A summit was reached this week that has never been visited before.
The Dow Jones Industrial Average closed above 40,000 for the first time in history. A record possible only because of the outlook investors have in the economy of the United States. Seems like not everyone bemoans the nation’s economy as reported daily.
How to explain this?
Into my mailbox came posts by an American historian, Heather Cox Richardson, that put a spotlight on facts seldom reported these days. By way of introduction, I should say that Professor Richardson writes one of the most widely read newsletters around, Letters from an American. Reaching over one million subscribers, here is Professor Richardson’s point of view as she describes it, “I’m a history professor interested in the contrast between image and reality in American politics.”
Everyone is entitled to their own opinion, but not to their own facts, is a phrase I’ve always found useful when people are sharing an opinion with facts wildly at odds with reality. Professor Richardson compiled a set of current economic facts that just might explain why some are more optimistic than others.
Excerpts from Heather Cox Richardson’s Letters from an American:
About the Dow above 40,000…
This extraordinary performance means investors have confidence the Federal Reserve will get inflation under control without throwing the country into a recession.
About inflation….
Driving the hike in the stock market, most likely, is the information released…. by the Bureau of Labor Statistics in the Labor Department saying that inflation eased in April. Investors are guessing this makes it more likely that the Federal Reserve will cut interest rates this year.
About a just released CBO report….
….a report released yesterday from the nonpartisan Congressional Budget Office, or CBO, [is] an important addition to the news from the stock market. It concludes that the goods and services an American household consumed in 2019 were cheaper in 2023 than they were four years before, because incomes grew faster than prices over that four-year period. That finding was true for all levels of the economy.
About purchasing power….
That is, “for all income groups…the portion of household income required to purchase the same bundle of goods and services declined.” Those in the bottom 20% found that the share of their income required to purchase the same bundle dropped by 2%. For those in the top 20%, the share of their income required to purchase as they did in 2019 dropped by 6.3%.
About employment….
These statistics come on top of unemployment below 4% for a record 27 months, and more than 15 million jobs created since Biden took office, including 789,000 in manufacturing. According to Politifact, three-quarters of those jobs represented a return to the conditions before the coronavirus pandemic, but the rest are new.
About America’s economic recovery….
Politifact noted that it is so rare for manufacturing jobs to bounce back at all, that the only economic recovery since World War II that beats the current one was in 1949, making the recovery under the Biden-Harris administration the strongest in 72 years.
Lastly, about the stock market….
In comparison to the breathless coverage of the stock market during Trump’s administration, this milestone is getting very little coverage. Under Trump, the stock market had the highest annualized gain of any Republican president since Calvin Coolidge in the 1920s, but at 11.8%, that annualized gain was lower than the annualized return under Democratic presidents Barack Obama (12.1%) and Bill Clinton (15.9%). Biden’s annualized return passed Trump’s in April 2024, as well.
As the saying goes….“just the facts!”
Craig Fuller served four years in the White House as assistant to President Reagan for Cabinet Affairs, followed by four years as chief of staff to Vice President George H.W. Bush. Having been engaged in five presidential campaigns and running public affairs firms and associations in Washington, D.C., he now resides on the Eastern Shore and publishes DECADE SEVEN on Substack.
Deirdre LaMotte says
Heather is my morning go-to. I forward her Letters to a group of
like minded and on-the-fence people. All benefit from the truth
when most Americans apparently receive “news” from social media, unfortunately.
Carol Voyles says
Thank you, Mr Fuller!
I, too, receive her daily reminders that whether our primary concern is for our economy, our democracy, or simply for truth and accountability, facts must matter.
Christine Martin says
Covid plays a larger and distorting role when looking at data points during the Bidrn administration. Just another fact!
Donald Martin says
I must confess that I am not one of Professor Richardson’s newsletter subscribers. But as long as we are appealing to facts cited by widely read authors, let me refer Spy readers to the May 17, 2024 article by Greg Ip and Rosie Ettenheim published in the WSJ. The authors report on the more comprehensive measure of economic wellbeing, “Total Household Net Worth” (defined as “all assets, including stocks, bonds, cash, and property minus debts”), as compiled by the non-partisan Federal Reserve.
The authors report that, adjusted for inflation, Real Household Net Worth rose 0.7 percent in the first 3 years of the Biden Administration compared with 17.0 percent in the first 3 years of the Trump Administration. If asked the proverbial question “are you better off today than you were during the previous administration?” these facts may explain why so many, but certainly not all, Americans bemoan their economic circumstances today in contrast to the rosy picture suggested in Mr. Fuller’s Opinion.
