The Trump Presidency

[nsacpi]

I noticed that nobody commented on the 4% Q2 GDP number announced last week.

That's a different field than RUSSIA! and it actually impacts people

while we're cherry picking economic data lets try this one on for size:

The Consumer Price Index has gone up 2.9% in the past year. The year before it went up 1.6%. And the year before 1.0%.

Last time I checked accelerating inflation qualified as something that "affects peoples lives."

Or do we only dwell on things (4% GDP growth) that fit a certain narrative but ignore others (higher inflation for consumers) that don't.

[nsacpi]

It's not hard and yet Obama couldn't get us 1 year of 3% despite more deficits than previous 43 president's combined

Trump's spending is reckless and irresponsible. I've never argued otherwise. But don't act like you care now.

Neither party is interested in cutting spending.

1) Has Trump gotten us a year of 3%?

2) Obama was dealing with the most severe economic and financial crisis since the Great Depression, an event that had long-term ramifications for banks and the availability of credit. Does context count for anything?

If we get to 3% this year, it will be largely due to blowing a gaping hole in federal finances. I would not regard that as an accomplishment. I would regard it as irresponsible.

[50PoundHead]

I absolutely believe interest rates should have been raised.

But that doesn't change the fact that it is a headwind for growth.

Obama has the most accommodative fed for economic growth in history but failed to yield 3% growth

(To be clear, Trump hasn't either, but I think we're a good bet for it this year if this tarrifs stuff doesn't blow up)

Again, you have to look at the numbers in context to the situation at hand. Obama had a very conciliatory Fed, but he also had a Congress that was recalcitrant. That tension probably put a damper on business decisions (I would argue that it shouldn't to the extent that it did, but I don't own a business so what do I know). It's important to note that Obama did want to lower the marginal corporate tax rate to bring it closer to international norms, even though our effective rate was never as far out of whack as many in the business community contend it was/is. He wanted it to be revenue neutral, but that was the starting point of the negotiations and if Congress had picked up on the offer, the whole corporate tax structure issue could have been tackled during Obama's tenure.

As nsacpi pointed out, Obama did inherit a mess that was largely the result of irrational exuberance (using Greenspan's phrase that he somehow doesn't really believe) and getting out of that mess required some pretty drastic action. The key thing is that the trend line (not the quarter-by-quarter bar graph) was positive after the economy bottomed out. I don't agree with every decision he made. There were parts of the stimulus package I thought weren't particularly good ideas (Cash for Clunkers comes to mind), but not everything that works on the blackboard will work in real life.

[cajunrevenge]

Trumps gonna pull a Clinton. Ride an economic boon you had little to do witg, take all the credit, then get out before the crash. Then he will tweet endlessly about how he is a financial genius who could fix thr ecomomy in a day.

[sturg33]

while we're cherry picking economic data lets try this one on for size:

The Consumer Price Index has gone up 2.9% in the past year. The year before it went up 1.6%. And the year before 1.0%.

Last time I checked accelerating inflation qualified as something that "affects peoples lives."

Or do we only dwell on things (4% GDP growth) that fit a certain narrative but ignore others (higher inflation for consumers) that don't.

How is discussing the most recent GDP number cherry picking data?

And the inflation numbers are based on fed activity, not policies.

You're smarter than this

[sturg33]

1) Has Trump gotten us a year of 3%?

2) Obama was dealing with the most severe economic and financial crisis since the Great Depression, an event that had long-term ramifications for banks and the availability of credit. Does context count for anything?

If we get to 3% this year, it will be largely due to blowing a gaping hole in federal finances. I would not regard that as an accomplishment. I would regard it as irresponsible.

1. No, and I already addressed that last page

2. Obama was indeed, which makes our lack of growth out of the trough that much more troubling. As you know, it was the slowest economic recovery out of a recession in our history, while behind a massive regulatory environment and tax hikes, to go along with 0% interest rates, QE, and enormous deficits

Obama blew a hole in our finances and didn't get to 3%

[cajunrevenge]

China says talks are pointless because there is no confidwnce we would live up to any deal we make.

[nsacpi]

How is discussing the most recent GDP number cherry picking data?

And the inflation numbers are based on fed activity, not policies.

