Actually,
Workers are making more money and taking home a larger percentage of what they earn. It should come as no surprise that the Conference Board recently reported that its consumer confidence index had climbed from 135.3 in September to 137.9 in October. Both readings are the highest in 18 years.
That confidence is, in turn, driving consumer spending. This spending has increased every month since April, following the Internal Revenue Service lowering withholding rates – thanks to the Republican tax cuts.
With consumer spending driving over two-thirds of GDP growth, we are finally seeing the kind of growth in the GDP that we should have seen under President Obama and coming out of the recession.
We are averaging 3.3 percent GDP growth year to date with GDP growth coming in at 4.2 percent in the second quarter and 3.5 percent in the third.
It’s early, but the Atlanta Federal Reserve is projecting over 2.6 percent growth for fourth quarter. If true (and I believe that estimate is low), GDP growth would be 3.1 percent for 2018, making it the first year since 2005 with 3 percent or better GDP growth.
If the projection is correct, Obama would be the only post-World War II president without a single calendar year of at least 3 percent GDP growth. In fact, the economy is so strong that the Federal Reserve Bank has had enough confidence to raise interest rates seven times since the election and will raise them an eighth time in December.
Higher interest rates create demand for interest-bearing instruments – like bonds – and decrease the demand for stocks, driving prices down. Nonetheless, and despite the recent ups and downs in the Dow Jones Industrial Average, it remains up over 35 percent.
That is a huge testament to the economy’s strength. During the entire Obama era – prior to the 2016 election – the Fed only had enough confidence in the economy to raise interest rates once (in December 2015) and then only by one quarter of 1 percent.
What does this all mean? In essence, Obama didn't have jack squat to do with Trump's economic improvement. Trump's policies are working, and Obama's didn't.
