CEA's Kevin Hassett discusses the economy

CEA's Kevin Hassett discusses the economy

economy lately is that the strong economy that we're seeing is just a continuation of recent trends and you know since we're the Nerds at the White House we decided that this is a testable hypothesis and so that what we can do is we can go out and we can estimate recent trends that is trends that ran in the economy up to the point of the last election and then compare the latest data to the recent trends in most cases by the way the estimates of the trends that we present to you here are very statistically significant as are the deviations from the trend and so not going to as I always do show you a few slides can I have the next slide please that's the first slide again there we go so the first slide that we're looking at is small business optimism and this is basically for parallel construction you're going to see that each of the slides we go through is going to look a lot like this and so the blue part to the left of the slide is what happened from the 2012 election through the 2016 election and the dotted blue line is the trend that president Trump inherited from the previous president and the red line is what actually happened with the data and so I think that if you look at this chart you can see that the first thing is small business optimism the middle chart is the percent reporting now is a good time to expand the last one is the percent expecting higher real sales in six months I think if you look at any of those you'd say jeez that doesn't really look like the continuation of a recent trend good I have the next slide please the next chart is something that in my first pressing here wait way back last fall we talked a lot about its business investment which is more than three hundred billion dollars over the trend again if you look at the blue line on the left the first chart is non-residential fixed investment and the dotted line is the trend in the growth rate of that that President Trump inherited for the middle chart is structures or buildings and that as you can see the dotted line is something that's headed straight down and then the final chart is equipment investment and that went straight down before President Trump was elected and I think that if anyone were to assert that the capital spending boom that we're seeing right now was a continuation of the trend the president Trump inherited then well you know they wouldn't get a high grade in graduate school for that assertion the next chart please durable goods orders capital goods orders it's a key part of the economy and it's one of the factors that we look at most closely because it characterizes basically the the good paying jobs the jobs that affects normal Americans blue-collar Americans and the first chart is core capital goods orders and the second chart is core capital goods shipments and if you look at it the blue again shows a clear downward trajectory and billions of dollars and that trajectory reversed itself completely when President Trump was elected if you were going to assert that the current good news is just the extension of a recent trend then you just simply be factually incorrect the next slide please here we're looking at the is M purchasing managers index which is a survey of people who are purchasing managers for manufacturing firms and so they're the the folks that you know as the title suggests manage the purchases and and so it's a really great indicator of the economy because you could survey them and say hey have you been buying lots of stuff this month or have you not and the index shows what their responses look like and you could see that the trend and the purchasing managers index was pretty much flat when President Trump took office and the red line shows you what happens since that is there's a clear inflection right at the election and a clear break let's turn to the next one peace now one of the things that I can remember at the American Enterprise Institute talking a lot about before I came in here was the fact that entrepreneurship in America was falling off and one of the ways we can measure entrepreneurship is that if you start a new business that you have to apply for an ID number tax ID number for your business and so in this chart we've plotted the ein applications for new businesses and if you look at the blue line they were heading up heading up we're in a recovery but there's a clear upward trajectory way above the trend at the end and you know Sarah I'd like like John Roberts is a calculus geek and so she looked at that one and said geez that looks like a very strong second derivative to me and then I said I didn't know you did calculus and she said I like calculus better than talking to these guys the next check chart is prime age workers re-entering the labor force and again if you look at the trend one of the things people said when we put out our growth forecast that said that we'd have three percent growth as we said that president Trump's policies are gonna bring factories back to the US give you the capital spending boom that you saw in the previous chart and that was going to bring people back into the labor force at precisely the right time once again you can see that there's a clear break of the trend and so if you see a break of the trend in the capital spending the new plant formation that gives blue-collar workers their jobs they go the next slide please then maybe we see a break of the trend and blue-collar workers employment as well and so this is employment for people in goods producing industries if you look again at the blue part on the left you can see that there's a clear downward trend going on in the growth rate of that for President Obama and then a clear inflection time to almost precisely once again at the election and the notion again that somewhat he might defensively attempt to assert that this is a continuation of a trend is almost laughable if you look at this chart and you know look at the rest of it now somebody might say if you're showing a bunch of charts well geez maybe it depends on when you estimate the trend and I'm sure that if you went back and began your estimate the trend at the Civil War and then thought about well what trend do we get then well then maybe we're not you know you get a different answer from what we see but another way to sort of test whether the data that I just showed you is a fair representation of what a trend looked like when President Trump was elected it's just to compare it to nonpartisan bodies were saying so can I have a look at my final chart here I know but I guess I heard the sigh of relief when I said final Charenton so so so if you look at the final chart you'll see that the black line is in June of 2017 what the CBO a Congressional Budget Office a nonpartisan agency that has a job really of looking at recent trends and projecting it what they said would happen to capital spending back in 2017 the blue line is what they said in April 2018 and the red line is what's actually happened and so I would assert that if you look at the the collective body of evidence the notion that what we're seeing right now is just a continuation of recent trends it's not super defensible and I think that I know that we're in a political time and passions are high but as geeky economist one of the things we have to do is think ahead to you know what historians will think when they look back at this time and I can promise you that economic historians will a hundred percent accept the fact that there was an inflection at the election of Donald Trump and that a whole bunch of data items started headed north they will of course argue for a long time about why that happened but my final final thought for you is just this that when they do that and when you watch people do that in the media going forward without beds and so on that you should watch out for ex-post theorizing as an economist one of the things I most care about is an ex ante theory something that happens before and then let's watch the data and then see if it agrees with a theory that's how you test a theory you might recall that I came back here last fall and I told you that if we had the tax cuts the president Trump advised that week that we have that he pursued if we pass them then there'd be a boom in capital spending this year in fact we provided estimates at the time last fall this said the capital spending this year would go up about 11 percent because of the tax cuts so far in the first half of the year capital spending is up 10% and so you don't have to really reach far for a theory of what half of President Trump deregulated the economy we've talked about how that affects growth the tax cuts have had exactly the predicted effect on the economy that's brought businesses back to the US factories back to the US and created jobs for ordinary Americans it's clear the data that there's been a trend break you you

