Economic Insights - January 2018

Comments Off on Economic Insights - January 2018
Economic Insights - January 2018 LoadingADD TO FAVORITES

Last January, when the economy was just beginning to emerge from the dark and pessimistic Obama malaise, the Business Briefings Editors offered this vision of the period just ahead:

We can already foresee the departure of the public-policy elites who gave us the last eight-to-sixteen years of fiscal policy, and their replacement with an all-star cast from the real economy.  Those new players are promising to abandon the old ideas that have failed us, and free the markets to take full advantage the Deployment Phase of the Fifth Techno-Economic Revolution.

Markets know that this infusion of real world experience will push policy in a much more market-friendly direction.  It’s not just “hope and faith,” it’s an entirely rational response to a radical shift in economic policy.

Donald Trump has set his sights on realizing 4 percent or more annual growth in real GDP, rather than the 2.2 percent real GDP growth observed since the end of the Great Recession in June 2009.

However, most economists have trashed the idea.

But that makes no sense. We have experienced relatively long periods of 4 percent or more economic growth. Following the Kennedy tax cuts, the economy averaged 5.2 percent yearly growth between 1963 and 1969.  After the Reagan tax rates fully went into effect, alongside Paul Volcker’s conquering of inflation, the economy grew at 4.5 percent annually between 1982 and 1989.  And between 1994 and 1999, Bill Clinton, working with Newt Gingrich, oversaw an economy that grew 4.3 percent annually, after welfare reform, free trade, and capital-gains tax relief were implemented.

So, we can easily point to five-year, six-year, and seven-year periods, within recent memory, when the American economy beat 4 percent.  And, for nearly all the post-World War II period, dating from 1947 to 2007, the U.S. economy actually grew at 3.4 percent annually.  And 3.4 percent is not really all that far from 4 percent.

In fact, we at Business Briefings believe, it’s only a few pro-growth policy changes away.

The 4 percent target originally promoted by Jeb Bush and adopted by Donald Trump is both aspirational and doable. 

Forget, what the Keynesians are saying.  Four percent growth is definitely...

To continue reading, become a paid subscriber for full access.
Already a Business Briefings subscriber? Login for full access now.

Subscribe for as low as $135/year

  • Get 12 months of Business Briefings that will impact your business and your life
  • Gain access to the entire Business Briefings Research Library
  • Optional Business Briefings monthly CDs in addition to your On-Line access
  • If you do not like what you see, you can cancel anytime and receive a 100% pro-rata refund