Fast Growth, and Lots of It, Is Right Around the Corner

Townhall.com ^ | June 20, 2017 | Stephen Moore

[Kaslin]

Every day, legions of economists dismiss Donald Trump's economic agenda and forecast of 3 percent growth as a wild-eyed fantasy. The consensus is that the economy "can't possibly grow at 3 percent," according to The Wall Street Journal. "Slow growth is the new norm, so get used to it," wrote Rucir Sharma, chief global strategist at Morgan Stanley, in Foreign Affairs magazine this month.

Question: Why does anyone bother to listen to economists anymore? The profession has become an embarrassment, and the most respected economists have shown themselves to have as much predictive power as a deck of tarot cards.

Almost everyone in the economics field -- with a few, ahem, exceptions -- bought into the Keynesian idea that massive government spending, a "stimulus package," would revive the economy after the Great Recession of 2008-2009. The trillions of dollars of government borrowing here and abroad created a decade-long anemic recovery. The number of jobs created under President Barack Obama's stimulus turned out to be fewer than the number we would have had if the government had done nothing -- according to the Obama administration's own analysis. So we got $9 trillion of debt with almost nothing to pay for it.

Amazingly, every Obama budget forecast that annual growth would reach 3.5 to 4.5 percent. Bullish growth was just around the corner. (Remember Joe Biden's "Recovery Summer" tour?) Consider how these bullish forecasts squared with reality.

In 2009 they said we would get growth up to 4.6 percent.

In 2010 they said we would get growth of 4.3 percent

In 2011 they said we would get growth of 4.4 percent.

In 2012 they said we would get growth of 4.1 percent

In 2013 they said we would get growth of 3.6 percent.

In 2014 they said we would get growth of 3.4 percent

We never got growth above 3 percent under Obama, and the average growth was 2 percent, ending at 1.6 percent. The reality was, on average, about 1.5 percentage points below the projection, which was about an 80 percent overestimate of growth. Maybe we should have just hired the tarot-card readers. Their predictions couldn't have been any worse.

So now the very people who made these preposterous forecasts are telling us 3 percent growth is a fantasy under Trump. Under their model, tax increases create 4 percent growth, but tax cuts can't get us to 3 percent growth.

The major reason that we can't get growth, we're told, is that we have so many millions of baby boomers retiring. But we have 100 million people over the age of 16 outside the labor force today or unemployed, and that's a giant labor pool to get workers from. Most of them are young, not old. This is a gigantic pool of workers we could tap into -- if Washington would stop spending $1 trillion a year paying people not to work.

Another fallacy is that this long recovery means the economy is due for a recession. No. For much of America this has been a long recession, not a long recovery. We are suffering from a severe growth deficit. The economy is $3 trillion behind where it should be because of the shallow recovery. It's teed up for a boom, not a bust.

How do we ignite that boom? Nearly every policy during the Obama years was anti-growth: tax increases; minimum-wage hikes; Obamacare; Dodd-Frank regulations; massive debt spending; the Paris climate change accord; an EPA assault against American energy; massive expansions of food-stamps programs and more. If Trump is able to shift those policies into reverse -- especially by getting tax rates down, not up -- then 3 to 4 percent growth is easily achievable, and the economics profession will be proven dead wrong again.

[circlecity]

If Trump can turn the economy around then all this opposition will come to nothing. That’s how Reagan brought the country around to him - by filling their pocketbooks.

[steve8714]

I was an economics major at UMSL, under Joseph P McKenna. Economic predictions are useful for nothing. Econometricians can offer a good record of what already happened.
You may as well try to forecast the climate.

[txrefugee]

Does anyone remember Obama’s economists assuring us that they saw “green shoots” in 2010? No one else ever saw those fictional signs of life as the Middle Class suffered through the worst fake “recovery” in the history of the country.

[Starboard]

Businesses have been hampered by the weight of the regulatory millstone. Removing that burden can only help the economy to grow faster. Plus, lower taxes will incentivize people to spend and encourage businesses to expand.

