Super MAGA-Nomic Winning: Atlanta Fed Predicts 5.4% First Quarter GDP Growth…

It can be a little confusing to listen to business or economic news analysts discussing the current state of the economy.  They are all generally positive, but the inherent delivery of their forecasts is cast against the backdrop of their experience.  Almost no-one, currently in the business of economic analysis, has experience, life skills, analytical training or educational understanding based on anything other than a Wall Street economic outlook.

Business Schools stopped teaching the principles of Main Street economics forty years ago.  All modern analytical tools, and the data-systems therein, were structurally built upon an economic theory that establishes Key Performance Indexes based on Wall Street economic models.  Titans of industry were replaced by fast-talkers pushing paper.

The paper economy and the monetary policy therein, has been the underlying architecture of economic analysis for decades.  Within this process Main Street U.S.A., was assigned the role of a “service driven” economy. Institutionally everyone accepted this reality.  Thus, those same voices are conflicted and cannot reconcile today’s economic shifts.

The Atlanta Federal Reserve is now estimating the potential growth for the first quarter of this year at 5.4%.  This is a stunningly high projection when historic assumptions are factored.  However, in the new MAGAnomic economy, it’s high, but not out of line.

The Main Street economic engine is roaring back to life.  Real consumer spending jumped from 3.1 percent to 4 percent in the latest quarter.  Consumer spending is approximately two-thirds of our GDP.  However, the real key figure is ‘investment”.   Private fixed-investment growth surged from 5.2 percent to 9.2 percent, that’s where the growth projections should be focused.  Trump’s MAGAnomic policies are driving investment in the U.S. economic base.  The current growth in private investment has doubled.

Business are building out their capacity.  Big and Small corporations and manufacturers are building manufacturing facilities, plants and expanding capacity.  Small companies are hiring and expanding.  Small manufacturers of U.S. goods and services are expanding to become mid-size manufacturers.

This is Main Street expansion, something that has not happened in 40 to 60 years.

This specific type of economic expansion is why most economists using Wall Street analytic models cannot accurately measure or predict growth.  The capital investment is not attached to U.S. Federal Reserve monetary policy; it is attached to the consumer.  It might sound weird but that’s what’s happening.

The Wall Street economic engine, fueled by monetary policy, is disconnected from the Main Street economic engine, fueled by consumer spending and demand for goods and services.

The paper economy is impacted directly by monetary policy; but the main street economy, actual goods, manufactured goods, is driven by consumer demand, wages, earnings etc.

Today Lowes announced they will give bonuses of up to $1,000 to more than 260,000 hourly workers and will expand benefits such as adoption assistance and paid parental leave as a result of the recently passed Tax Cuts and Jobs Act.   Lowes is positioning itself for increased in wages and benefits ahead of a tightening job market.  Upward wage pressure is an outcome of Main Street growth.

Today UPS announced: “more than $12 billion in investments to expand the company’s Smart Logistics Network, significantly increase pension funding, and position the company to further enhance shareowner value.”  UPS is investing in capital expansion, and simultaneously increasing its wage and benefits package for the same reason.

All of the Main Street MAGAnomic policies interact with each other and create a dynamic of internal domestic growth.  Building more industry creates a demand for more workers; the demand for more workers creates upward pressure on wages; increased wages makes consumer spending grow; consumer spending growth makes industry expand to capture the demand of consumers.   See how that works?  It’s a circle of growth.

It seems simple, and in many ways it is; however, it takes a person willing to look out for the domestic needs of the American Economy (Main Street) ahead of the global Wall Street economy.  President Trump is the first president in over a generation to actually put economic nationalism into place as the driver for economic policy.

Back in late 2015, and early 2016, when candidate Trump announced the outline of this America-First agenda, we predicted rapid wage growth would be triggered in the second quarter of this year (2018).  We stand by that prediction.

President Trump has aligned the economic planets; taxpayers are keeping more of their income; consumers have more to spend and the best play for business and manufacturers is to invest in America to capture that spending capacity; their investment drives even more jobs and higher wages… and the growth continues.


It works.

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