Conversation about the Current State of the Economy

Since this keeps coming up in conversations, I thought I'd just post this here as a reference so I don't have to keep typing the same things over and over...

Let me reiterate that I'm not saying that Republicans or Democrats are better here, that I am for or against Trump (although you can guess where I stand on that), or that this article has anything much to do primarily with political stances - Quite the opposite, it's more of a critique of the Capitalist system which both parties have supported, and continue to support/defend without question.

We have been consistently told that the economy is doing great and that all we have to do to understand this is to look at the unemployment numbers.  Yes, they are lower than they have been in something like 50 years, but there is a lot more to look at behind this one number and we should never take it at face value (even when it appears to be bad, it's probably worse, and still doesn't tell us all that much).

There is a pretty good article here which goes into just how complicated this one number is, and why it should be taken with a huge grain of salt.

Secondly, the main thing to remember here is that simply looking at the unemployment rate, seeing that it's low, then happily walking away is something akin to having your doctor take your temperature, seeing that it's 98.6, and giving you a clean bill of health (when you could possibly have stage 3 cancer).  There are a large number of other factors that go into judging the true health of an economy, and they all need to be looked at in order to get a more clear picture of how things really are.

Since I already typed up a detailed response to a Facebook post about this yesterday - but also because it's Saturday morning and I'm gonna pull the lazy card - I'm going to copy and paste that conversation here:

(My Response)

I do plenty of research, and I actually got sick of watching CNN a couple of years ago as, yeah, it's gotten to be mostly sensationalist garbage (as has Fox News and MSNBC, for that matter).

The graphs you're showing do look impressive, but there's a lot more to them than just a picture, and there's a hell of a lot that these graphs don't tell us (I don't think you read the Forbes article I posted above either, which is at least partially explaining why you can't pin all of the credit/blame for the *immediate* state of the economy on the sitting President, and is also partially saying that you can't give Trump full credit for what was already on course to happen anyway - Not that I'm saying Obama was 100% responsible either).

First of all, regarding GDP... yes, Q2 of 2018 had an unusual spike before they dropped down a bit in Q3 and Q4. This was about the time where the new Tax Cuts were coming into effect (though they also had something to do with the rise in 2017) - Again, mostly for the rich and corporations... Yes, some of us saw a little more money in our paychecks, but the deductibles were also changed beneath our noses, and that screwed a lot of people when they went to file taxes the next year (just as the CPA that I go to). Also, it would have be nice if OUR tax rate went down by 15%, yeah? So between this and the Republicans doing some short-term deficit spending, the GDP rose for a bit, but who really benefits from all of this? In the long run, the GDP is still *averaging* around 2.3% anyhow, year over year.

Regarding the stock market... this graph also looks impressive, sure. There's a lot to be said about this. For one, it's great that stocks are doing so well, but that really is only a benefit to about half of the US population and does nothing for the rest of the people. Secondly, of course you have to give credit for the boost in the stock market to the Trump tax breaks... it was fantastic for the corporations and the rich, and that is reflected here. However, with what sounds like good news, we should probably factor in a few other things:

- As it happens every 7 to 10 years lately under our Capitalist system, it's been widely speculated that we are overdue for another recession, and most economists agree on this as there are plenty of warning signs all around us (an inverted yield curve on bonds, the fed lowering interest rates, a housing market that has topped out, etc.). That being said, with every recession is a dramatic fall of the stock market. Mind you, Trump is doing everything in his power to try to hold that off until after the upcoming election (as it could be very bad for him), but it's probably just a matter of time.

- The tariff wars (and the looming of Brexit, for that matter) have been pretty bad for US businesses so far, and I can say this from personal experience. Already this year, the company that I work for (a pump manufacturer that gets many of it's parts from China) who does about $20-$30 million a year in business has already said that the tariffs have cost them about $400,000 this year alone. They have had to make up for this in different ways, and it hasn't been good for us. Of course, each set of tariffs affects different industries differently (they just announced more on European goods like Whiskey yesterday), but none of it is good. Apart from that, it creates uncertainty in the markets, which also scares businesses into holding off on new investments, new projects, new hires, etc...

- Although rich and corporations are doing great, the wage gap has continued to increase as it has since around 1980.

- A report by the Federal Reserve recently showed that, although things have improved ever so slightly since the last recession, one in four families have had to skip medical procedures because they can't afford them, even when they are insured. Also, something like 40% of the population still cannot handle a $400 emergency without putting it on a credit card, selling something, or taking some other measure. One in five are still struggling to pay their monthly bills.

I'm not trying to be antagonistic here. I just think that we have been told over and over that the economy is "doing great", shown a graph or two, and we believe it without really questioning it much.