The State of the Union address has been made, and although I don’t like to talk about politics too much because it really doesn’t effect what we do with our investing, it is today’s news so I will make a few comments.
The United States is the largest and most influential economy in the world so I’m always rooting for good things and success from our friends south of the border (I’m Canadian). The political atmosphere has been a little polarizing of late but I’m always optimistic and I truly do hope President Trump is successful as I hoped Obama would be and Bush before him. It’s important for the world so of course I tuned in to enjoy the State of the Union.
I think it was one of his better moments. There were some inspiring things said and a lot of talk about coming together. I hope that’s the case as it would be good for all of us. However President Trump is a politician, and as we all know politicians from time to time tend to say things that aren’t exactly true. I’m not mentioning these to call anyone a liar or use it as a gotcha moment to compare because they all do it. Just keeping it honest because these are actually important statistics.
So let’s do a little friendly fact checking. Here’s a few direct quotes that stood out to me as I was listening.
1) “Since the election we have created 2.4 million new jobs”
So this is true and it certainly sounds like a lot, but without proper context it makes it sound like jobs growth is accelerating when in fact it’s not. 2017 job growth was actually the lowest since 2010.
2) “We enacted the biggest tax cuts and reforms in American history.”
I’m not sure on what measure he is referring to, but whether inflation adjusted dollars or just a percentage of GDP there have been several in the past that were larger.
3) “After years and years of wage stagnation we are finally seeing rising wages.”
I agree with the first part, we have seen frustratingly low wage growth for many years now. However the part about us finally seeing a rise, that’s debatable.
4) “401k retirement pension and college savings accounts have gone through the roof.”
Now granted “through the roof” is not an economic claim that can be checked easily, but at the very least it’s misleading for a few reasons:
– Only about 15% of Americans have 401k’s
– Only 40% of Americans own any stocks at all, and less than 20% in any significant amount
– Stocks aren’t everything, and in fact it’s not even the majority. Remember the bond market is twice the size of the stock market and rates are historically low so balanced performance is relatively low as well.
– College debt is also at all time highs and still rising and I don’t think high stock valuations have provided any meaningful relief.
5) “Unemployment claims have hit a 45 year low.”
Technically true, but misleading to imply that it’s anything more than a continuation of a long developing pattern. It doesn’t appear to me there is any noticeable change that new policy would have caused.
So that’s it. Overall I thought it was good with some inspiration within. It was well delivered and I certainly hope that more good things are on the horizon. I’ll be rooting for President Trump to have a great 3 or 7 more years whichever it is.
But I’m also an investor, economist, and occasional devils advocate so I will be ready to jump in and say with all due respect sir, that’s not entirely true 🙂
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