The left is quickly running out of excuses for why Donald Trump’s economic policies have caused a boom rather than the bust they predicted with such great certainty.
Last year, when the U.S. economy began to percolate with faster growth, the media and other Trump haters argued that this simply reflected a pickup in worldwide growth: Trump was riding the wave of what economists were calling “synchronized growth.”
But now what do they have to say? The latest indicators are that, as a Wall Street Journal headline reported on June 3: “Global Economic-Growth Story Fades.” Japan’s growth rate is estimated to have slowed to slightly negative in the first quarter. The European Union was at an anemic 0.4 percent. The pace of global growth is expected to be much slower over the next two years, according to the World Bank and the International Monetary Fund.
Then there is the outlier: the United States. Here at home, growth is sizzling. Almost all economists now predict a growth rate of above 4 percent for the second quarter of 2018, and Dan Clifton of Strategas, one of the best forecasters of recent times, believes we may hit 5 percent later this year. He points to the surge of investment capital flowing into the United States and how the increased business spending points to several more quarters of this torrid growth. Meanwhile, the rest of the world treads water.
So much for synchronized swimming.
Then there is the argument that Trump’s policies have nothing to do with the American prosperity burst. Politico’s economics reporter recently published a column insisting that the “GOP tax cut is not why (the) economy is booming.” He contemptuously added, “Economist are rolling their eyes at candidates’ claims (that Trump’s policies inspired faster growth).” Which economists?
As it happens, this is the same gang that was dead wrong about the likelihood of growth in the first place. Now they argue that the tax cuts are just kicking in and can’t account for the increased economic activity. But this ignores the anticipatory effect: Businesses are anticipating the tax bill’s lower rates on their profits and investments and making decisions accordingly.
Whatever the cause, it is undeniable that America has a new spring in its step. After a decade of malaise, the American economy is the envy of the world today. A recent Bloomberg article reports: “The U.S. dethroned Hong Kong to retake first place among the world’s most competitive economies, thanks to faster economic growth and a supportive atmosphere for scientific and technological innovation, according to annual rankings by the Switzerland-based IMD World Competitiveness Center.”
But the ultimate judges of all this are the American people – the voters. They know something big is going on here.
In the years before the 2016 election, about 3 in 10 voters described the economy as good or great. This year, 7 in 10 do. That surge in optimism began immediately after Trump’s election and hasn’t subsided. The same trend is true for the confidence of small businesses and manufacturing businesses. Up, up and away.
Perhaps the best news of all is to think that maybe Trump’s critics are right that the economic thrust from the tax cut hasn’t even kicked in yet. If that’s true, then buckle up, because we’re in for a hell of a ride.