Make America Great again, right? As the mainstream media continues to wallow in self pity through self inflicted narrow mindedness, it is worth following what is really going on. They can’t find much to praise him for. Almost everything he does is laced with ridicule and bias. White supremacist, racist, bigoted or a buffoon. The same media mob that missed the heartbeat of the electorate is blind to think it has unparalleled insight on something it has no idea about. One chart I often look to as an indicator is the official number of “unemployed persons“. As you can see over 66 years it’s been a formidable leading indicator for recessions or downturns. However it would seem that Trump has managed to inject the most confidence in markets than any other president elect in the last 64 years.
This was one of my key indicators in thinking Trump would win the election. He was appealing to the people who were worried about the future. The ones who saw jobs post GFC increasingly become low paid menial tasks with little growth or career prospects. The Democrats would bang on about their great record under Obama and that HRC would be a continuation of that theme. How wrong they were. They bragged about low poverty and high standards of living when those they were really talking to were experiencing the pain in real time. Is it any wonder that the electoral map looked like it did – many in the regional areas had had enough of the false promises which delivered nothing to them. It wasn’t #whitelash it was #blindarrogancelash.
Don’t get me wrong. I’m one of the biggest bears around but I do think the unemployed persons trend could break the 66 year streak if confidence (the biggest missing ingredient in a zero/negative interest rate world for the last 8 years) continues like this. I keep banging on about “confidence” – that without it, the world economy will continue to head toward cliff. We are by no means out of the woods but the one thing central banks have craved is “confidence” in them. It has been sorely lacking leading them to resort to aggressive asset purchases to persuade us into thinking we’re already in Utopia. It has been nothing but an unmitigated disaster. What the group thinkers in the world’s central banks have forgotten is simple – People and companies invest because they see a cycle, not because interest rates are low. Trump is actually giving people and companies hope in a new cycle. Central banks have achieved next to nothing and are no left with next to no tools to fight any slowdown. The only fix to the global economy is thrusting more control in the hands of people rather than trying to exert bigger government.
I looked back at the rate of change of unemployed persons from October to November in election years going back 60-odd years. No president has got close to Trump in absolute or percentage terms. You can see the results in the following two charts – red denoting Republican and blue Democrat. For a first term president-elect, no other has got close to Trump with perhaps the exception of Ike Eisenhauer Not even Reagan had a surge. Bush Senior – minisculy. Bush Jr – No. Bill Clinton – No. JFK – No. Nixon – No. Carter – No. Only Trump and to a lesser extent Ike has had a meaningful first term cut in unemployment before taking the Oval Office.
Unemployed persons fell by almost 480,000 (-6.1%). That tells us that corporates are backing The Donald. It isn’t an exact science to be sure but usually election victories by the non-incumbent party give much hope or despair for corporations. As I’ve written in previous posts, small business in the US has been reluctant to hire because of burdensome red tape and regulation (incl Obamacare) that has made them uncompetitive. Now with the prospect of lower taxes and a lifting of restrictions we can place a reasonably safe bet that corporations are celebrating ‘hope’ more than anytime in the last 64 years.
Yes Obama often pats his own back over the low unemployment rate but that can be flattered by falling participation. The unemployed persons index is a raw figure. No, it wasn’t a send off for Obama but a resounding boost to business (most likely small) confidence to meet the likelihood of lower taxes and more domestic production. Hallelujah!
Now to be fair to Obama, the GFC did not exactly help him post a great 2008 figure but even after 4 years, his legacy didn’t fulfill companies with much hope.
None-the-less We should continue to loom for other positive consumer or business confidence figures to follow in December to see if this trend is ongoing. Black Friday looked good too. The National Retail Federation reported from this year’s Black Friday:
$3.34 billion: The amount of money spent online on Black Friday, setting a new record, surpassing the three-billion-dollar mark for the first time, and marking a 21.6 percent increase year-over-year. For comparison, last year’s total was $2.74 billion.
$5.27 billion: The total amount of money spent online on Thanksgiving and Black Friday combined, a 17.7 percent increase year-over-year. On Thanksgiving specifically, online sales came in at $1.93 billion.
$1.2 billion: The amount of mobile shopping revenue on Black Friday, a 33 percent growth year-over-year, making Nov. 25, 2016 the first day in retail history that sales from mobile passed the billion-dollar mark.
For me – it paints a positive picture that Americans are putting a lot of faith that draining the swamp will pay big financial dividends.
I remain extremely bearish on the global economy but Trump actually gives me hope that he can restore confidence in America and should it manage to come back to a 3%+ sustainable economic growth trajectory that is a big shot in the arm for a sick and tired world. Less government is the answer. The world should hope he Makes America Great Again. We need it because no other government I see around the world has much of a clue other than more of the same tired old response to something they have little understanding of. It takes a lot of convincing to make me ‘believe’. I’m becoming a believer now.