The U.S. economy is in good health so it seems. But let’s take another look.
Unemployment is about 3.5%. Interest rates and mortgage rates are very low.
However, there are areas of concern. The Chinese economy is slowing dramatically and its inflation is rising. Will they buy all the agricultural products they promised?
President Trump has constantly demanded lower interest rates during prosperous times. Other nations are currently experiencing negative interest rates. Lower American interest rates hurt those who depend on bank CDs and bonds to avoid risks and provide for a secure retirement. Stock prices and dividends may take a sudden jolt if the economy slows down.
The tax cuts benefited the top 1%. They provided little in the form of wage increases for the middle class.
The debt for student loans, used cars and credit cards has skyrocketed.
The new Trump budget proposal sits at $4.8 trillion or $1 trillion over tax revenues. The national debt is above $22 trillion. The national deficit adds $1 trillion annually to the debt for the next 10 years. Trump’s budget projects Medicare and Medicaid spending to increase at a lower rate than rising health costs. This shifts the burden to the middle- and lower-income earners.
Mr. Trump has frontloaded government spending before the election. The Federal Reserve is buying U.S. Treasurys in order to pump more money into circulation. A growing money supply that exceeds economic growth can put pressure on the price of goods and services. With all this spending, the U.S. economy is only growing at 2% rather than the 4% Trump promised.
All this Trump spending does not improve our economic infrastructure. We may benefit from temporary prosperity at the cost of future stagflation. Nobody wants buyer’s remorse after Election Day. Just something to think about.
Roger Lee Green