The Good News About Trump's Brand Of Economics

The new year could well demonstrate President Trump's brand of Republican economics - tax cuts, deregulation and tough policies on trade with China - really works.

In 2018, the president's policies instigated nearly 3 percent growth, robust jobs creation and rising wages - a combination President Obama's statism could not deliver. The prevailing narrative among the left-leaning financial press and Democratic Party is the economy is on a sugar high.

Household incomes got a jolt from personal tax cuts and those temporarily accelerated consumer spending. However, newly rising wages and lower gasoline prices - both enabled by Mr. Trump's policies - are now giving a fresh boost to consumer spending power. Those should keep cash registers ringing well into 2019.

Deregulation is raising labor productivity, and permitting businesses to keep prices in check even as they raise wages. Pulling out the volatile energy food sectors, "core inflation" is flat lining in the range of 2 percent. Federal Reserve Chairman Jerome Powell has the opportunity to heed President Trump's call for a more cautious interest rate policy.

The left-leaning media and Democrats have been on a relentless disinformation campaign asserting corporate America is pocketing their tax cuts, when they are in fact expanding capacity and adding employees.

It does not show up in large increases in investment spending, because most durable goods (other than cars and cell phones) are getting cheaper adjusted for broader inflation and relative to household incomes and business cash flow.

Want proof? Compare the price of a basic laptop, washer and dryer or color TV to what you or your parents paid 20 or 30 years ago.

As for business equipment and building space, Amazon is installing robots that not only reduce labor and operating costs but that could also slash up to $800 million from capital costs by cutting consumer-order cycle times from 60 minutes to 75 minutes to only 15, shrinking required inventory and reducing warehouse space by 50 percent.

1 2 3
View single page >> |

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.