by Investor’s Business Daily · January 12, 2018
Economics: As signs that the economy is strengthening become undeniable, the question now is who deserves credit. The evidence is showing fairly conclusively what the correct answer is.
X The IBD/TIPP Economic Optimism Index jumped more than 6% in January to 55.1, which is close to the all time high for this measure and marks the 16th consecutive month the index has been in optimistic territory. The personal financial outlook index climbed to 64, the highest it’s been since 2004.
Other indexes drawn from the monthly IBD/TIPP poll show financial stress down, quality of life up.
IBD/TIPP isn’t alone. A recent Quinnipiac poll found that two thirds say the economy is “excellent or good,” which is the highest ever for this poll. (When Trump took office, just 46% rated the economy as excellent or good in this poll.)
Various economic indicators are coming in better than expected as well. The 4th quarter GDP is likely to top 3.2%, which would make three consecutive quarters of 3% growth — something that hasn’t happened since 2005.
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It seems pretty clear that, whatever sturm und drang is going on in Washington, the public is finally starting to see hope and change a full decade after the last recession started.
But just as the economy’s strength is becoming more apparent, so too have efforts to credit President Obama for the turnaround. The thinking goes that Obama’s policies were finally kicking in just as President Trump took office. Obama himself made this case in early December.
The Quinnipiac poll found that 49% say Obama is “more responsible” for the current state of the economy, with 40% saying Trump is. But the results are driven almost entirely by partisanship. What’s more, Trump’s numbers have been rising over the past year, which makes sense.
Let’s review the evidence, first.
The recession ended six months after Obama took office, but the recovery he presided over for the following 7 1/2 years was the worst since World War II. Yearly GDP growth never once reached 3%, job growth was anemic, wages stagnated, and unemployment dropped mainly because so many people left the workforce.
Then Trump unexpectedly won the election, promising to undo most of Obama’s economic policies — deregulating, cutting taxes, etc. Almost immediately, business optimism shot up and the stock market roared.
And now with the tax cuts on the books, dozens of major companies have handed out bonuses to hundreds of thousands of workers and announced pay hikes — with Wal-Mart (the country’s largest employer) boosting its starting wage to $11.
The good news keeps coming. On Thursday, Fiat Chrysler announced that it will spend more than $1 billion to revamp a Michigan assembly plant and move production of its Ram truck there from Mexico, creating thousands of jobs in the Great Lakes State. It’s also giving $2,000 bonuses to 60,000 U.S. workers.
None of this would be happening if Hillary Clinton — who promised to raise taxes and impose still more regulations — were president, and all of it will help stimulate economic growth in the months ahead.
No matter what anyone thinks about Trump, he clearly deserves credit for much of the economic gains we’re seeing today.