicted recessions wrong.
ReplyDeleteI found this article immensely interesting. I do not think Trump is a good president, but the economy still seems to grow at a healthy rate with Trump in office. The unemployment rate is exciting because it seems to be going down which is good overall. Trump embracing capitalism more has seemed to have helped the market. The economy is currently booming and hopefully stays this good.
ReplyDeleteI think it is very interesting to see that people think of the presidency as someone who just makes political decisions, but Donald trump knew full well that he was not going to do that when he was elected. He wanted to someone who lead America like a business. Make them successful and increase there economic status in the global market. For him being a previous business man himself, this was a very good role for him and the numbers don't lie. If you like President trump or not, it doesn't matter, what he has done for economic growth in the first two years of his term is remarkable and we have never been stronger as a country.
ReplyDeleteThis article did a great job showing the recent economic impacts that has resulted from the changes in the last 3 years. The strong economy today is a great sign that the economy will continue to look up. I am very surprised at how low the unemployment rate is, for all races and am also glad to see that the tax cuts have made such a drastic difference in the economy. One thing you mentioned that I found interesting is that the Fed has no desire to enact any sort of monetary policies at this time. In my opinion that is a good sign that the economy is in the right place. I also find it interesting how many successful business owners doubted the prosperity of the economy under Trumps election. I wonder what there thoughts are now, considering the economy is doing so well.
ReplyDeleteReally nice job incorporating vocabulary from the past few weeks. In the business cycle, yes, we always see highs in lows in the free market. Something to maybe add to this article is why we would see any drops. Your article goes through a lot of the positive aspects of what Trump has done to help but where might the troughs and recessions come from then?
ReplyDeleteThis article was super thorough and coherent. Nice job! I generally agree that the economy is booming like never before in recent history thanks to the pro-free-market policies introduced by President Trump. Regardless of what your opinion is on the president, you've got to recognize that he followed through with his promises, which is something to be respected. It's refreshing to read a review of Trump's economic policies without the attacks on his politics or character. I think that the figures that are most promising are the dropped unemployment rates across various demographics, including numerous minority groups, the surge in consumer confidence and influx of new jobs. However, it would be interesting to examine the microeconomic changes as a result of these policies as well to get the whole picture.
ReplyDeleteI agree with all the other comments that when writing about the American economy, it is important to keep our political opinions about presidents, parties, and their agendas out of it, because that distracts us from seeing what is truly happening in our economy right now (which this article did well!). The business cycle concept was introduced when the study of macroeconomics started after WW2. I believe that the peaks and troughs of the business cycle are natural and will happen regardless of who is influencing the economy. Trump has definitely taken steps to improve the economy, but I think it is also the natural progression of the business cycle towards the peak (that occurs due to self correcting policies that have been set since the early 1900s) that is helping Trump and his fantastic numbers showing a growing economy. That being said, the number of jobs the president has created is something that can't be looked over and is impressive. Trump comes from a business background and it isn't surprising to me that economics is his forte, thus cutting business taxes was one of his biggest steps in helping the economy. Like Jamie said, I think we need to look closer into what these businesses are really doing with their profits before we conclude that they are only helping consumers and lowering prices. Overall, this was a really thorough and informative article.
ReplyDeleteWhile Trump may not be the most qualified in certain aspects of presidency, the fact that the economy is currently booming makes sense. Before becoming the president, Trump was a businessman and starred on the Apprentice. Therefore, Trump understands the business side of the economy including consumer confidence, taxes, employment, and wages. Additionally, you mentioned that the fiscal policy action taken by the government allowed the economy to thrive. In no way am I disagreeing with that statement, however, I am curious about the classical economic theory. If there was no government intervention and everyone waited for the economy to fix itself, would the economy would be in the same state that it’s in now? If not, would the economy be better or worse off?
ReplyDeleteThis article did a great job showing the recent economic consequences that have resulted from the changes made in economic policy due to the election of Donald Trump. Although many people have voiced his disapproval for the current President, I believe that the promotion of free-market policies and the tax cuts have really allowed for more and more economic growth. I also believe that this surge of economic prosperity to the American people will allow all groups, not just the top 2%.
ReplyDeleteCorrelation is not causation; Trump became president, then the economy rose. It is also true that dabbing became less popular and then the economy rose. It is foolish to assert that a change in administration has direct and immediate effects on the entire economy, especially before he had implemented any policies. Those policies are perhaps described as foolish; Trump has rescinded the parts of the Glass-Steagall banking reforms put back into place after the 2008 recession which allows banks to be take on more risk, which is what caused the recession in the first place; the original Glass-Steagall Act was repealed in 1999. What Mr. Trump refers to as the death tax only applies to people who have more than $5 million and is in place to prevent the establishment of a landed gentry. He also wants to reinstate the manufacturing economy, and this is one of the goals of the economic protectionist policies. We are a service economy full of skilled workers; reinstating the manufacturing economy is like stating that we should return to trading in seashells and giant stone disks, and tariffs directly cause deadweight loss and at no benefit to consumers. Lastly, the tax cuts on the super rich are an affront to upward mobility; putting a 70% tax rate on income after $11 million increases upward mobility by generating more funding to public programs that energize the poor. The progressive tax rates are like items in Mario Kart; if you're ahead, you get bananas, and the bottom 99% all deserve blue shells.
ReplyDeleteI think that this article does a great job of showing how even though Donald Trump is the first president without a government background he still has strengths in some areas. The fact that he has used all of his skills from his life from being on TV and running businesses he is able to see the United States as a business of his own and I think that these statistics and accomplishments could lead to future presidents not having any government background at all but rather have a background in business or technology that can help them to advance the county in ways other presidents might not have. I also agree that what Trump has done fot the U.S, so far has been mostly positive and that we need to look past the things he might say and focus on the results and statistics of what he has done.
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