BREAKING NEWS - SECOND QUARTER GDP GROWS BY 4.1%
by Kevin Ryan

Those “crumbs” sure do add up. The tax cuts and worker bonuses that Nancy Pelosi said were just “crumbs” have led to a blowout second quarter. Just released economic data shows that GDP grew by 4.1% from April to June. In addition to the strong second quarter, the Commerce Department revised its first-quarter reading up from 2.2% from 2.0%.

The last time the economy expanded at 3% for a full year was 14 years ago. President Trump has repeatedly pledged to return annual growth to the 3%+ range. To achieve that goal, GDP growth will need to average just under 2.9% in the last half of the year.

Last year, the economy grew by 2.3%. But 2018 is the first year in which the Republican tax cuts are in effect, and so far, by all indications, they are having a strong, positive impact.

GDP likely got a big boost from the tax-cut money going to both companies and consumers, economists say. Consumer spending, which makes up 70% of GDP, has continued to rise.

“Retail sales have been really strong recently, up for five straight months, which is really kind of rare in this economy,” said Ryan Detrick, senior market strategist at LPL Financial.

The tax cuts also featured a big, permanent reduction in business tax rates, boosting investment and corporate profits. Their main impact would have begun to be felt by mid-April, when corporations’ first-quarter tax payments are due. Many workers, too, saw larger paychecks beginning in February or March, as companies around the country gave out bonuses and increased wages.

Going forward, however, several factors are expected to hinder growth. The full effects of the White House’s protectionist trade policies had yet to be felt in the 2nd quarter, as the imposition of broad-based tariffs didn’t go into effect until early July. But it’s expected to be a costly burden for both American industries, who will have to absorb higher material input costs, and consumers, who will see higher prices.

And rising gas prices are also going to have a negative impact on parts of the economy, although the booming American oil industry will benefit.

THE ENTIRE "STAGNANT MIDDLE CLASS INCOMES" NARRATIVE IS BASED ON A MISREADING OF THE DATA
by Kevin Ryan

It’s probably the single most oft-mentioned claim from politicians in America today: “Middle class families have stagnated! Their incomes, adjusted for inflation, have barely moved in the last 30+ years!” As evidence, they show income quintile charts which seem to indicate that a middle class family in 2016 is only making 14% more than it made in 1986 (after adjusting for inflation). Much of populist and liberal agenda is based on this narrative. Senator Elizabeth Warren this week became the latest to allude to the wage stagnation narrative, claiming in an interview that capitalism isn’t working for the middle class. It’s become such a common assertion that few question it.

And it’s completely false.

First of all, income quintiles are NOT a measure of upward mobility. Instead, they simply show what each of America’s income brackets is earning at a given point in time. For example, in 2016, a household in the top 20% of earners (the top income quintile) averaged $213,941, households in the middle income quintile earned an average of $59,149, etc.

Where the confusion comes in is when people compare today’s middle income quintile to the middle income quintile from 30 years ago, which averaged $51,979 (adjusted for inflation), and say “Middle class families are only making 14% more today than they were 30 years ago! Middle class wages have stagnated! Capitalism is not working for middle class families!!”

That’s a false interpretation of the data for one simple reason: families do NOT stay in the same quintile over time. A young worker in his or her 20s will make significantly more later in life after promotions, raises, finding better paying jobs, etc. How much more? To find out, all you have to do is look at the median income data broken out by age group.

Year: 1986
Age: Up to 24
Median income adjusted for inflation: $32,018
Income quintile: 2nd lowest

Year: 1996
Age: 25-34
Median income adjusted for inflation: $54,709
Income quintile: Middle

Year: 2006
Age: 35-44
Median income adjusted for inflation: $71,907
Income quintile: 2nd highest

Year: 2016
Age: 45-54
Median income adjusted for inflation: $77,213
Income quintile: 2nd highest

In other words, the median new household 30 years ago has seen its income grow by 141% after inflation by the time they reach their prime earning years (age 45-54), a hell of a lot more than the 14% that politicians would have you believe. And it has risen from the 2nd poorest income bracket to the second richest.

What's more, the income growth of the median family has actually INCREASED in recent decades, not decreased as the false narratives suggest. The median household established in 1967 saw its income grow by 119% after inflation by the time it reached its peak earning years in 1997, significantly less than the 141% growth between 1986 and 2016.

And that compares favorably to nearly every other country in the world. The U.S. economy has grown two to three times faster than competitors such as Germany, France, and Japan, while providing families with median disposable incomes that are 15% to 30% higher than in those countries.

Yet because of the false “stagnating incomes” narrative, there are people who actually think our market economy doesn’t work or is even hurting the middle class. The reality, according to the publicly available census data, is precisely the opposite: most families in America experience significant upward mobility, and that upward mobility is actually increasing over time, not decreasing. I’d strongly encourage you to share this information, especially with those who are spreading the false narrative.

Trevor Noah, host of Comedy Central’s “The Daily Show,” asked Democratic socialist congressional candidate Alexandria Ocasio-Cortez how she plans to pay for her agenda Thursday and she said tax the rich and slash military spending.Ocasio-Cortez began by bragging about her meeting with a Nobel Prize-winning economist and claimed her ideas could net the United States trillions of dollars.

“This is an excellent, excellent question,” she replied. “I sat down with a Nobel Prize economist last week — I can’t believe I can say that, it’s really weird — But one of the things that we saw is, if people pay their fair share, if corporations and the ultra wealthy — for example, as Warren Buffett likes to say, if he pays as much as his secretary paid, 15 percent tax rate, if corporations paid — if we reverse the tax bill, raised our corporate tax rate to 28 percent … if we do those two things and also close some of those loopholes, that’s $2 trillion right there.”

She also said it would take $3 trillion to $4 trillion and a carbon tax to create a “renewable energy economy” and claimed the Trump tax cut bill prevents the wealthiest Americans from paying “their fair share.”

“One of the wide estimates is that it’s going to take $3 trillion to $4 trillion to transition us to 100 percent renewable economy,” she continued.

"So we’ve got $2 trillion from folks paying their fair share, which they weren’t paying before the Trump tax bill,” she said. “They weren’t paying that before the Trump tax bill. If we get people to pay their fair share, that’s $2 trillion in 10 years. Now if we implement a carbon tax on top of that, so that we can transition and financially incentivize people away from fossil fuels, if we implement a carbon tax — that’s an additional amount, a large amount of revenue that we can have.”

Ocasio-Cortez also targeted military spending and said there are billions of dollars being wasted on defense and said it will take courage from both sides of the aisle to fix the country’s fiscal problems.

“Then the last key, which is extremely extremely important is re-prioritization. Just last year we gave the military a $700 billion budget increase, which they didn’t even ask for,” she said. “They’re like, ‘We don’t want another fighter jet!’ They’re like, ‘Don’t give us another nuclear bomb,’ you know?”

“That is a decision that requires political and moral courage from both parts of the aisle,” she added.