Nearly a decade of near-zero interest rates have finally kicked the U.S. economy back into gear. Unemployment is down, inflation is creeping up, and the stock market has soared, so it’s time for the Federal Reserve to start raising interest rates again. That, at least, is the consensus of Fed officials, who announced a widely-expected quarter-percent rate hike today (Bloomberg).
In the short term, that will mean higher rates for credit-card borrowers and home and auto loans. (But don’t hold your breath waiting for better return on your savings.) In the long run, it may mean conflict between the independent Fed and the new administration: President Trump has made sky-high promises for economic growth and job creation that are probably impossible to make good on anyway, but they’ll be even harder to fulfill if the Fed is boosting rates.
Markets are supposed to hate uncertainty and unpredictability, and those are surely hallmarks of the Trump administration’s early days. Yet the stock market, at least, has shrugged off fear of volatility and charged ahead: This week the Dow Jones index leaped past 21,000.
Is the “Trump bounce” just about anticipation of tax cuts and deregulation? Is it a result of large pools of investment cash desperate for a better return than bonds and banks can offer? Or is the market sending us a signal that the global economy, after a decade of slow growth and low inflation, about to return to the more familiar pattern of the ’80s, ’90s, and aughts, with faster growth and higher inflation punctuated by occasional recessions?
The recent Republican National Convention (RNC) portrayed a very negative version of the current state of the Republic. There are certainly many issues facing the United States — structural underemployment, income inequality, divisive violence — but the truth is, on many counts the country is doing extremely well.
I wanted to collect some of those indicators and present them here to remind us that we’re not failing. In fact, we’re continuing to reach new heights. I’m sure there are many ways to claim that “America is in decline,” but let’s not fall into the politics of fear and despair. Of course, Americans know there are many ways to improve and so we can and should do better. But here are some proof points that might help you feel a bit more optimistic than the news out of Cleveland would have you believe.
The US GDP continues to grow to unprecedented heights (Federal Reserve).