"The underlying reality of low growth", Neil Irwin says, "will haunt whoever wins the White House in November". I don't think so. I expect vigor, no matter who wins the White House in November.
I think it would be pretty ironic if Hillary Clinton gets elected. Because what I'm looking at amounts to vigor starting about a year into the first term of the next U.S. President. If Hillary is elected, we will be hearing stories that it takes a Clinton to create economic vigor. But Bill Clinton had no more to do with the good economy of the 1990s than Hillary does with the good economy of 2018-2024.
It would be more accurate to say that the changes which created the good years of the latter 1990s happened mostly during the Reagan and H.W. Bush years; and that the changes which will create the good years to come happened mostly during the Obama years.
For the record, the vigor of the 1990s was made possible by a big drop in debt growth (1985-1991) combined with a big increase in spending money (1990-1994). The debt-per-dollar ratio shows this as a decline (1990-1994). That decline was followed by unusually rapid increase (1995-2000). This increase was the source of the funds that made vigorous growth possible in the latter 1990s.
The changes are indicated in red on the graphs below:
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| Graph #1: The Growth of Total Debt |
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| Graph #2: The Growth of Spending Money |
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| Graph #3: The Debt-per-Dollar Ratio |
You can see the same effects in the graph of household debt service.
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| Graph #4: Household Debt Service |
The stage has already been set for the vigor that will be attributed to our next President.
7 comments:
Arthurian monetarism.
I read and understood everything in this post. (There’s usually a lot I don’t quite get — which reflects on me, not on you.) I hope what you think will happen does happen.
Thank you, Michael!
At FiveThirtyEight, The Economy Is Keeping ‘Reluctant’ Trump Voters With Him:
"More than one year in, reluctant Trump voters are generally still happy that they voted for Trump. In the most recent survey, 57 percent of reluctant Trump voters said they had no regrets about their vote, though 28 percent said the jury was still out. For a comparison, 83 percent of all Trump voters said they had no regrets, while 11 percent said the jury was still out.
Most importantly, our latest survey shows that the president is making some inroads with these reluctant Trump voters, however gradual, and that the economy is a big reason why.
In April of last year,2 our survey found that only 14 percent of reluctant Trump voters strongly approved of the job the president was doing. In the latest iteration of the survey, that number had ticked up to 22 percent. This could be due in part to reluctant Trump voters’ views of the economy..."
At CNBC, 7 September 2018: Trump has set economic growth on fire. Here is how he did it:
"Trump's economic program was very simple: an attack on taxes and regulations with an extra dose of spending on infrastructure and the military that would create a supply shock to a moribund economy."
No. Look at my graphs.
Politico, 3/21/2019: How Trump is on track for a 2020 landslide:
“The economy is just so damn strong right now and by all historic precedent the incumbent should run away with it,” said Donald Luskin, chief investment officer of TrendMacrolytics, a research firm whose model correctly predicted Trump’s 2016 win when most opinion polls did not.
Jeffrey D. Sachs at Project Syndicate, America’s Illusions of Growth:
"Many commentators have interpreted buoyant GDP and unemployment data in the United States as vindicating President Donald Trump’s economic policies, and some suggest that his re-election chances have improved as a result."
Sachs disagrees with those commentators. But let's wait and see how the elections turns out.
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