Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Did Trump Cause the Improved GDP Growth -- Ray and I were published in the American Thinker this morning
Here's the link:
Did Trump Cause the Improved GDP Growth?
By Howard Richman and Raymond Richman
Real GDP rose by 3.0% during the second quarter of 2017, the fastest quarterly rate in over two years, according to data released on Wednesday by the Commerce Department. Did President Trump cause the accelerating economic growth?
The answer is yes. The rapid growth was led by a surge in business fixed investment (purchases by businesses of new tools and structures). If not for that surge, Real GDP would have only grown by 2.2%. The following table shows the contributions of the different types of spending upon economic growth during the second quarter:
Business investment depends upon expectations. During the Obama years, businesses, other than subsidized crony capitalists, were constantly pummeled by new regulations. As a result, businesses used every device including locating their factories abroad, and avoided new investments in the United States.
Trump actually moved on his promises and reduced harmful business regulation and took actions to reduce the trade deficits. Business responded to a new set of expectations that were favorable to business. The stock markets boomed in anticipation.
Moreover, business fixed investment is the key to economic growth. It not only creates demand, but it also gives workers new factories, increasing their productivity and wages.
The increased business confidence in the United States is the result of actions taken by the president during the months since he took office. These include:
Will the economic boom continue? Unfortunately, Congress failed to repeal the growth-killing regulations of Obamacare. Fortunately, Trump has ways to further increase economic growth without congressional help. For example, he can negotiate better trade agreements and impose trade-balancing tariffs.
Our current trade agreements encourage U.S. companies to locate factories in low-wage countries, secure in the knowledge that the trade agreements guarantee their products can enter the U.S. duty-free. Manufacturers are reluctant to build factories in the United States in the face of such artificial competition.
If Trump continues to move America’s huge trade deficits toward balance, he would continue to increase investment opportunities for manufacturing within the United States and would continue to increase GDP by increasing net exports.
The result would be higher and higher incomes for American businesses and American workers. The second quarter of 2017 was the best economic quarter in more than two years. It may also have been the first quarter of the Trump economic boom.
The Richmans co-authored the 2014 book Balanced Trade published by Lexington Books, and the 2008 book Trading Away Our Future published by Ideal Taxes Association.
Comment by , 9/12/2017:
Thanks for this article, Howard and Raymond. The figures came in handy during a recent discussion in which opponenets of our president were attempting to discredit him in this area. Do the two of you have Facebook pages?
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