The Economy Continues To Claw Its Way Upward?

Will the Trump administration effect the economy – either positively or negatively? I have written in the past that it takes a long time (except for helicopter drops of money directly to consumers) for fiscal policy actions to impact the economy overall.

So far, the only event since 20 January I have seen which would affect the USA economy is the increase in consumer and business confidence starting the week of the election. I am not a fan of consumer confidence surveys for a variety of reasons – but I do lean towards the notion that spending increases generally correlate to a positive outlook.

Having said that there has been a general correlation, There are few (if any?) economic theories which rise to the level of a scientific law. Scientific laws are always true. If economic theories were laws – operation of economies would be push-button. If a fluctuation in the force was noted, the correct counter-dynamic would be executed and the economy would return to its planned trajectory. No more recessions.

Understandably, what is understood to be the economy has too many variables acting at once for simple laws to be discovered. Logically, if economic laws are ever discovered, it is likely they will be complex utilizing a daunting multiplicity of dynamics. It will never as simple as raising interest rates as the economy heats up, and lowering them when the economy slows.

I do have questions:

The USA has a consumer driven economy. Using simple logic, the more money the consumer has – the more money the consumer can spend. The more money the consumer spends, the more the economy grows. Beginning this decade, the Western countries been faced with the ageing of the boomers (the largest population segment). They are now well past their highest spending years – and now a majority must survive mostly on social security benefits. Is it not in the best interests of the economy to ensure social security benefits are high enough to keep the economy growing? It is a joke to believe the benefits are properly inflation indexed.