Economist George Mentz on the Trump and Obama Economy – How Past Policy is Still Haunting the USA
For many years, economists and politicians have been analyzing GDP growth. Now after a meager 3 years under President Trump, politicians and bureaucrats have been proved wrong about fiscal policy, sustainability, and tax strategy of Donald Trump.
As for GDP? How is this calculated? Does a GDP number represent the actual economic increase of the U.S.’s success?
In the last three years, the Dow Jones industrial average has gone from President Barack Obama’s 16,000 to President Donald Trump’s recent 29,000.
Why was Obama’s GDP so slow to recover? Basically, GDP under Obama went from $14.4 trillion to $18.4 trillion; however, Obama borrowed an extra $10 trillion to try to bolster a failing economy and employment numbers. During Obama’s term, the Nasdaq stock market barely reached the market valuation highs that were achieved in 1999 before the Clinton Crash of 2000.
So, with this information, how is GDP below 3% today when the stock market has increased $10 trillion in value in the first three years of Trump?
With record jobs and employment and historically low unemployment, how is GDP still under 3%?
Consider the following:
- 95% of the global population of 7.8 billion is outside of the U.S.
- Fortune 500 companies in the U.S. are doing more and more business outside of the U.S. The percentage of S&P 500 global sales outside of the U.S. was 42.90% in 2018
- U.S. companies are making more profit outside of the U.S. with lower taxes and regulations. NPR says that the U.S. formerly had the worst corporate tax rates in the world under Obama.
- The U.S. is now more competitive with regulations and taxes, and more companies are now moving to the U.S. to open operations or manufacturing due to our cheap land, affordable workers, lower taxes and fewer regulations. The Chicago Tribune says the U.S. is a second-most competitive nation in the world under Trump.
- It will take years to level the playing field and to reduce the trade deficits which affect GDP. With Trump’s lower regulations, tariff policy, and lower taxes, Americans will be able to afford to buy domestic again with lower costs of manufacturing and services in the U.S. According to Office of Information and Regulatory Affairs data, the Trump administration has achieved $33 billion in net regulatory savings since Obama left office.
- With lower regulation, lower corporate tax, and competitive pricing of goods and services, higher exports from the U.S. will begin to boost GDP again. Trade deficits are decreasing.
George Mentz says, “Since Trump was elected, the U.S. GDP is beating the strongest nations in dramatic fashion. The U.S. is averaging 2.6% GDP growth or higher while beating Canada’s 2.3%, France’s 1.8%, Germany’s 1.6%, Japan’s 1.4%, and the United Kingdom’s 1.4%”
Before the 2016 election, the Congressional Budget Office (CBO) estimated that real GDP would grow at a 2.0 percent annual rate over the first 12 quarters (three years) of a new administration.
There are several ways to calculate GDP. Some calculations use government spending and inflation.
- With Obama, the government injected over $450 billion in TARP money, which artificially boosted Obama’s GDP. This was essentially free money lent to banks and financial firms. While much of the TARP money is said to have been paid back, the borrowers paid little or no interest on the money during a time when government debt was doubled to $20 trillion under Obama.
- With Obama, interest rates were virtually zero for seven years, thus reducing inflation, which artificially boosted GDP.
- Obama’s taxes and regulations made it more beneficial to buy goods and services from offshore, thus, lowering GDP for years and affecting the public to this day.
Overall, the U.S. is in a period where offshore corporate activities are well-positioned to sell goods and services to the world’s 7+ billion people that are outside of the U.S.
Trump’s policies, with getting rid of TPP and NAFTA and updating the international trade policy and NATO, will boost the GDP and profits of U.S. companies for continued worldwide success and low employment.
About George Mentz
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is a TUV Accredited & ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and organizations. George Mentz is an Associate of St. George’s House Windsor Castle and Mentz serves the Commission for Presidential Scholars. Mentz as a General Counsel of the Financial Analyst Certification body and has been seen in Yahoo Finance, the Wall Street Journal, The Week, The Hill, NBC, FOX, and other media commenting in educational standards, accreditation, economics and wealth management.