Tuesday, July 3, 2018

Actually, America is doing fine (keep reading-- I'm going somewhere with this)

Yes, you read that correctly.  I really should begin this post with the following statement:  "They're right, of course.  Quite right."  Go watch Change of Mind, which is the Prisoner episode from which I derive the title of the blog, and you'll get it.

Anyway, let's check in on GDP growth and unemployment.  For economic numbers, as always, we turn to my good buddy, FRED.  Federal Reserve Economic Data.  Let's see how things are doing in the first year and a half of the new administration, shall we?

WOW!!!!  I mean, look at those GDP growth numbers!  Growth all along, and 16.5% growth in Q2 of the second year of the new administration?!  Holy shit!  Steadily dropping unemployment too!  I mean, that's just spectacular!

Oh, wait.  Fuck, that's Carter.  Did you even bother to look at the x-axis?  OK, that was a nasty trick I pulled, but hey, it was fun, right?  Now, you have to ask yourself a question.  One of two things is the case.  Either Carter was a way better president than you have been told, or the economy can do well, particularly for a year and a half (or more), with even a shitty president.

Hint:  you don't need to upgrade your assessment of Carter as President.  He sucked.  Then again, my standards have changed, but we'll get to that, particularly tomorrow.

How are things doing today?  (No tricks this time).  Let's look at the same graphs for Trump, to the degree that we can (we don't actually have Q2 numbers for 2018 yet).

Comparison?  The unemployment rate is lower now than at the same point in Carter's term, but the trend is similar, and Trump's Presidency simply started from a lower starting point.  GDP growth is nothing compared to what it was in the first year and a half of Carter's term.

Here's the basic point.  Unless it is hit by exogenous shocks, the economy tends to grow.  Capitalism works.  In Sunday's post, I gave you a primer on presidential influence on the economy.  There isn't that much, in normal circumstances.  That's a good thing, particularly given America's spotty electoral record when it comes to making intelligent choices.  Remember:  DDRRDDRRDDRRDDRRDDR....

How many elections would I have to flip to get that as the perfect presidential election record from 1944 through 2016?  One.  1980.  If that's what the American people do, would you want them making choices about who "runs" the economy?  I wouldn't.  I'd rather have an economy that runs its own damned self, that you very much, Adam Smith.  There are too many fucking mercantilists left.  Books, people.  They're called, "books."

So, the point for today is that the economy mostly chugs along.  It has continued chugging along for the last year and a half, and it will continue to chug along after... this... passes, unless things start glowing in the dark.  Even trade wars are temporary.  From an investment perspective, don't do anything stupid.  Trade wars must end, and when they do, you'll want your money invested in a widely diversified portfolio, passively managed.

All other things being equal, the economy grows.  Of course, Carter had some problems towards the end of his term, and you can't assume it will grow at a constant rate, but unless Donny really does launch the nukes, the economy will grow, particularly if he backs off this stupid, fucking trade war.  If you are properly invested, you will make money.

See?  I can be bright and cheery.  All I had to do was chop off the last two years of Carter's Presidency to make it look like he was awesome, and even then, Trump looks lousy by comparison!  OK, I suck at this "cheery" thing, but you knew that.  Remember, though, the economy is doing well.  Facts are good.  I like facts.  Never try to talk yourself out of facts just because they get in the way of your politics.  Right now, some of us are stockpiling facts...  Anyway, economy=good.

Of course, you know there's another side to this, right?  That'll be for tomorrow.  Things are, um... marinating, which is what should be happening in preparation for the 4th.  Remember: marination is the key to a proper BBQ!  OK, if I'm being technical, low temperature is the key, but I'm trying to do a metaphor.  Get your marinade going, though.

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