I too have always found wisdom in the phrase “Everyone is entitled to their own opinion but not their own facts” but picking and choosing some of the relevant facts, as perhaps in the Richardson newsletter, without addressing the others has the liability of sometimes leading us to the wrong conclusion.
Deirdre LaMotte says
The Joint Economic Committee in Congress states that:
President Trump has repeatedly claimed that median household income increased $5,000 since he took
office and that he has worked magic with the economy. 1
This claim was cited first by right-wing economist Stephen Moore, who recently wrote in
RealClearPolitics that “the median or average-income family has seen a gain of $5,003 since Trump
came into office.
”2 Variations have been repeated by then Vice President Pence, Fox News personalities
such as Stuart Varney and Jesse Waters, policy analysts at the Heritage Foundation and others. The
president later further inflated the number, claiming that the increase is $7,000 when tax cuts are
included and $10,000 when factoring in supposed savings from deregulation.
3
The Washington Post Fact Checker awarded the claim “Two Pinocchios,
”4 partly because Trump
claims credit for a trend that started under Obama and greatly exaggerates the impact of the tax cuts.
The official government statistics report only a $1,400 increase over the first two years of the Trump Administration.
The increase during the last two years of the Obama administration was three times larger
The annual data show that median household income increased $4,800 during the last two years of the
Obama administration—more than three times greater than during the first two years of the Trump
administration.6
The $5,000 figure is based on monthly data, which are less reliable than annual figures
This is not the widely accepted official annual statistic
on household income, but is produced by a private
firm based on less accurate monthly data from the
Census Bureau’s Current Population Survey (CPS).7
The monthly survey has a small sample size and
includes only one question about income, while the
annual survey has a much larger sample size and asks
many precise questions about income.
8
Because of these methodological shortcomings, the
monthly numbers can be very volatile—for example,
showing that household incomes skyrocketed almost
$2,000 from May through August.9 An increase of this
magnitude in such a short period seems unlikely.
But hey, U.S. Billionaires Got $1 Trillion Richer During Trump’s Term. Now that is what makes Merica great, correct?!
Pamela Getson says
There is no single news source quite like Heather’s, steady, factual, contemporary. I read her letters with daily anticipation. I was happy to learn she will soon publish a compendium of her recent past letters in a single volume. Though I too pass her work to friends who have been unaware of her writing, thank you for making many more people aware via the wider readership of The Spy.
reed fawell 3 says
Beware, anyone claiming to possess the exclusive insight into “reality” should not be trusted. Double that if they are Washington DC players.
Mickey Terrone says
Right, Reed, beware of anyone claiming exclusive insight into reality, except if his name in Donald Trump. In that case, turn, face south toward Mara Lago and that’s your gospel of the day. And retweet it.
Reed Fawell 3 says
I have said nothing about Trump.
Pamela Getson says
As a statistician I am always interested in any application to pure (raw) data. While it is not a case of “damned lies and statistics” as so many often claim, it can certainly be argued that any application must be very carefully dissected based on what the raw data includes, or as sampled, etc. For starters these two referenced POV involve two completely different data sets–we could (should?) stop right there…as well as the authorships are those of a historian using data with temporal context parsed by subsets (quintiles) and “consumption bundles” vs an economist reporter and co-author using entirely different formats. This is not wrong in and of itself, just different and requiring scrutiny before drawing any accurate conclusions. Putatively though, both CBO and Fed Reserve data is non-partisan.
The actual full CBO report states differences in the relative reduction of attributable costs of “consumption bundles” per quintile of income, and indeed every quintile, on average, showed this reduction. Of course the highest incomes assisted by huge Trump era tax cuts for wealthy would fare better than lower for whom it would not even apply, but indeed curiously, all fared better by 2023. Yes, on average within their quintile.
But neither interpretations used efforts to carefully attribute the contribution of pre vs post pandemic changes to incomes, insurances which were reflected in actual format changes made in consumption, the latter of great importance which has been noted to have surged and then waned as the pandemic as well as assistance programs ended and rolled past. It seems one’s “opinions” must remain more circumstantially unique if they are also to remain factual,and it would benefit everyone to have the media stop touting the effects as one side or another, with partisan leads that one story fits all in equal fashion.
But when there is context of history to be had, Richardson is exquisitely informed and provides an informative resource via her writings. I encourage everyone to try another topic she has addressed 🙂
Reed Fawell 3 says
Excellent comment by Pamela. This is an incrediable complex subject, and as a general rule we have not a clue really as to it’s reality, including Washington DC, and the lady in question on whom their is tremendous partisan pressure. Goodness knows we should know that by now.