Trump set to DEMOLISH another part of Obama’s “legacy”

In declaring his candidacy, President Donald Trump promised he would be the “greatest jobs president God ever created,” and thus far, the market seems to agree. The S&P 500 has risen at historic rates since both Trump’s victory on Election Day and since the inauguration. During his first 100 days, he enjoyed the third largest market rally that any president had experienced since WWII.

Employment gains have been larger than expected thus far, with the economy adding 211,000 jobs in April, and 522,000 in Trump’s first three full months in office.

Trump’s main challenge will be delivering on his promise for four percent annual GDP growth. Since the end of WWII, annual real GDP growth has averaged 3.26 percent, but only 2.42 percent since the 1990s. Given how much Obama complained about the economy he inherited from George W. Bush, it would only be fair to point out that Trump “inherited” an economy from the first president in American history to ever go a single year without averaging three percent growth.

Still, growth is expected to be positive. As many may be aware, the economy is defined as being in recession when it contracts for two consecutive quarters (6 months), and according to Morgan Stanley, the odds of that happening have tanked under Trump’s presidency.

According to Market Watch:

According to Morgan Stanley, there is a 25 percent chance that a recession will occur over the coming year. If that sounds too high for comfort, particularly with S&P 500 index the Dow Jones Industrial Average and Nasdaq Composite Index trading near record levels, investors can take some comfort from the fact that the forecast actually represents improved odds from a previous prediction.

“A stronger global backdrop and the delayed promise of tax reform have lowered this assessment from 30 percent previously,” Ellen Zentner, a Morgan Stanley economist wrote in a note to clients. In July 2016, it had forecast a 40 percent chance of a recession.

In other words, the risk of a recession has been cut.

The investment bank’s methodology incorporates “a blend of conditional and unconditional methods,” and indicates “a very low risk of recession beginning over the next six months.”

While it sees a recession as a low outcome, Morgan Stanley did note some reasons to be cautious about the economy. “While difficult to measure in real time, an unemployment rate near its natural, longer-run rate suggests the economy is in the late phase of its business expansion, which naturally lends upward pressure to recession probabilities.”

However, while unemployment is at record lows, the labor force participation rate (those actually looking for work) tanked under Obama. While there were 9.9 million more jobs when he left office than when he took office, the labor force overall shed 14.6 million people. Those who’ve simply given up looking for work in Obama’s economy are an untapped resource for an expanding Trump economy.

[Note: This post was written by Matt Palumbo. He is a co-author of the forthcoming book A Paradoxical Alliance: Islam and the Left, and can be found on Twitter @MattPalumbo12]

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