We Should Celebrate The American Economy

What does it mean when the Dow hits 40,000?

It tells me a few things even though it has settled back to almost 39,000. One is that domestic and foreign investors like the U.S. economy and believe that the market is pretty darn good. Inflation, while still above the Fed target, is not the drag that some have made it out to be. But that isn’t the only thing the U.S. has going for it.

Our unemployment rate for all sectors is the best it has been in more than 50 years. The economy may be slowing down, but it doesn’t look like there will be a recession in the next 12 months. Then why isn’t the Biden Administration tooting their horns more for this remarkable comeback after Covid?

If Trump were still president, he would be beating his ample chest over the current numbers. He did it even when the economic numbers were not as good as under Obama or Bush 43. Modesty is not Donald Trump’s forte.

I don’t really believe any one policy that the government initiates change our economics very much. Other forces have larger impacts on growth. Just look at Covid to see that no matter who was in the White House, the economy was going to tank.

The best policy that any occupant in the White House can institute is stability. Markets like predictability more than anything. President Biden is a stabilizing force. He isn’t all over the place. The other good thing is he is not a braggard. Perhaps he should be more of one.

I don’t personally like his targeted industry proposals. When specific companies and industries are selected to reward, markets are skewed. The best thing any government can do is provide the money for pure research. That allows everyone to have knowledge and benefit. Government can also make sure that their people have access to health care, childcare, elder care, and education.

Companies are not in business to be anything more than producers of profit for their shareholders and reliable sources of good products for their customers. Society should not make them responsible for providing social services. Placing mandates on business saps competitiveness.

Dow at 40,000 is remarkable. We should celebrate that feat. Now Congress needs to look at deficits and raise taxes. The Republican mantra of tax cuts was very justified when nominal rates were 70%. We have hit the point of no return when it comes to tax reduction. We can’t fund needed programs including defense spending and we continue to borrow in a good economy which tells me something is wrong.

What happens when we do have a recession? That is when borrowing is acceptable. Doing so when the Dow is at 40,000 is reckless.