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47 thoughts on “CEA's Kevin Hassett discusses the economy

  1. So Cory Booker goes on CNN's "State of the Union" today (5/5/19) to push the HOAX that Trump inherited Obama's great economy. To put it nicely, he is "factually incorrect". Why can he get away with lying about this… because the M$M will not report the truth. Just sayin.

  2. Damn, how can this be? I trusted my Obbutthole that jobs were gone and not return. That Pres Trump will cause a down fall. HOOWWW, HOW CAN THIS BE? OH WELL, WE'RE DEMORATS, WE DON'T KNOW HOW TO READ CHARTS.

    if u didn't get it, I'm MAGA all the way. Just poking holes on Obbutface comments that Pres Trump has no "magic wand" and will cause America to get worse in dept.
    MAGA 2020

  3. US economy is showing good steady growth, this is good news. but the presentation is a bit misleading not with the starting point of the trends but with the descriptions, example: the goods-producing employment was presented as the acceleration 5:26 (present change graph) and the jerk was extrapolated (change of change), looking at the same data nominally from 2012-nov to 2018-nov one would be hard-pressed to extrapolate the same conclusion. here is a link https://fred.stlouisfed.org/graph/?g=mxZ7 yes there is an uptick but presenting the derivatives of it is problematic

    this data is generally not fit with polynomials, this is because it is noisy and when you make trendlines each derivative multiples the noise/error factor. like I got marks taken off at school for doing the same thing

    another one that was really weird is prime age employment to population ratio 4:54 https://fred.stlouisfed.org/graph/?g=mxZo
    I downloaded the data and tried to make it as smooth as he does on his chart but it is so much more jittery and yet a trendline fits much neater across the two periods.

