Carnes: It is indeed the economy, stupid | VailDaily.com

Carnes: It is indeed the economy, stupid

There are those who say, because of stock market highs and unemployment lows, “We have the greatest economy in the history of our country!”

Sensationalistic hyperbole aside, those people (OK, that one person) is dead wrong.

Stock market indices and unemployment levels are merely two metrics out of hundreds considered to gauge the actual economic health of a nation.

No one would measure the health of the ski industry solely upon mid-mountain snow depth and equipment sales, right?

Another point to quickly get out of the way: Presidents do not make or break economies. Capitalism plays the main role, thus I do not give credit or point blame squarely on the shoulders of whoever happens to be sitting in the Oval Office at any particular point in time.

While Congress and the Senate spend the money and pass regulatory bills that indeed play a part, George W. Bush no more crashed the economy than Barack Obama repaired it.

The Dow Jones average has been on an upward tear since 2009, with the highest percentage increase coming in 2013, along with a freefall for unemployment.

Both are now flattening out, but this is due to the always inevitable slowdowns, not anything directly accomplished by politicians.

The stock market will always be a gambler’s paradise, and although there is no official house, it still wins more than it loses. At the same time, our almost unprecedented economic expansion has so enriched one-percenters they now hold almost as much wealth as the middle and upper-middle classes combined.

But while market corrections are healthy in the long run, with the U.S. expansion now in its eleventh calendar year we desperately need interest rates to remain stable for an extended period, as the pace of job creation is quickly dwindling, down 26% this year alone.

The productivity of American workers fell in the third quarter of 2019 for the first time in almost four years, and orders for durable goods are dropping faster than America’s ranking as the world’s most competitive economy, which slipped to third place behind Singapore and Hong Kong for the first time in nine years.

American farmers are quickly becoming the latest socialist welfare queens, as farm debt is up 30% since 2013 along with farm bankruptcies up 24% in just the last year, reaching the highest level since the last recession officially ended in 2011.

Major retail store closings are almost double what they were just a year ago and “household debt” has ballooned to the point that even car loans are being treated like mortgages, with more and more going underwater (owing much more than the value of an asset).

GDP growth is quickly slowing to the point that the second quarter of 2019 was less than half the same time period in 2014.

And then there is the dreaded “inverted yield curve” (basically where short-term bonds have higher yields than long-term bonds), which have preceded all nine recessions in the American economy since 1955.

The overall United States trade deficit continued to widen in the first nine months of 2019, up 5.4% from the same period in 2018, and our federal deficit has ballooned 26% in just the last year, as while tax revenues grew 4%, tax spending rose twice as fast at 8%.

And while constant borrowing from the Federal Reserve appears to be the current strategy, the government will eventually run out of lenders. We cannot simply borrow our way to perpetual prosperity.  

For those of you who take an objective look at reality as anti-Trump, there’s nothing I can say to a brick wall, but for all others I remind them of Sir John Templeton’s quote: “Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria.” 

Beware the constantly euphoric elected leaders, for they know not what they do, or say.

Especially now.

Richard Carnes, of Avon, writes weekly. He can be reached at poor@vail.net.