Freedom Line Blog

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:

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Sorry, Socialists

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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

From our friends at American Enterprise Institute, predictions from people like Barack Obama on the U.S. manufacturing sector’s demise were greatly exaggerated.  As one can see from the image below, the sharp upward trajectory since Donald Trump’s election has taken American manufacturing output to a record high:

U.S. Manufacturing Reaches New High

Today brought yet another impressive U.S. employment report from the Labor Department, with an unexpectedly high 213,000 new jobs added in the month of June (versus the expected 195,000).

But the report includes a particularly impressive number after nearly a decade of people just giving up on working during the Obama era malaise.  Over 600,000 Americans decided that the market is so hot that they got off the sidelines and entered the game:

The increase in the unemployment rate came due to a rise in the labor force participation rate, which increased 0.2 percentage points to 62.9 percent as 601,000 people came off the sidelines and re-entered the labor force.”

Continuing the sports analogy, The Wall Street Journal notes that what we’re witnessing is a different kind of ballgame under the Trump Administration than the unprecedented economic sluggishness that characterized the Obama “expansion”:

Steady hiring and low unemployment shows the labor market continues to be an area of strength for the economy since the recession ended nine years ago.  What might be different now is that other aspects appear to be picking up steam.  Some economists project economic output rose at better than 4% annually in the second quarter for the first time since 2014.

Rising consumer spending, manufacturing output and exports are expected to have contributed to the gain, set to be officially reported later this month.  If sustained, that would be a turn from much of the expansion in which hiring has been consistent, but growth has been sluggish, holding near a 2% annual rate.  One explanation is wages.  Even though Americans were finding jobs, scant raises left them with little room in their budgets to step up spending.”

It’s amazing what an economic agenda of tax cuts and deregulation can do for an economic cycle that was supposedly on weary legs and amid an era of “secular stagnation” when solid growth was a thing of the past.

And the good economic news just keeps on coming.   American manufacturing companies report a new record high positive outlook in the continuing wake of tax reform and deregulation.  Note the immediate uptick beginning at the very end of 2016:

Record Positivity Among U.S. Manufacturing Companies

In our latest Liberty Update, we note how the U.S. has quickly reclaimed its position as the world’s most competitive economy under President Trump after slipping under Barack Obama.  This image vividly illustrates one point we highlight – that for the first time ever, the number of job openings exceeds the number of unemployed Americans in the workforce to fill them:

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Jobs, Jobs, Jobs

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From the always-insightful Holman Jenkins of The Wall Street Journal in his latest “Business World” commentary:

Mr. Pai, chairman of the Federal Communications Commission, cares about good policy.  That hasn’t been the rule for years.  During the Obama era, tech and telecom policy were driven by White House interest in whipping up millennials and exploiting public hostility to cable providers.”

It’s almost as if the wave of deregulation and tax cuts had some sort of impact.  The Congressional Budget Office (CBO), no refuge of supply-side enthusiasts, just boosted its job growth estimate by 2.6 from last year’s estimate:

Deregulation and Tax Cuts: Jet Fuel For Jobs