In just the past week or so, we've had a nuclear showdown with North Korea, a trade spat with China, an investigation of the president's campaign for possible collusion with the Russians, a riot in Charlottesville, Va., that revealed a widening political split among Americans, and growing left-wing rage directed at a sitting American president. So why isn't the economy falling apart?
More to the point, rather than treading water or weakening, the economy actually seems to be improving.
We know, the stock market is fickle and today's rally can be tomorrow's rout. But it's a fact that the S&P 500 has risen more than 10% this year, enriching millions of Americans with 401(k)s, IRAs and individual investment accounts. Total market value has grown by more than $4 trillion since the start of the year.
What's fueling the rise? S&P 500 earnings jumped 11% in the second quarter following 16% growth in the first quarter. And, in the second quarter, more than half the companies on the index exceeded earnings forecasts. This is why the stock market is "melting up," to use a favorite phrase from Wall Street economist and investment advisor Ed Yardeni.
But the stock market isn't the whole story.
A just-released report shows a 4.3% year-over-year jump in retail sales for July, with previous months revised upward. So far this year, retail sales are up 4.6% on average, compared to a rise of 2.7% for President Obama's last year in office. Meanwhile, a piece in USA Today highlights how the labor participation rate of Americans of prime working age is at its highest since 2010, while unemployment is at 4.3%, tying its lowest level since 2001.
In short, more Americans are going back to work (more than a million since January), retail sales are growing again, the stock market is rising, inflation and interest rates remain low, and the overall economy is showing clear signs of stronger growth.
Whether you like it or not, Trump deserves a great deal of credit for changing the tenor and tone of the economy.
In just over six months, Trump has approved new energy projects and pipelines, taken the U.S. out of the economy-killing Paris Climate Accords, started a rigorous government regulatory reform that will yield billions of dollars in savings, and has already cut 16 rules for every new one put in place, slashed regulations for manufacturers, begun to restock the federal judiciary with judges who believe in free markets and individual liberty, and pushed a reluctant Congress to live up to its promises to repeal and replace ObamaCare and reform taxes.
Again: All in six months.
Average citizens get what's happening. That can be seen in the IBD/TIPP Economic Optimism Index for August, which jumped 4.6% to 52.5, the highest level since March. Sure, America may be a mess politically right now, but economically it's on the mend.
The truth is, despite the street antics, antifa protests, nonstop vitriol and outright hate spewed toward our president, particularly from the media and celebrities, President Trump has quietly gone about fixing what's wrong with the economy.
He's just getting started. With even a little more help from Congress, we could be on the verge of a big economic expansion.
As we often have said in the past, we're not Pollyannas. Nor do we, like Voltaire's Candide, believe we live in the best of all possible worlds. But it must be said that the economy is potentially on the verge of something great, as recent data show, despite all the political hubbub and nasty news. There's an old saying: "The stock market climbs a wall of worry." It seems the economy does, too.
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