Economy

The Economy's Roaring, Stupid

Despite a bad December for stocks, many signs still point to a healthy economy in 2019.

Lewis Morris · Jan. 8, 2019

Leftists will tell you that 2018 was the worst year ever if for no other reason than Donald Trump is still president. They will also tell you that the economy is tanking because of a bad December in the stock market. Some media voices reported, with a bit of schadenfreude no doubt, that it was the worst year for stocks in a decade, and the worst December for the market since the Great Depression.

If that sounds dramatic and a bit of a stretch, it’s supposed to. To Democrats, any sign of a troubled economy is one more negative thing that can be pinned to Trump. So, when the markets hiccuped last month, we were treated to a deluge of doom and gloom.

There were some notable points missing in all this reporting and the endless speculation in which TV economists and pundits love to engage.

One reason the markets may have dropped is investor fear of Democrats taking over Congress. Democrats in power means reckless spending (though, unfortunately, Republicans weren’t enough different in that regard), burdensome regulations, and policies that stifle innovation and crush small-business investment and growth. Investors know this to be the case, and not because they are Republicans. When it comes to money, a good investor is dispassionate about politics. He calls it as he sees it, and many seasoned investors see a shaky economy when Democrats are in charge.

Thankfully, Dems only took control of the House, but they can still do plenty of damage. That is one reason why we witnessed a stock market course correction in December, some sell-offs and repositioning to prepare for what lies ahead.

Has the market hit bottom yet? It depends on who you listen to. Democrats certainly hope not. They’ll have a much stronger case against Trump in 2020 if the economy tanks. But there is more to the economy than just the stock market. After all, Barack Obama loved to tout the roaring markets during his second term, but working people everywhere knew that those gains weren’t making one wit of difference in their wallets and weren’t creating jobs.

A big indicator of a healthy economy is jobs and wages. The country added 312,000 jobs in December, far more than expected. November and October’s jobs numbers were amended to show greater gains as well. And 2018 as a whole turned out to be strong year with 2.6 million jobs added.

There is more good news to be found by diving deeper into the jobs data. The labor participation rate was at 63.1% for December. This means that people who had left the job market during the Great Recession and the Obama “recovery” are getting back in the game. So, remember, if unemployment rises in the near term, it’s most likely because of the greater number of workers in the market for a job, not because companies are laying off workers.

Job gains were particularly strong last year among small businesses, according to a recent survey by the National Federation of Independent Business. And virtually every sector of the economy gained jobs, including health care, construction, manufacturing, retail, and professional services.

Wages were also strong in 2018. Average hourly earnings grew by 3.2%, the fastest growth since 2008. This is a trend that may continue for the time being since there are still more jobs than workers, which gives workers leverage in negotiating salaries.

We should hold the applause, though, and temper expectations. Reduced taxes and deregulation under Trump have given this country the robust economic rebound we’ve needed for years. Fortunately, Republicans still hold the Senate, but the incoming Democrat House majority will be pushing an agenda that could send the economy into a tailspin. Get ready for “Medicare for All,” the “Green New Deal,” “free” college, “living” wages, and all sorts of snake oil that leftists try to sell.

Minimum-wage hikes are also a favorite for leftists on the state and municipal level, with scores of states and cities raising — in some cases doubling — their minimum wage. This will not put more money in workers’ pockets, but it will put more low-income people out of work as businesses can’t afford to hire as many people or even shutter entirely.

The full impact of the trade war with China has also yet to reach its conclusion. While it seems that Trump currently has the edge in this fight, the cost to American business is real. No one ever really wins a trade war; they just lose less than their opponent.

The economy is subject to a variety of factors, some of which are beyond our control or ability to predict. Right now, the generally pro-business, pro-worker policies of the Trump administration are paying off. It will be important to make sure we stay the course. There are those who would like to see America fail, and unfortunately, many of them are inside our own country. Let’s disappoint them in 2019.

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