Labor Day and a little more confidence in the air
Happy Labor Day!
We have a few things to cheer about this Labor Day. We embrace with passion that 3% GDP revision. We have not seen that 3% GDP number for quite a long time – i.e., eight years of Obama!
Let's check this summary:
The U.S. economy grew faster than initially thought in the second quarter, notching its quickest pace in more than two years, and there are signs that the momentum was sustained at the start of the third quarter.
Gross domestic product increased at a 3.0 percent annual rate in the April-June period, the Commerce Department said in its second estimate on Wednesday.
The upward revision from the 2.6 percent pace reported last month reflected robust consumer spending as well as strong business investment.
Growth last quarter was the best since the first quarter of 2015 and followed a 1.2 percent pace in the January-March period.
Economists had expected that second-quarter GDP growth would be raised to a 2.7 percent rate.
Isn't it amazing what a little confidence will do to the U.S. economy?
To be honest, our old nemesis "participation rate" is still around. The rates have been in the low 60s for a few years – not a good sign that the recovery is complete yet. However, I'm optimistic that a little more 3% growth could see that change for the better.
To paraphrase the late Yogi Berra, 90% of the economy is mental, and the other 10% is in your head.
What we are watching is a private sector that suddenly feels that the guy in the Oval Office understands how a private-sector economy works. They may not feel perfect about the U.S. economy, but at least they are comfortable with the pilot.
These new numbers should also provide a launching pad for the GOP to start talking jobs.
They should listen to President Trump, who connects with crowds when he does that, as Kimberly Strassel points out:
In Missouri, Mr. Trump busted up the left's class-warfare model. He didn't make tax reform about blue-collar workers fighting corporate America. Instead it was a question of "our workers" and "our companies" and "our country" competing against China. He noted that America's high tax rates force companies to move overseas. He directly and correctly tied corporate rate cuts to prosperity for workers, noting that tax reform would "keep jobs in America, create jobs in America," and lead to higher wages.
Mr. Trump pitched tax simplification as a question of fairness, urging lawmakers to eradicate the "special-interest loopholes" that his own business uses, so as to level the playing field for Americans who can't afford "an army of accountants."
This all sounds pretty good, unless you are Chuck Schumer.
Or maybe Bernie Sanders!
Happy Labor Day, and let's get the GOP to work so that more Americans can work, too!
PS: You can listen to my show (Canto Talk) and follow me on Twitter.