A summit was reached this week that has never been visited before.
The Dow Jones Industrial Average closed above 40,000 for the first time in history. A record possible only because of the outlook investors have in the economy of the United States. Seems like not everyone bemoans the nation’s economy as reported daily.
How to explain this?
Into my mailbox came posts by an American historian, Heather Cox Richardson, that put a spotlight on facts seldom reported these days. By way of introduction, I should say that Professor Richardson writes one of the most widely read newsletters around, Letters from an American. Reaching over one million subscribers, here is Professor Richardson’s point of view as she describes it, “I’m a history professor interested in the contrast between image and reality in American politics.”
Everyone is entitled to their own opinion, but not to their own facts, is a phrase I’ve always found useful when people are sharing an opinion with facts wildly at odds with reality. Professor Richardson compiled a set of current economic facts that just might explain why some are more optimistic than others.
Excerpts from Heather Cox Richardson’s Letters from an American:
About the Dow above 40,000…
This extraordinary performance means investors have confidence the Federal Reserve will get inflation under control without throwing the country into a recession.
About inflation….
Driving the hike in the stock market, most likely, is the information released…. by the Bureau of Labor Statistics in the Labor Department saying that inflation eased in April. Investors are guessing this makes it more likely that the Federal Reserve will cut interest rates this year.
About a just released CBO report….
….a report released yesterday from the nonpartisan Congressional Budget Office, or CBO, [is] an important addition to the news from the stock market. It concludes that the goods and services an American household consumed in 2019 were cheaper in 2023 than they were four years before, because incomes grew faster than prices over that four-year period. That finding was true for all levels of the economy.
About purchasing power….
That is, “for all income groups…the portion of household income required to purchase the same bundle of goods and services declined.” Those in the bottom 20% found that the share of their income required to purchase the same bundle dropped by 2%. For those in the top 20%, the share of their income required to purchase as they did in 2019 dropped by 6.3%.
About employment….
These statistics come on top of unemployment below 4% for a record 27 months, and more than 15 million jobs created since Biden took office, including 789,000 in manufacturing. According to Politifact, three-quarters of those jobs represented a return to the conditions before the coronavirus pandemic, but the rest are new.
About America’s economic recovery….
Politifact noted that it is so rare for manufacturing jobs to bounce back at all, that the only economic recovery since World War II that beats the current one was in 1949, making the recovery under the Biden-Harris administration the strongest in 72 years.
Lastly, about the stock market….
In comparison to the breathless coverage of the stock market during Trump’s administration, this milestone is getting very little coverage. Under Trump, the stock market had the highest annualized gain of any Republican president since Calvin Coolidge in the 1920s, but at 11.8%, that annualized gain was lower than the annualized return under Democratic presidents Barack Obama (12.1%) and Bill Clinton (15.9%). Biden’s annualized return passed Trump’s in April 2024, as well.
As the saying goes….“just the facts!”
Craig Fuller served four years in the White House as assistant to President Reagan for Cabinet Affairs, followed by four years as chief of staff to Vice President George H.W. Bush. Having been engaged in five presidential campaigns and running public affairs firms and associations in Washington, D.C., he now resides on the Eastern Shore and publishes DECADE SEVEN on Substack.
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