Lost in the cacophony of last week's hyper-drive news cycle, consisting of Comey, Mueller, Cohen, Ryan and Syria, was another boomlet of good economic news. Under normal circumstances, this would be a major political storyline -- or at least a top discussion point in analysis of the upcoming midterm elections. But for reasons enumerated in that first sentence, these are not normal circumstances, which is why America's robust economic position almost feels like an afterthought among the chattering class. In our Thursday post, we noted how voters are now crediting President Trump, not President Obama, for the country's economic health, with close to eight-in-ten Americans rating their personal financial conditions as 'excellent' or 'good.' Gross Domestic Product (GDP) growth has been solid, small business owners are reporting unprecedented positive outlooks, and wages are improving amid a stable and strong employment picture. After an outstanding February jobs report, the momentum slackened a bit in March, but many core indicators about the fundamentals of the economy remain in very good shape. For instance, the Wall Street Journal reports on this record-setting milestone:
The number of Americans claiming new unemployment benefits has never been so low for so long. Initial jobless claims, a proxy for layoffs across the U.S., decreased by 9,000 to a seasonally adjusted 233,000 in the week ended April 7, the Labor Department said Thursday. This means claims have now held below 300,000 for 162 consecutive weeks, cementing the longest streak for weekly records dating back to 1967...The current streak eclipsed the previous longest stretch that ended in April 1970. Taking into account the size of the labor force, claims today compared to the late 1960s and early 1970s are much lower...The consistently low claims levels point to labor market health because they mean relatively few Americans are losing their jobs and applying for benefits to tide them over until they can find new employment. After several years of consistent job growth, firms are reluctant to let employees go in a tightening labor market in which many available workers are quickly snapped up.
Meanwhile, America's manufacturing industry -- often cited by politicians in both parties -- is experiencing a burst of optimism and growth, thanks to Republican policies. Boosting American manufacturers was a theme of Trump's 2016 presidential campaign, and based on results thus far, it looks like he's entitled to some bragging rights:
Trump’s speech came amid surging optimism among American manufacturers thanks to the after-effects of the GOP’s recently-implemented tax reform law. More than 93% of manufacturers have a positive outlook on their company’s prospects in the U.S. economy – the second-highest level ever recorded by the National Association of Manufacturers – its most recent quarterly survey revealed. Meanwhile, optimism among small manufacturers was at its highest level ever recorded throughout the survey’s 20 year history; 94.5% of companies reported that they were positive about their future. Wage growth among those manufacturers surveyed also rose at the fastest pace in 17 years...The survey showed that manufacturers expected full-time employment to increase by 2.9% on average over the next year, an all-time high by the survey’s standards. Companies also said capital investments are likely to rise by 3.9% over the next 12 months, while inventories are expected to rise by 1.7%.
There is simply no question that tax reform is largely responsible for these gains, along with the Trump administration and the Republican Congress' focus on cutting excessive federal red tape and regulations. With leading Democrats talking up their desire to repeal the economy-boosting tax cuts, while demeaning tax reform's real-world impact on everyday Americans, the GOP is rightfully going on offense. If other storylines weren't sucking up so much political oxygen, this would be a pretty decent unified message on which Republicans could be campaigning:
The Senate Republicans’ campaign arm is escalating its attacks on Democrats running in key races over opposition to the GOP’s tax overhaul. The National Republican Senatorial Committee (NRSC) is launching a five-figure digital ad campaign, which was shared first with The Hill, that touts the various benefits of the tax law for families. The ad then rewinds and accuses Democrats of wanting to undo them...The ads will run as 6-second and 15-second versions on Facebook and YouTube in the 10 states that President Trump won in 2016 where Democratic incumbents are up for reelection. They’ll also run in Nevada and Arizona, where Democrats have their best opportunities to pick up Senate seats. “Instead of fighting to help middle-class families, Senate Democrats are doing everything they can to repeal the tax cuts to appease their radical base and out of touch leadership,” NRSC communications director Katie Martin said in a statement...A number of GOP groups have run ad campaigns aggressively promoting the tax overhaul and slamming Democrats for their opposition to it, particularly those running in red states. No Democrats voted for the bill.
Democrats demagogued and lied about the law, which has soared in popularity thanks in part to the Left's rhetoric failing to match tangible outcomes. As The Hill's story points out, zero Democrats in Congress supported a law that slashed nearly all Americans' taxes and made US businesses more competitive. On that score, Speaker Ryan's office is touting this development: "The International Franchise Association [last week] announced that nearly 400 franchise brands or individual businesses signed a pledge to issue bonuses, boost investment, or increase wages as a result of the updated tax code." Ryan and Trump have each been thanked by individuals whose families have been directly helped by tax reform during recent public events. While there's much to celebrate, I'll leave you with the latest reminder that more jobs and economic growth cannot erase the long-term structural issues that we face in terms of deficits and debt:
Tax reform is not anywhere near the primary cause of these challenges; unsustainable spending, particularly on insolvency-bound entitlement programs, is -- yet neither party is serious about altering Washington's reckless trajectory. One party talks a good game but accomplishes nothing when presented with a realistic chance to move the needle (this empty gesture is ridiculous); the other party is in full-blown and irresponsible denial, and is determined to sprint -- not jog -- off the fiscal cliff. Our short-term economic picture is rosy, with much credit due to Trump/GOP policies. But that does not defuse the looming debt crisis bomb.