by Ruth Riddle:
The economy is riding a wave. Despite the storms that swirl around President Trump, he is holding a steady course that will ensure smooth sailing. He has set the economic sails to catch the winds of prosperity and guide businesses and individuals to thrive in the waters of capitalism. As Trump said at Davos on Friday, January 26, 2018, “America is open for business.”
First, the stock market. The market is a barometer of faith in the economy. Five days after President Trump’s inauguration, the Dow hit 20,000 for the first time, up 1,700 points since his November 2016 victory. Investors were optimistic that the billionaire businessman and unconventional politician would be good for the economy. They started investing in America and have not stopped. In January 2018, the Dow crossed 26,000.
Second, regulations. At the beginning of his first year in office, President Trump directed every department and agency to eliminate two regulations for every new regulation. By December 2017, that directive had resulted in the elimination of 20 regulations for every new regulation. Over 1,500 regulations (considered ineffective, duplicative or obsolete) have been eliminated. Regulatory compliance is a time consuming, costly burden to business. The one-year cost savings of deregulation is purported to be $570 million. Without the regulatory burden, businesses can operate more efficiently and effectively. They can channel their savings into research and development, expansion and staffing.
Third, jobs. As depicted below, job creation soared to over one million new jobs during the first six months of 2017.
Source: Breitbart, August 4, 2017
Fourth, unemployment. The percentage of people seeking work dropped to 4.1 percent as of November 2017. This is the lowest overall unemployment rate since December 2000. Further, black unemployment dipped to 6.8 percent – an all-time low, since tracking of this statistic began in 1972. Indeed, “A rising tide lifts all boats.”
Fifth, gross domestic product (GDP). This measure indicates economic health. As our president has said many times, a strong economy produces a GDP above a growth rate of 3 percent. As the tax cuts are realized by individuals and businesses, the GDP will respond in an upward climb, as demand for goods increases supply. The January 2018 forecast is expected to near 4 percent.
Sixth, the tax cuts. In December, the long-awaited tax cuts became law. The highlights consist of a corporate rate that dropped from a high of 35 percent to a low of 21 percent, making our businesses competitive once again. Further, overseas profits of as much as $3 trillion will return to our shores. The largest of these is Apple, which will pay $38 billion in a one-time tax payment to repatriate profits of $252 billion in overseas cash. This infusion of capital into the economy bodes well for jobs and corporate expansion. Very important, individual tax rates have fallen, and standard deductions and child credits have doubled, allowing middle-class taxpayers to keep more of their earnings and provide for a simpler tax return. More money in the pockets of Americans translates into more spending by these consumers. More spending by consumers translates into a more robust economy.
Seventh, the Federal Reserve. Jerome Powell was confirmed as the Federal Reserve Chairman in January 2018. Janet Yellen, although credited with keeping interest rates low, was a proponent of financial regulation. Powell is inclined to ease banking rules, viewed by President Trump and businesses as too restrictive. Unshackling the banks from onerous regulations will allow more lending to corporations and individuals, which, in turn, will spur economic growth.
Overall, the Ship of State sails forward. Everyone will prosper on the high seas of the American economy, with one caution, “Don’t be at the airport, when your ship comes in.”