Summary: While the Democrats party over their victories on Tuesday, let’s examine one of the great forces deciding elections. What is the trend of the US economy, and how might it influence the major elections in 2018?
The Republican’s incompetence gave the Democrat’s some rare victories on Tuesday. Today Democrats rejoice, relieved that they need not re-think their political platforms or alliances. They will continue with the strategy that has brought their party to near ~85-year low point in political strength: love for foreign wars, the health care industry, Wall Street, and identity politics. See the data here, here, and here) — plus the new CNN poll showing that favorable views of the Democratic Party have dropped to their lowest mark since this survey began in 1992. (Across the aisle, the GOP has had great success with its outright extractive program (benefiting the 1%), marketed with lies (e.g., tax cuts are great!).
This is beyond odd. With even moderately competent political leadership, the economy has the decisive effect on US national elections. That a stable and moderately strong economy did not put Hillary Clinton in the White House reflects the incompetence Donna Brazile reports in her new book, Hacks: The Inside Story of the Break-ins and Breakdowns That Put Donald Trump in the White House.
The ebbs and flows of US politics are driven to a large (not exclusive) sense by the following graphs. If the economy continues on this path, the Republicans might suffer only the usual minor losses in the mid-term elections — and do well in 2020 (perhaps led by President Pence).
These graphs show the first nine months of Trump (from his January 20 inauguration though the most recent data) — and the 8 years of Bush Jr. and then Obama, for comparison. Note that Trump has had almost no effect on the economy yet, and will not until the legislation and budgets from the GOP Congress and him take effect during the next year or two. These graphs
Real GDP per person
Real gdp is useful in many ways. But individuals do not benefit if GDP increases due to population growth. GDP per capita is a better measure of how well Americans are doing. Like all measures, it provides only a partial truth. This does not tell us how well the increased national income is divided. In fact, the 1% (or the top few percent) are skimming off most of it.
Conclusion: so far, more of the same stable moderately slow growth.
Median real weekly earnings for wage and salary workers
How Hillary could lose with median real wages growing for the past two years at the fastest rate since the tech boom? If this continues, do not assume the GOP will display such incompetence, especially under the leadership of President Pence.
Fours years of sustained moderately strong job growth — and Hillary still managed to lose (in the electoral college, with a small win in the popular vote — instead the landslide a competent Democrat probably would have received). As for the GOP and Team Trump, this is the one major economic that is slowing (decelerating). It is not a leading indicator, but one of the most important economic metrics. Watch it.
For More Information.
Important: To see why the Democrats have been unable to capitalize on the zany antics of Trump, see Matt Taibbi’s typically brilliant analysis.
- What every American needs to know about the Federal Reserve System.
- What are the limitations of the Fed’s power? It’s neither impotent nor omnipotent!
- The Fed sees years of slowing growth. Prepare for years of political turmoil.
- Today’s mythbusting: the Fed is not suppressing interest rates.
- More proof of rising inequality, perhaps our greatest threat.
To better understand what lies ahead for America…
I recommend reading The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War by Robert J. Gordon (Prof economics, Northwestern U). From the publisher…
“In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, motor vehicles, air travel, and television transformed households and workplaces. But has that era of unprecedented growth come to an end?
“Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth challenges the view that economic growth will continue unabated, and demonstrates that the life-altering scale of innovations between 1870 and 1970 cannot be repeated. Gordon contends that the nation’s productivity growth will be further held back by the headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government, and that we must find new solutions.
“A critical voice in the most pressing debates of our time, The Rise and Fall of American Growth is at once a tribute to a century of radical change and a harbinger of tougher times to come.”