    I just think he could have presented the data better, or like talk me through it a bit… especially if he is targetting a more "nerdy" audience there are enough positive indicators from FRED albeit maybe not as dramatic as he makes them out

  4. All of the charts Hassett shows are so small minded not looking at larger historical trends, but focusing on narrow myopic trends (only 2016-2018)

    I'm not an obama fan, But People please realize, the economy is BIGGER than any ONE man or any one president.

    all these trends are just continuing recovery from 2008 crash… but the "gains/recovery" that our "great economy" has been gathering have not been going to the workers… they have been going to the Corps and Elites. This Hassett is just lying to y'all.

    Measuring the "health of the economy" by Reganomics/trickle down, is a metric that benefits the Wealthy elite, not accurate to measure the Health of the blue collar average worker.

    Here are some more down to earth metrics than measure the heartbeat of the average american…

    1. medical bills one of main reason for bankrupcy
    2. most americans cant afford $1000 emergency
    3. people have less people (friends family) they feel they can count on in emergency.
    4. no real wage increase since 1970, but productivity has boomed… more work for less gain.
    5. most jobs created are temp, and part time low wage jobs…
    6. if minimum wage kept up with inflation since 1970 it would be $22, not $7.50 or whatever
    7. housing prices have skyrocketed. one of causes of increased homelessness
    8. most americans are too deep in debt, living off of credit, over-levered and have refinanced their houses for emergency spending.
    9. 30 million americans dont have healthcare.

    So what if the unemployment rate is down, these are shit jobs
    So what if the stock markets are booming, more than 50% americans dont own stocks
    So what if the GDP growth rate is up, this isnt going in your pockets.


    1st slide is quite misleading.
    see charts at bottom of website as well.

    slide 2 questionable
    slide 2 equipment and structures investment. gov debunked by gov

    slide 3
    core capital goods orders/shipments rise fall in Unison (2001,2008, 2015) … trend seems weird at least… this one is the most on trumps side. or there was a mini recession (2015) in this metric … ????

    slide 4
    ISM purchasing managers index… more consistency since 1980s, prior to 80s much more extreme variability

    slide 5
    New application of Employer ID numbers have surged…. been rising since 2008…
    dont think trump can take much credit for this.

    slide 6, again this dude is dense…

    slide 7… NAFTA, fucked this one… all the manufacturing jobs have already left… some came back under obama, and more since trump, but manufacturing has been losing since 1976 and grossly losing since 1993.

    slide 8… this guy is boring me. Private nonresidential fixed investment

  5. "We just have to realize paus paus pause.those jobs are just never coming back " what' Trump gonna do? god I dont even want to say his name damn it. !! Wave a magic wand and make those jobs come back?? 😂 F freaking you osama bin barak husein you inserted iluminati mole !!! Americaaa Strong and forever freee Nation of God I love us so much !!! 💪

  6. This is what people think of this guy's and his book Nobel laureate Paul Krugman argued on his faculty website that the book contained basic arithmetic errors and was "a very silly book" but regarded Hassett's role as co-author as a "youthful indiscretion."[12] Statistician and blogger Nate Silver described the book as "charlatanic" and suggested on empirical grounds that the authors had failed to notice that at the time of writing stock prices were "as overvalued as at literally any time in American history".

  7. This doesn't mean anything, the increase was goods are all companies taking advantage of the tax breaks that they will get the following year, show what its doing for everyday, also the first year he didn't sign any new policies or anything this is all to Obama, show 2018

  8. Hey Obana, guess what??????????????

    President Trump does have a magic wand, & it is working a hell of allot better than all of your silly lies, & bull crap promises, YOU TURD!!!))))))))))))))))))

  9. Youtube is such garbarge. The first 40 links is all MSM. What happened to the YOU in YOUtube? If I want propaganda ill watch TV. Thank you Obama for making propaganda legal.

