Real Data Reflects Early Confidence
By Roger Stone
The new Trump Administration doesn’t have to wait for a brighter future, they are getting a brighter today in the form of better than expected economic data.
A wide variety of metrics demonstrate that the economy is picking up, demonstrating the increased confidence held by the general public. President Elect Trump promised he would put America First when it came to jobs, and President Trump has delivered significant gains in a short amount of time.
Using the Bully Pulpit, President Trump has corralled hundreds of thousands of new jobs from industry giants that were sitting on the sidelines and on huge reserves of liquidity during the Obama years. Just five companies; Intel, Exxon, Ford, Sprint, and IBM will hire over 75,000 people in the next four years. His leadership has allowed him to do all this in his first hundred days.
Brick and mortar retail had been declining month over month for much of last year, but starting in February, this trend reversed. Retail is now up for the first time in a long time, and the Dow is up over 3% for the past three months. Manufacturing CEO confidence is nearing an all-time high.
Can President Trump keep up the pace? All signs point to yes, as the current gains are factoring in geopolitical jitters about the saber rattling in the Middle East and Asia. Many observers expect economic activity to accelerate even further once the systemic noise generated by those who are determined to resist all things Trump, begins to settle down. In the meantime, it’s been a good opportunity for gold bugs to take some profits.
The Trump Administration also spoke at length about repatriating foreign reserves held by US companies in various off-shore tax avoidance schemes. As part of their tax initiative that will be rolled out later this year, reduction in corporate taxes along with incentives to keep jobs and capacity here in the USA, coupled with the return of potentially hundreds of billions of dollars, even more job gains can be expected.
Even the gloomy news has a silver lining. While new house construction fell a couple of percent, the annual rate of new construction was higher than expected. The huge housing slowdown that was predicted seems to have been curtailed. With prices rising in most markets and inventory capacity down for both purchases and rentals, it is easy to see that baring some black swan event, the growth in construction will return soon.
One area of concern is loan originations, where more adjustable rate mortgages are being issued than expected while over-all lending activity is down over 10% from last year. Most of this has been related to the high prices of homes, but this is expected to help spur new construction.
President Trump has also been looking to save money used in running the Federal Government. While it is true that he ended his Federal Hiring Freeze a couple of days ago, he also demanded that all of his agencies submit plans to cut waste, fraud, and increase efficiency in their departments, and to plan for reduced budgets in the near future.
There’s no doubt that Team Trump has a very difficult job ahead of them, but using past indicators as a guide, we see that so far they’ve been up to the task.
https://www.census.gov/retail/marts/www/marts_current.pdf
