US real GDP growth from Q1 2009 to Q3 2017. The green line is a linear fit to the GDP over the three years from Q1 2014 to Q1 2017.
St. Louis Federal Reserve District Bank / FRED
I have have just updated the leading and coincident economic indicators I am following, the first update I have done since last May. That means it is time to take a more analytic view of just what is happening to our economy, and why.
Plot of annual Real U.S. GDP per capita growth in percent averaged over ten year periods. This is the major reason why huge U.S. corporate tax cuts are needed!
The Gallup Organization
About a month ago, I was having a conversation with a gentleman of the progressive persuasion about U.S. corporate tax cuts. I was trying to persuade him the U.S. desperately needed very large corporate tax cuts to restart economic growth. Otherwise we are doomed to secular stagnation, if not indeed secular decline. Being a progressive, he of course did not agree.
Sen. Chuck Schumer (D-NY), together with Democratic Senate and House leaders, announcing their “Better Deal” at Berryville, VA on July 24, 2017.
Screenshot from Newsy coverage.
Having taken a quick look at the Republican Party’s seemingly insurmountable problems in my last post, we should now consider the Democratic Party’s even more destructive, long-term problems. These difficulties are made all the worse by the fact most in the Democratic elites are unwilling even to acknowledge them.
Lady Liberty in New York harbor looking outwards from New York. Is she welcoming the world to New York, or pointing the direction to greater freedom for New Yorkers?
Wikimedia Commons / Elcobbola
Any survey of progressive blue states losing people and companies to other, predominantly red states would be incomplete, even for a partial list, without a look at New York State. Since we have already examined the exodus from the blue states of Illinois and California, it is New York’s turn to be in the dock.
Cumulative net migration to and from California to other states from 2004 to 2013.
The Sacramento Bee
An even greater disaster for American progressivism than the state of Illinois is the not-so-golden state of California.
Illinois Speaker of the House Michael Madigan speaking to press about the status of the state budget on June 22, 2017 during a special legislative session called by GOP Governor Bruce Rauner
Screenshot of an Illinois News Network video.
No progressive-dominated state exemplifies the bleeding of population and resources to red states more than the deep blue state of Illinois. It is a perfect example of the forces described in the post The Ideological Balkanization of the United States.
Democratic Party workers watching the presidential election returns in shock on the night of November 8, 2016.
Photo Credit: AP / Matt Rourke
One might expect such a lurid title for a post from a neoliberal such as myself (also erroneously known as a “conservative”) . However, the reason why American progressives should take this judgement so very, very seriously is that it comes not just from from a neoliberal, but also from a progressive American journalist, an academic who is currently an adjunct faculty member of the Columbia University School of Journalism. Thomas B. Edsall comes to this same conclusion in a June 8 op-ed in the New York Times entitled The Democratic Party Is in Worse Shape Than You Thought.
Alas! Real GDP growth is still trending downwards.
Data and Image credit: St. Louis Federal Reserve District Bank / FRED
It is now time to take our periodic look at how the U.S. economy fairs. My last survey was last February, with my tardiness in making a new one due to a hope that the new Trump regime would cause something new to happen in the economy. Although there are indeed new signs for hope, nevertheless the new administration’s biggest economic ambitions still await fruition. Given the true enormity of the political and economic problems, I suppose it could be no other way.
Real U.S. Per capita GDP in chained 2009 dollars (blue curve) and its percent change year over year (maroon curve). The thick green line is a linear fit of the maroon curve over the recovery years from the Great Recession.
St. Louis Federal Reserve District Bank / FRED
I have not made a general survey of the U.S. economy for some time, the last one having been in October of last year. What caused me to take longer in producing a new one was the (for me) unexpected surge in GDP in the third quarter of 2016. From the Atlanta Fed’s forecast called GDPnow, plus
the other bearish indicators I was watching, I firmly expected third quarter GDP to come in at or below two percent. Instead, it showed at a very respectable 3.5 percent! What was going on? I decided to wait and watch before pontificating, searching for understanding before I wrote.
Rep. Kevin Brady (R-Texas), Chairman of the House Ways and Means Committee. Brady’s controversial plan for “border adjustment” taxes are being fiercely opposed.
Wikimedia Commons / Office of Congressman Kevin Brady
The Republicans in Congress are absorbed in a quandary. As for many of the rest of us with our own budgets, when congressmen find themselves in real financial trouble, many complications get in the way of finding a solution. As I have explored before in the post The Federal Government’s Projected Bankruptcy, the federal government is on the track to total insolvency within one to two decades. Yet, at the same time the Obama administration left national security problems that demand increased expenditures just to ensure the continued existence of the United States. Simultaneously, tax reform including large tax cuts both for the middle class and for American corporations are absolutely required to wake up our moribund economy. How can the Republicans reconcile these contradictions?
Which Way Can We go!
(c) Can Stock Photo / svanhorn
There is no doubt about it! Unless the federal government drastically reduces mandatory entitlement expenditures in the near future, it will soon be bankrupt . What can be meant by “bankrupt” in terms of a nation? In terms of a person or a private organization, the dictionary meaning of the word is that the person or organization is declared in a court of law unable to pay outstanding debts. Whether or not a court will ever declare the United States government as being incapable of paying outstanding debts, I would settle for the definition that the U.S, government in fact can not pay its outstanding debts. And the time when that will be true may be a lot sooner than you think.
President-Elect Donald Trump conversing with President Barack Obama in the Oval Office, November 10, 2016
Wikimedia Commons / Pete Souza
The shell-shocked mass media and progressive pundits still are having immense difficulty coming to terms with the insult to their all-knowing wisdom of Donald Trump’s election. That insult will become all the greater as policies launched by the Grand Old Party actually work and return Americans to prosperity.
Italy’s Beppe Grillo, head of the Italian Five-Star Movement in 2012
Wikimedia Commons / Niccolò Caranti
Last Sunday’s Italian constitutional referendum marks yet another step in the slow unraveling of the European Union and of European dirigisme. Following the United Kingdom’s Brexit vote to leave the EU last June 23, Italy’s vote against proposed legislative reforms is yet another popular protest against intrusive state management of society.
Naval vessel of the the People’s Liberation Army Navy.
Center for Security Policy
In the United States over the past eight years, China has found its perfect enemy, more concerned with appeasing the People’s Republic of China than in confronting it. After the United States withdrew from the Philippines in 1992, China saw the opportunity to fill the power vacuum by claiming the entire South China Sea, a project discussed in the posts Is China a Threat?, The Weakening of U.S. Alliances and National Security, and Probability of War with China Increasing?. Despite some U.S. Navy “freedom of navigation” operations recently in the South China Sea, the Obama administration has consistently ignored Chinese provocations as much as it possibly could in hopes they could engage China and ultimately convert them into friends — an approach identical to the one they adopted with Iran.
Now, with the approaching administration of Donald Trump no doubt weighing heavily on their minds, the Chinese are finding increasing reasons to be nervous about Asian pushback against their imperial ambitions. One can only hope in the face of all this nervousness that the Chinese do not allow their trigger fingers to get itchy.
Are you ready for your soul to be weighed?
Morguefile.com / Southernfried
This is not an an essay on how human values and ethics are irreconcilable with Reality. At least not usually. Instead, its message is that if we somehow mistake what Reality allows, that old harridan will deny us what we need to support a just, economically bounteous society, whatever that means to each of us.