Freedom Line Blog

Here’s some potentially VERY good economic news that was lost amid the weekend news flurry.  Those with “skin in the game,” and who likely possess the best perspective, are betting heavily on an upturn, as highlighted by Friday’s Wall Street Journal:

Corporate insiders are buying stock in their own companies at a pact not seen in years, a sign they are betting on a rebound after a coronavirus-induced rout.  More than 2,800 executives and directors have purchased nearly $1.19 billion in company stock since the beginning of March.  That’s the third-highest level on both an individual and dollar basis since 1988, according to the Washington Service, which provides data analytics about trading activity by insiders.”

Here’s why that’s important:

Because insiders typically know the most about their companies’ outlook, evidence of buying can signal corporate optimism and reassure investors, especially in times of turmoil.  ‘I’ve never seen a number like that before,’ Dr. Nejat Seyhun said, referring to the buy-to-sell ratio that he calculated for the energy sector.  Beyond Marathon Oil, insiders at companies including Exxon Mobil Corp., Sunoco LP and Continental Resources Inc. have also purchased shares.  He said the increased level of buying may signal that energy executives believe ‘the oil price war is not going ot last too long.’  Dr. Seyhun’s research over the years has found that insider activity can be a ‘solid’ predictor of future returns.  Stocks that insiders purchased during the 1987 stock market crash ‘bounced back,’ he said.”

We often malign insiders who dump stock before a downturn, so in this case we should welcome the signs of spring that insiders who tend to be most knowledgeable and possess actual skin in the game are heavily optimistic.  As we noted in our Liberty Update commentary last week, that may signal a closer similarity to 1987’s crash, which witnessed a return to normalcy and prosperity soon thereafter, as opposed to 1929 or 2008.  Staying the course on the lower-tax, less-regulatory environment that gave us the strongest economy in history when we entered this pandemic will help along the way.

This is incredible.  Amid the coronavirus scare and economic malaise across the rest of the world, the Labor Department reports that job growth in the U.S. exceeded expectations by 100,000 in February:

Nonfarm payrolls grew far more than expected in February as companies continued to hire amid a growing coronavirus scare.  The Labor Department reported Friday that the U.S. economy added 273,000 new jobs during the month, while the unemployment rate was 3.5%.  Economists surveyed by Dow Jones had been looking for payroll growth of 175,000 and a 3.5% jobless level.  Average hourly earnings grew by 3% over the past year, in line with estimates.”

Although the effects of the coronavirus create uncertainty going forward, the Trump Bump has continued.

Americans already expressed record satisfaction on economic conditions in the U.S., over three years into President Trump’s tenure.  Turns out that things are even better than we initially realized, as employment data from the end of 2019 was just significantly updated:

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Even Better Than First Realized

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More phenomenal news from Gallup.  Consumer spending accounts for approximately two-thirds of the U.S. economy, and economic confidence has now reached its highest point since 2000, when the mainstream media couldn’t stop talking about how great things were.  Thank you, deregulation and tax cuts.

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Thank You, Tax Cuts and Deregulation

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From the official federal Bureau of Labor Statistics and our friends at the American Enterprise Institute (AEI), a nice visualization of how the Trump economic agenda has most benefited those in the lower-wage industries starting in 2018 after tax reform took effect.  So much for leftists’ class warfare attacks on tax cuts and deregulation.

A Trump Bump

From AEI, something to remember when we’re told that the middle class in America is disappearing.  It’s disappearing because people are moving upward:

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Middle Class Disappearing… Upward

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In our Liberty Update commentary entitled “No, Scandinavia Doesn’t Vindicate Socialism” this week, we rightly ridicule admitted socialist Bernie Sanders, including his odd claim that “we now have an economy that is fundamentally broke and grotesquely unfair.”  Well, as this Gallup survey illustrates, he’s swimming upstream against American public opinion.  Specifically, in a survey that Gallup has conducted periodically since 2001, the public’s view of the job market has now hit an all-time record high:

Sorry, Socialists

Perhaps this helps explain why Sanders has suddenly plummeted in 2020 Democratic candidate surveys, although one wonders how long people like Elizabeth Warren can avoid the same fate.