You're smarter than this

How is it cherry picking. I dunno. I looked and looked and couldn't see any "fair and balanced" commentary by you on the economy.

Well if the Fed controls the economy, I guess the 4% GDP growth belongs to them too. No? Or would that not be consistent with the narrative you are pushing. I don't think it is possible for the Fed to control inflation without having substantial ability to affect other aspects of the economy. It doesn't happen through magic.

I don't know what I'm supposed to be smarter about. I just pointed out some data to balance the narrative you are pushing.

[nsacpi]

Obama was indeed, which makes our lack of growth out of the trough that much more troubling.

Actually, when economies come out of major financial crises the pattern is not for a V shaped recovery. See U.S. recovery from the Great Depression. See Japan after bursting of the bubble, when they experienced a period called the Lost Decade, but which actually lasted more than a decade.

The Great Depression officially ended in March 1933. It was followed by weak growth and a "double dip" recession in 1937-38. That double dip recession was pretty nasty, one of the worst recessions. It only looks minor in comparison with the Great Depression.

[sturg33]

How is it cherry picking. I dunno. I looked and looked and couldn't see any "fair and balanced" commentary by you on the economy.

Well if the Fed controls the economy, I guess the 4% GDP growth belongs to them too. No? Or would that not be consistent with the narrative you are pushing. I don't think it is possible for the Fed to control inflation without having substantial ability to affect other aspects of the economy. It doesn't happen through magic.

I don't know what I'm supposed to be smarter about. I just pointed out some data to balance the narrative you are pushing.

GDP is most important economic factor there is and nobody said word 1 about it because it was good news. The cpi inflation data has already been discussed on this board

Because the fed isn't being overly accommodative to this admin.

I'd say the growth is more likely from reduced regulatory environment and tax cuts.

We have a spending problem. That is not new.

[sturg33]

Actually, when economies come out of major financial crises the pattern is not for a V shaped recovery. See U.S. recovery from the Great Depression. See Japan after bursting of the bubble, when they experienced a period called the Lost Decade, but which actually lasted more than a decade.

The Great Depression officially ended in March 1933. It was followed by weak growth and a "double dip" recession in 1937-38. That double dip recession was pretty nasty, one of the worst recessions. It only looks minor in comparison with the Great Depression.

Uhhh... Coming out of both of those recessions we achieved almost 15% and 20% GDP growth, respectively

The recovery from the great recession was a joke

[nsacpi]

GDP is most important economic factor there is and nobody said word 1 about it because it was good news. The cpi inflation data has already been discussed on this board

Because the fed isn't being overly accommodative to this admin.

I'd say the growth is more likely from reduced regulatory environment and tax cuts.

We have a spending problem. That is not new.

A big chunk of the GDP acceleration this year will be due to blowing a hole in the deficit. And I'm sorry but I don't see how that is a good thing. You enact massive fiscal stimulus at a time when labor markets are already tight, it should not be a surprise to see inflation accelerating. The Fed is doing what it can to limit the damage caused by the ill-timed loosening of fiscal policy. On who's watch is this ill-timed loosening of fiscal policy happening? Is fiscal policy something the president has responsibility for? I think the answers are clear. I agree the administration (like any other) should be judged mainly for those things it actually has responsibility for. Fiscal policy is one of any administration's biggest responsibilities. I wouldn't give this one an A. Or a B. Or even a C.

[nsacpi]

Uhhh... Coming out of both of those recessions we achieved almost 15% and 20% GDP growth, respectively

The recovery from the great recession was a joke

It look much longer to return to pre-recession levels of activity coming out of the Great Depression. Not until WWII more than 10 years later. Similarly, Japan took over a decade to return to pre-bubble levels of economic activity.

To get an idea, the unemployment rate was around 3% in 1929. In 1940 is was around 15%. More than 10 years later.

In contrast, the unemployment rate bottomed out at 4.4% in March 2007. By March 2017 it was 4.5%.

I realize the unemployment rate is not a perfect measure that settles everything. You can look at other measures. Like GDP for example. 10 years on we had more than recovered to pre-Great Recession levels of GDP. Not so with the Great Depression. 10 years later we were still way below where we started. It took WWII to get back to pre-Depression levels of activity.

