Fort Report Column: Good Economic News
My office recently received a call from Craig, who does a tidy business in industrial coatings. He had an unusual complaint: Business is too good! He could not hire enough qualified people fast enough to keep up with demand.
An interesting problem to have. Empirical evidence echoes it. The National Federation of Independent Businesses reports that confidence levels of small businesses are at the second-highest level in the 45-year history of their monthly index. This good economic news is not isolated to a type of business, sector, or region. Many small business owners said this is a very good time to expand.
According to a Bureau of Labor statistics report released the week before last, U.S. gross domestic product (GDP) grew at 4.2% in the most recent quarter, the highest since 2014. U.S. unemployment is now at 3.8%, lowest in a generation. African-American, Hispanic, and female unemployment is at the lowest in U.S. history. Median household income rose to $61,400 in 2017, a 1.8% increase and highest ever recorded. A big reason for the increase in income is that many part-time positions have become full-time positions.
Perhaps, most importantly, these dynamics are putting upward pressure on wages. For too long, we have been in a spiral of downward mobility. In August, average hourly earnings rose 2.9%, the highest increase since 2009. Inflation remains in a normalized range, per the Federal Reserve’s own estimates, and has recently declined. It is encouraging that 72% of blue-collar workers and 78% of white-collar workers reported that they were optimistic about their economic future. In a recent Gallup poll, about 2/3 of Americans felt this is “a good time to find a quality job.”
All this good economic news did not just magically happen. Though policymakers tend to take too much credit for economic booms and too little blame for economic crashes, most economic analysts conclude that actions taken by Congress over the last two years have improved our outlook. The Tax and Jobs Act put the U.S. corporate tax rate on competitive footing with other developed nations and put substantially more money into the pockets of individuals, small business owners, and families. Regulatory reform has unleashed unprecedented Main Street entrepreneurial momentum. Around $1.2 trillion in accumulated earnings of U.S. multinationals stored overseas have been brought back home. While there has been understandable criticism that the returning capital is causing stock buybacks, it is important to note that this has the beneficial effect of improving the retirement funds of roughly 50% of Americans. We are also seeing reinvestment in new equipment and plants, research and development, and better wages and bonuses. I will take Made in America over Made in China any day.
Good economic news multiplies benefit for individuals, families, entrepreneurs, schools, churches, civic institutions, and government. According to the Monthly Treasury Statement released this week, the US federal government collected an unprecedented $1,521,589,000,000 in individual income taxes through the first 11 months of fiscal 2018. The trend is our friend.
These points should not gloss over challenges. Budget deficits are rising, primarily due to the retirement of the Baby Boom Generation. Structural deficits and debt mean hidden taxes. The tech boom has ingeniously increased productivity, yet it has diseased our social dynamics. Structural decay in community life makes us all yearn for a simpler time of interdependence and knowing thy neighbor.
While economic news is not the fullness of our answers, it sure helps. When economic options increase, social inequality tends to decrease, stress on government goes down, and persons are more able to live free from the anxiety of indebtedness. Government programs, such as Social Security, receive a boost. Young and old can afford more schooling. Giving to faith-based entities and nonprofits goes up. Good economic news builds community. It builds human dignity.