Leftists' hopes for a recession spoiled AGAIN by U.S. consumers

'Comedian' Bill Maher is spttin' nails today, as the American consumer continues to defy expectations and drive expectations to new highs.

Sentiment among American consumers rose more than expected this month, boosted by expectations for low inflation and rising incomes, according to preliminary data released Friday by the University of Michigan.

The October print on consumer sentiment climbed to a three-month high of 96 from September's 93.2, the new figures showed. The current economic conditions also rose to 113.4 from 108.5 ...

Optimism about the possibility of a trade deal between the world's two largest economies also rose this week, when top diplomats met in Washington, D.C. for negotiations.

President Trump, who will have a key meeting with Chinese Vice Premier Liu He on Friday, said "good things" are happening at the talks, noting there are "warmer feelings than in recent past."

Maher stirred some controversy last August when he openly wished for an economic crisis, stating his belief that the country could survive that turmoil but not a second Trump term as President:

The exchange began with commentator Tom Nichols remarking about Trump's trade policies, saying "I'm not wishing for a recession, but if the farmers want to keep touching the hot stove."

“Well, you should be," Maher interjected. "Because that will definitely get him unelected."

"But Bill, you don’t really want a recession," shot back Anthony Scaramucci, Trump's former White House communications director and a now occasional critic of the administration.

“I really do. We have survived many recessions. We can’t survive another Donald Trump term,” Maher responded.

Apparently, consumers are smarter than comedians and investors seem to be, too. The S&P 500 is in the middle of a technical breakout on the consumer sentiment and trade deal prospects and could test new highs for capital valuation next week and through the holiday season.

This begs the question: Why are average Americans bullish on the economy? Isn't there a Trump Trade War going on? What about that (fake) impeachment inquiry? What about the big auto worker strike? Why shouldn't consumers do what Democrats want them to, and trash the economy?

Leftist darling and NY Times op-ed star Paul Krugman has been pining for a crash since Trump's election in 2016. It hasn't happened. The primary reason Maher, Krugman (and a buttload of other wackos) have been wrong is partly explained in yesterday's post on the fundamentals of U.S. economic growth. The average American is better off today than he was in 2018, 2017 and 2016.

Another big part of consumer confidence is that the average American has more take home pay thanks to the Tax Cut and Jobs Act of 2017, which helped little guys a lot more than big guys, regardless of how the media screech about "tax cuts for the rich." It wasn't and liberals are not happy about that at all.

American consumers have driven growth in the wealth of this nation since World War II. When you put more money in their pockets, they're better off. Duhh... When they're better off, they spend more. Double-sized Duhh...

Whether you love President Trump, hate President Trump, or really don't gaf about him... you can't deny that YOUR President keeps his promises.

The U.S. Economy has never been better

If your chief concern is how the poor and middle class are doing in the Trump Economy, it's hard not to like the latest figures from the U.S. Census Bureau (PDF).

A few highlights from the report:

• Real median family income rose 1.2% and real non-family median income rose 2.4%.
• Real median wages and salaries (most important to lower income families) rose 3.4%.
• Full-time gainfully employed labor rose 2.3 million.
• The poverty rate dropped 4% and 1.2 million people left poverty.
• In 2018, for the first time in 11 years, the official poverty rate was significantly lower than 2007, the year before the most recent recession.
• Conditions improved for all Americans regardless of race, gender national origin or age.

Regardless of who you are or where you live in this country, you are better off today than you were this time in 2017 or 2016. 

A modest sum of $1,000 invested in October 2016 a 401(k) or IRA that tracks the growth of the S&P 500 Index is worth approximately $1,410 today. Financial markets are historically stable, historically healthy and are in a long term trend of gentle and healthy growth. Interest rates are historically low as well, meaning that families just starting out today face very good chances of securing a mortgage and owning a home (outside major metropolitan areas). 

Middle and lower income Americans still face a few challenges. An aging population and rising demand for medical services have healthcare costs rising faster than inflation. Unsecured/personal and student loan debt is uncomfortably high. But these are not insurmountable or panic-inducing problems for an economy growing healthily like this. 

You would think that good news like this would be major headlines. It's not, and Aaron Brown at Real Clear Markets talks about this, too.

However, 2018 worked for everyone. The economy did well, all the real measures of economic well-being were improved, and the Gini coefficient went down. More money, more equality. But you wouldn’t know it from the headlines.

· Ben Holland wrote at Bloomberg under the headline, “Census Says U.S. Income Inequality Grew ‘Significantly’ in 2018” and suggested the culprit was, “the impact of President Donald Trump’s end-2017 tax bill, which was reckoned by many economists to be skewed in favor of the wealthy.”

· Business Insider’s take was “US income inequality jumps to highest level ever recorded” , and quoted Professor Timothy Smeeding, "Wages remain low, there is a lack of childcare for single-parent families, and so on."

· Mike Schneider’s AP headline was “Census: US inequality grew”.

These are just three examples, the sentiments were echoed in many other news outlets, and chewed over by many opinion columnists. How did people get things so wrong? I can’t explain overlooking all the good news in the report except perhaps by the old newspaper adage, “If it bleeds, it leads,” meaning bad news sells more papers (or collects more clicks) than good. Or perhaps reporting good economic news would be considered support for Trump and might reduce enthusiasm for anti-poverty spending.

Brown goes into some detail on the Gini Index, which is a heavily cooked statistical distribution that attempts to measure how wealth is distributed within a country. It was developed in 1912 by Italian demographer, statistician and sociologist Corrado Gini (1884-1965).

Today's Gini Index is 0.486, which fell a three thousandths of a point from 0.489. In the U.S. the number has risen about 0.14 points since 1979. Since 1998, it has risen about 0.08.

The Gini Index has its uses in getting a big picture view of how poor people fare vis-a-vis the wealthy. An index reading of zero is the leftist utopia of perfect distribution of wealth. An index of 1.0 is perfect inequality, which is where the left thinks we are today. A relatively stable Gini indicates less economic uncertainty and less turmoil. A wildly fluctuating Gini indicates broad uncertainty and unrest.

A key takeaway from using Gini to gauge economic well-being is that it is independent of total economic wealth and output. A very wealthy nation with a high Gini number would likely see everyone living comfortably. A very poor nation with a low Gini would likely mean nobody has anything.

A slowly rising Gini Index has been a long time favorite tool of the left, and they've used it for decades in arguing for more spending to combat poverty and income inequality. Never mind that total wealth has grown faster over the same period. Never mind the glacial pace of its rise. That it's rising at all is cause for action!

But the drop in the Gini Index confounded them, so they chose arbitrary starting and ending points to cover up the fact that things are pretty good and getting better. Hence the headlines Brown lists above. 

Another key takeaway about the Gini Index is that its father was a fascist. He was a celebrated friend of Italian Dictator Benito Mussolini and a professed eugenicist. It was his intent to use his Index to measure the economic performance of genetically managed populations over time and to compare the performance of a pure race to the populations of less desirable or mongrel nations. He fervently supported Fascist Italy and Nazi Germany. How's that for irony?