However, since Trump’s election the politicized Fed under Janet Yellen has raised interest rates three times, and more are in store. The Fed has also indicated it will start winding down its massive balance sheet. These counter winds will probably have some dampening effect on growth, however Trump will have an opportunity to replace Yellen next year.

[SMARTY]

Money and blood are the only things that the uninformed, the mis-informed, the backward, the young and the illiterate ever comprehend.

Maybe for Liberals it’s always about emotion and blood. For Conservatives it’s always accountability and $$.

[Starboard]

And what about Obama’s “Recovery Summer” in 2010? Just another phony propaganda campaign that produced virtually nothing.

[Lou L]

Why does anyone bother to listen to economists anymore? The profession has become an embarrassment, and the most respected economists have shown themselves to have as much predictive power as a deck of tarot cards.

Obviously, much of what the Obama administration did to the economy was back-door, behind the scenes, but the aftermath spoke for itself. I suspect that administration knew full well, that their policies would not produce economic growth, so they grew a narrative of low-growth to any economist that would listen. It was the "new normal," they said.

I suspect there were some payoffs along the way--the media never questioned why their forecasts missed by such a large margin, nor did the investment community. The stock market just limped along. In fact, if you look at the DJIA, it had been going sideways for three years (2013-2016).

Obama and his minions loved to blame all of that on Bush, who preceded him, and no Republican ever even thought to challenge them. In fact, it was Obama's crony capitalist, high-tax, high-regulation environment that was an anchor around the markets.

Thank goodness we have a President and an administration now that understands what the markets need to succeed. If only the GOP Congress would reach out to support him occasionally.

[Scott from the Left Coast]

Got to have the tax cuts. And the swamp wants to keep the people poor.

Going to have to get Congress to do what they don’t want to do...as it gives them nothing they can’t get already. If the Swamp wins, there will be no economic boom to wash away the crap being put out by the Left...and anger will increase.

[Kharis13]

I agree, it’s hard to forecast what the economy will do from year to year. However, it was easy to predict a sour economy during the Obama years simply because of his job-killing policies and regulations. Pour water on a fire and it’ll begin to die and go out. Pour gas on the fire and watch it explode. I can’t know for certain the economy will grow under Trump’s leadership, but he’s certainly not pouring water on the fire.

[loveliberty2]

Let's read a short, but significant, excerpt from the words of the Author of our Declaration of Independence and Third President of the U. S., Thomas Jefferson, who, in his 1801 Inaugural Address, laid out what might be considered to be "qualifications" for the American presidency:

(Excerpt, "Our Ageless Constitution," p. xiv, reformatted)
"Let us, then, with courage and confidence pursue our own Federal and Republican principles, our attachment to union and representative government. Kindly separated by nature and a wide ocean from the exterminating havoc of one quarter of the globe; too high-minded to endure the degradations of the others; possessing a chosen country, with room enough for our descendants to the thousandth and thousandth generation;

- entertaining a due sense of our equal right to the use of our own faculties, to the acquisitions of our own industry, to honor and confidence from our fellow-citizens, resulting not from birth, but from our actions and their sense of them;

- enlightened by a benign religion, professed, indeed, and practiced in various forms, yet all of them inculcating honesty, truth, temperance, gratitude, and the love of man;

- acknowledging and adoring an overruling Providence, which by all its dispensations proves that it delights in the happiness of man here and his greater happiness hereafter

—with all these blessings, what more is necessary to make us a happy and a prosperous people?

- Still one thing more, fellow-citizens—a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.

- This is the sum of good government, and this is necessary to close the circle of our felicities.

[Sequoyah101]

It took Reagan two years but he had a demonrat congress and yet he did it. He also had Iran Contra to deal with.

I am not so optomistic for Trump though. Almost all in DC are against him and anything he tries to do.

My biggest concern right now is the medical system that is consuming as much of our economy as the gubment is and there is no end in sight to the growth of either one but escpecially the medical system. Repealing barkycare will do nothing to arrest this juggernaut. In fact, costs will continue to increase astronomically but worse, some will have a much worse deal than they are paying for now. Medicine is killing us, turning us over and shaking the last pennies out of our pockets then stealing the nickels from our dead eyes.