Btw I don't think our fiscal policy was perfect under Obama. I think we could have recovered faster if we had been more aggressive in using it. We started tightening policy way too early, at a time when the unemployment rate was still very high.

I think he made political mistakes in how he constructed and sold his policies. People came to resent "bailouts" for particular groups, like the banks and auto industry. I think he should have been more "populist" in how he sold his fiscal policy, even though I'm not a fan of populism itself. But its ok to use it as a marketing tool. He should have emphasized tax cuts and tax rebates for all, rather than the weird search for "shovel ready" projects, which in some cases was a way to help out his friends in the political arena. It is a problem Democrats have. They always want to target things to particular constituencies. This is why I'm not a Democrat. One of the reasons. I left the GOP after Trump was nominated, but I don't think I'll ever be a Democrat.

[sturg33]

A big chunk of the GDP acceleration this year will be due to blowing a hole in the deficit. And I'm sorry but I don't see how that is a good thing. You enact massive fiscal stimulus at a time when labor markets are already tight, it should not be a surprise to see inflation accelerating. The Fed is doing what it can to limit the damage caused by the ill-timed loosening of fiscal policy. On who's watch is this ill-timed loosening of fiscal policy happening? Is fiscal policy something the president has responsibility for? I think the answers are clear. I agree the administration (like any other) should be judged mainly for those things it actually has responsibility for. Fiscal policy is one of any administration's biggest responsibilities. I wouldn't give this one an A. Or a B. Or even a C.

At least with this fiscal hole we are seeing some growth out of it...

[sturg33]

It look much longer to return to pre-recession levels of activity coming out of the Great Depression. Not until WWII more than 10 years later. Similarly, Japan took over a decade to return to pre-bubble levels of economic activity.

Returning to pre recession levels and achieving yoy growth are different things.

Obama couldn't achieve 3% growth from a massive recession despite 0% interest rates and literally trillions of QE spending from the fed.

That's bad. Can't you admit that?

And if you're so worried about deficits you should take a look at what happened from 09-16

[nsacpi]

At least with this fiscal hole we are seeing some growth out of it...

these things tend not to end well

[nsacpi]

Returning to pre recession levels and achieving yoy growth are different things.

Obama couldn't achieve 3% growth from a massive recession despite 0% interest rates and literally trillions of QE spending from the fed.

That's bad. Can't you admit that?

And if you're so worried about deficits you should take a look at what happened from 09-16

Hold on. The Fed took extreme measures because the transmission mechanism of monetary policy broke. Banks were willing to sit on huge amounts of reserves. They didn't expand lending. So the credit mechanism, which is one of the ways monetary policy works, was broken. You shouldn't take the massive expansion of the Fed's balance sheet as some sort of measure of the amount of monetary easing provided to the economy. The Fed doesn't directly provide things like car loans and mortgages or directly affect the terms of those loans. It exerts an indirect influence through the markets and through banks. To get a small amount of traction it had to do much more, by several orders of magnitude.

I think one of the lessons of this whole episode (and it is a lesson not taken) is that the Fed needs an upgraded set of tools. I think it should be given emergency powers (maybe triggered by say an increase in unemployment over 10%) to sidestep some of these limitations. As of now, it remains a lender of last resort. But only to financial institutions. But we've seen sometimes that doesn't get you very far if the financial system is frozen. I would go so far as to give the Fed emergency powers to send every households a monetized tax rebate. This is a tax rebate funded entirely by the Fed expanding its balance sheet. Obviously those powers should only be activated under extreme circumstances. But we had those ten years ago.

[Super]

so how bout those real wages.

[Julio3000]

On the “affects peoples’ lives” scale, real wages/CPI has got to be up there, right? I keep bringing that up in the economics threads, to a chorus of crickets.

I find it tough to get jazzed about modest GDP growth when wages are at best stagnant. Looks like the investor class is prospering and everyone else is at best treading water.

[nsacpi]

so how bout those real wages.

well...the rise in inflation has suppressed those...wage inflation has accelerated in the past year, but not as much as the CPI

average hourly earnings growth has accelerated to 2.7% in the past year from 2.3% a year ago. CPI however has accelerated to 2.9 from 1.6.

So real wages (nominal wages minus inflation) has decelerated