From the mild-mannered yet oft-censored Dennis Prager, for anyone feeling undertaxed or who advocates even higher taxes:

Anyone Feeling Undertaxed?

After years of Obama economic malaise, American Enterprise Institute (AEI) highlights how worker productivity is finally surging following the election of Donald Trump and implementation of his deregulatory and tax-cutting agenda:

Worker Productivity Finally Surging

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Here’s why that’s important, as AEI’s James Pethokoukis notes:

[P]roductivity increased at a rapid 3.6% annualized rate during the first three months of this year.  On a year-ago basis, this puts productivity growth at 2.4%, the fastest pace since early 2010 and far better than the 1% pace that has typified the post-financial crisis expansion.  As Barclays economist Blerina Uruci told The Wall Street Journal, ‘That means we can grow at a faster pace on a more sustained basis.  It also means the economy can run hotter for longer without causing inflationary pressure.’  Moreover, consistent 2%-plus productivity growth makes a 3% real GDP economy less of a stretch.”

Another nice illustration of American Exceptionalism.  We’re just 4% of the world’s population, but a quarter of its prosperity:

American Exceptionalism, Cont’d

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People like Barack Obama, rationalizing his unsatisfactory economic stewardship, assured us that manufacturing was a thing of the past, and not coming back.  Well, a funny thing happened following his departure:

Barack Was Wrong

While attention can be distracted by shiny objects elsewhere, a nice new illustration of the U.S. economy’s revitalization beginning in 2017, as the procession of deregulation and tax-cuts revitalized an economic cycle previously on weary legs:

An Economic Surge

From the U.S. Senate Joint Economic Committee, a stark illustration of the sharp increase in wage and salary growth for full-time employees in the bottom 10% of earners:

The Poor Get Richer

From our friends who do such great work at the Tax Foundation, take a look at how tax cuts have led to companies bringing back more cash to the U.S.:

Tax Cuts Spur Repatriation

Consumer spending accounts for approximately two-thirds of the U.S. economy, and this helpful chart from the U.S. Senate’s Joint Economic Committee illustrates why our economy suddenly turbocharged over the past two years from its decade of sluggishness that we were told was the “new normal”:

Turbocharging the U.S. Consumer Economy

From the left-leaning Pew Research Center, note how something caused the number of Americans responding that the state of our economy is good to turbocharge past the Europeans and Japanese around 2016.  Perhaps Paul Krugman of The New York Times has a theory.

Something Happened Around 2016

Obama apologists desperately claim that the current economic acceleration is somehow attributable to him, never mind that the acceleration began as soon as the Trump Administration began reversing Obama policies by cutting taxes and reducing regulation.  In The Wall Street Journal today, two Arizona State University professors – Nobel laureate Edward Prescott and Lee Ohanian – debunk that claim in a commentary entitled “The Good Times Can Roll On.” As an ASU alumnus, it offers particular pleasure to recommend their entire piece for reading and passing along to others who may need it:

It’s clear the recovery ended in 2014 because the two hallmarks of recovery –  investment’s share of gross domestic product and labor input relative to the adult population – stopped increasing.  This left a large gap between actual output and the output level that would have occurred had the economy recovered to its prerecession growth path.  According to our calculations, the U.S. cumulatively lost about $18 trillion in income and output between 2007 and 2016.  Everything suggested this shortfall would persist or even grow.

Yet economic performance began to improve beginning in the first quarter of 2017.  Real GDP growth accelerated to about 2.7% between the end of 2016 and the second quarter of 2018, up from about 2% between 2014 and the end of 2016.”

Oh, and as football season approaches, go Sun Devils.

Here’s what a steady diet of deregulation and tax cuts have done in terms of job creation expectations from even the notoriously wet-blanket Congressional Budget Office:

Deregulation + Tax Cuts = Jobs Boost

A helpful image of the day, comparing private investment during the final two years of the Obama Administration to the immediate aftermath of the November 2016 election, and even more the tax cuts enacted one year later:

Inexplicably, U.S. economic growth has surged in the first and second quarters of both 2017 and 2018 after a deregulatory and tax-cutting presidential administration replaced a hyper-regulatory and tax-raising one:

Inexplicable Economic Bump