The right direction (part 1)

In the recent November, 2014 midterm elections, 67% of Americans answered that the country was on the wrong track. My response to that poll: if this is the wrong track, then wrong never felt so good!

From an economic standpoint, here are some trends across various areas of the economy:

1) Economic growth had been solid if unspectacular until early 2014. However, GDP has been growing at an annualized rate of nearly 5% over the last 6 months, which is quite good. 

2) Labor market - unemployment rate is at 5.8%, the lowest its been since 2007, 50 straight months of private sector job growth (which is a record since data has been collected), 10 straight months of 200K job growth, the longest streak since 1995.

3) The stock market has one of the longest and largest runs in decades, with the S&P 500 rising 223% since Jan 1, 2009 and more than tripling! since its low on March 9, 2009. Yes, the S&P 500 has more than tripled in less than 6 years. This rivals the other great bull market run from Jan 1994 to Jan 2000.

4) Annual inflation has been low (between 1 and 3%) since 2009. One can easily make the argument that extremely low inflation can be a bad thing, and that higher inflation would have been helpful in the recent economic context. However, since this post is about public perception and the public never views inflation positively, inflation of 1-3% is excellent.

5) Since it peaked in FY 2009 (the last year of the Bush administration), the deficit has come down each of the last year. Again, it can be argued whether deficit reduction should be a positive in the first couple of years of the crisis. However, the public does not understand that nuance and generally views it as unequivocally good.

6) Growth in health care costs have come down significantly. In fact, health care costs grew only 3.6% in 2013, the slowest rate of growth since 1960.

7) 10-15 million more people have insurance than they did a few years ago and many of them do not have to worry about the prospect of a single medical catastrophe driving them into bankruptcy or worse.

Some of these outcomes are directly due to policy, some are indirectly related to policy, and some are unknown or uncorrelated with policy. But regardless of who gets credit, almost all majors of economic performance are unequivocally headed in the right direction over the last 6 (and any subset of that) years.

In my next post, I will discuss some possible explanations for the public's view in spite of the economic record over the last 6 years.