  10. How many times do we have to see the differences between Democrat and Republican before the country learns capitalism and steady growth is way better the socialism and stagnation. History is supposed to teach us something in some cases, to not repeat. Know wonder the Democrats have taken over collage campuses and are trying to rewrite and teach an alternative pass to fit their socialist narratives. Crazy. Sign Of The Times – Harry Styles

  11. First of all, do you think you have a enough understanding and education of economy that you can say for sure what is important and that you understand what is said? If not, educate yourself so you can really understand what is said and what is missing.
    What that guys is not saying is that election period should not be count in trend, because almost in all cases numbers drop on elections. That’s why he points out that there was indeed election period, but he leaves out its effect on long time trend. It’s also noteworthy that they selected only those certain focus graphs that show positive results, but when you look at the graphs showing whole economy at wider range, graphs are far from as positive as those shown here. Just check the following reports.

    This one show how trend without election period, and similarly Trump’s progress should at start only after the election period. Like what Macleans said, we can all see how the Obama’s trend is still continuing on Trump’s term. This means that it’s not Trump who has created that economic rise, and if he claims so, he simply is lying.

  12. Any resonable person knew this was true, this is simply for the uneducated just repeating the garbage that Trump "inherited a good economy from Obama" anyone with half a brain knew how that was bullshit. This just shows why we voted for Trump, we voted for him not because of his moral standing or character, he's a BUSINESSMAN AND KNOWS HOW TO MAKE MONEY. Glad CNBC posted this. Notice how there is ZERO videos on MSNBC and CNN. This is why we call them fake news. TELL THE DAMN TRUTH, STOP LYING WITH FAKE NEWS. Seriously why can the media just be honest, he has done more in 2 years then most presidents have done in 8

  13. Another Democrat, another lie! oBama is no different. Busy sowing the seeds of racial division during his weak ass presidency, oBama somehow found the time to tank the economy! Then, when his predecessor makes miracles happen, oBama swoops in to take the credit! God, I can't stand leftists!

  14. Title should have been: Charts for dummies.
    a) Some of the positive (ascending) trends started already before the election.
    b) In some of the charts there was a wave- formed up and down of the economical development earlier (2013 till 15 about) but despite a new clear ascension of the economical development under Obama they simply „assumed“ that the improving situation wouldn’t last and draw a flat line through the whole thing. That is very biased to say the least.
    c) „optimism“ is only a hope and has little to do with how things work out eventually. It’s a poor evaluation factor to see how an economy is actually doing.
    d) These people conveniently forget the worldwide economic crisis that started in 2008 and lastet for some years. It took some time for the economy to recover afterwards.
    e) The steep incline of these chartlines directly after the election is proof that it’s not a result of any changed policy or laws bc. both take quite some time to take effect.

  15. So the next question is who are the companies responsible for these upturns, and what are they investing in precisely? It's one thing to assert increases but in order to really understand I would like to see whether these large scale increases are as a result of individual larger companies or smaller ones. The attitude of small businesses has clearly upturned but which companies are creating the increases he refers to in the later slides. There is still no viable minimum liveable wage either as many people are till having to work more than one job to make ends meet. I would hope that trillions in tax cuts would lead in the very first place to a decent living wage for those who work the hardest, and the longest, for the least. That's the marker of a functional society. Yes you need growth to achieve this but profit always comes first to the detriment of those who make the company function.

  16. Notice that the comment section on this hasn't been rigged and attacked by Soros Stooges….yet. First normalcy plays out….people discuss truth like rationl human beings and more people learn the truth. Then the maniacs show up in force because some LIBeral website or newsletter told them to and the websites themselves begin to rig the results to block conservative voices. I see a LOT of that on TWIT and FAKEBOOK. Gaggle/YouTube is the same…they just haven't gotten around to it on this yet. Where are all of the LIBs to scream and throw hissy fits about Trump to deflect and obscure the devastating truths herein?

  17. Fantastic. Too bad you can't get through to LIBs with such basic, factual information that refutes the fantasies they harbor, which are based on the lies they're fed by democrat politicians like Obama and his corrupt-media pimps. Truth v Fiction. They don't know the difference and are stuck on the stupid ideas that the truth is fiction and false narratives are the truth because they've been repeated enough times.

  18. It was kinda funny how the cameraman seemed almost forced to bring the camera back and show the graphs; that was the most reluctant zoom out action I've ever seen.

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