13 Ways the Economy is Getting Better

We call the events of 2008 a ‘financial problem’ instead of a ‘crisis’, because it didn’t become a crisis until the liberal media such has the NYT called it one. It was a banking problem contained to some institutions that became a global crisis by the media’s own doing to get Obama elected.

1. Healthcare, tuition, gas and oil prices through the roof, but this won’t hurt the economy. Pain at the pump helps the economy by increasing consumer spending.

A one penny increase in U.S. gas prices generally leads to a $1 billion increase in American household energy consumption. Analysts predict gas prices could rise 10 cents this summer if the turmoil in Iraq continues. Hopefully it does.

2. IQ and STEM more important than ever. Rich, smart people rule the world. Your genes will play a bigger role in your success or failure at life than ever before.
3. Soaring wealth inequality and record high profit margins
4. Decreasing labor force participation as millions of otherwise able-bodied people leave the labor market due to skills mismatch and a lack of hiring.

According to the graph below, the employment/population ratio declined sharply during the downturn, and only a small portion of that decrease has been recovered since that time. This is good news because it means more QE and fatter profit margins, but consumer spending keeps going up, despite the low labor force participation. The rising real incomes of the top 5% of earners is enough to compensate for falling real wages for the bottom 95%. Furthermore, rising home prices and record high consumer credit is expanding consumer purchasing power.

5. Facebook and Google become trillion dollar companies; Snapchat is worth $100 billion.
6. Record web 2.0 valuations. Uber becomes a $200 billion dollar company along with Tesla. Not a bubble.
7. Dow 22,000. Not a bubble.
8. People are getting richer and smarter than ever
9. The world is awash with liquidity, resulting in low treasury yields and buoying a wide variety of asset classes from stocks to bonds to real estate.
10. Bay Area real estate keeps going up. Not a bubble.
11. Major losses for dems in midterm elections
12. Dems lose Whitehouse in 2016
13. Rise of the ‘gig’ economy and low-paid service sector

In the future, people will be working longer hours for less pay, or even no pay at all through dead-end internships. This is good for the economy by increasing profit margins. From FT.com: “Tyler Cowen, economics professor at George Mason University, guards against demanding that every piece of work is paid. It can be ‘corrupting if you get into the mindset that you only do things for money,’ he says.”

When you consider ongoing social and economic progress and all of the coming innovations in science and technology, there’s plenty of room for optimism. Now couldn’t be a better time to be above average, to be smart, to be an economist and to be rich. According to Charles Murray, we’re coming apart and I look forward to this. From Louis C.K.: “Everything is amazing, and nobody is happy.”

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