4% GDP growth. That is what was promised by President Trump and expected from major analysts about the economy. As the real numbers rolled out last week, the Atlanta Federal Reserve Board lowered their final 1st quarter GDP number at .2%. That is just above zero. Compare that number to China, who has managed a steady 6% for the past few years. The truth is that the ‘trickle down’ theory was just that, a theory. And it didn’t work at all.
As President Trump takes his position beyond 100 days in office, very little has changed. There is still a very large health care dilemma, no concrete tax plan, and a potential government shutdown and fiscal crisis within the United States of America. Companies such as Apple can continue to post dismal production numbers, and at the same time increase their equity value. CNBC recently released an article in which an individual went to an Apple factory in China to work and explained how Apple will probably never come back to the United States and produce here.
The United States, financially speaking, is off the edge of socialism after production has left elsewhere while the government is the only place to find a decent wage, and a pension as well. Government spending has gone sky high, production is nearly non existent, and capital goods are at a standstill. All this is happening as the equity markets continue to soar to new highs. Poor jobs numbers = higher markets. Poor production numbers = higher markets. 3rd world GDP numbers = higher markets.
Markets can stay irrational for a very long time. When markets are consistently manipulated by the trading desk at the Federal Reserve, they can continue to prop equities up and keep the illusion alive. When you are strapped with cash like Apple, it doesn’t matter what production numbers you have, you can just buy back your own stock and make it go even higher. When logic and rational thinking takes over again, when the algorithmic programs on the NYSE begin to head the other direction, when real numbers begin to matter, only then can the United States repair the damage of the past 40 years.