There’s no denying it, the election of Donald Trump has set off a boomlet in the economy, and it promises to expand into a genuine boom once his pro-growth policies have become comfortably settled and guiding the economy. “It’s the economy, stupid,” and Stupid seems to have finally learned a thing or two.
ADP, a payroll processing company, estimated this week that private companies added 298,000 new jobs in February, the president’s first month in office. Economists had predicted that the number would be little more than half that, and the economy instead produced the highest total in nearly three years.
Manufacturers hired 32,000 new workers, construction companies 66,000 and mining companies added 8,000 new employees. It was the highest monthly “goods producing” job growth since ADP first collected such numbers.
What the numbers mostly reflect is a new confidence by business, and the business of America, as the wise man said, is business. For the first time in more than eight years, CEOs are welcome again in the White House. Mr. Trump, a successful businessman, has met with automobile manufacturers, airline executives, Silicon Valley techies, retail chiefs, leaders in healthcare and small business owners to reassure them that he wants to work with them to shape economic policy. And it seems to be paying off.
This week ExxonMobil announced that it would spend $20 billion over 10 years building 11 chemical and natural gas projects along the Gulf coast, creating 45,000 jobs. Ford, General Motors, Carrier, Wal-Mart, Lockheed Martin, and SoftBank have pledged similar expansions. Samsung, the Korean electronics manufacturer, is looking to bring some Mexican manufacturing jobs to the United States.
Mr. Trump promises to slash corporate tax rates, some of the highest in the developed world; to reduce regulations stifling growth, and make investments in infrastructure. As a result, the U.S. stock market has been on its longest bull-market streak since 1987, with the Dow Jones industrial average breaking 20,000 for the first time. The S&P 500 Index has set records, surpassing the predictions of many analysts for the whole of 2017.
“Confidence is playing a large role,” Mark Zandi, chief economist of Moody’s Analytics, tells CNBC of the ADP report. “Businesses are anticipating a lot of good stuff — tax cuts, less regulation. They are hiring more aggressively.”
Now that Wall Street has set the pace, retail investors are scrambling to get in on the action. The Wall Street Journal estimates that individual investors have poured $124 billion into stock exchange-traded funds within the first two months of the year, the most aggressive beginning of a year ever. “It’s unassailable that the retail investor is leading the way this year,” says Martin Small, head of U.S. iShares. “If it continues at this pace growth will smash all records.”
U.S. investor optimism ended 2016 at a nine-year high, according to Gallup. A survey conducted by CNBC News after the November election found that the percentage of Americans who believe the economy would get better this year jumped to 42 percent.
Mr. Trump promised to deliver 4 percent GDP growth — more than doubling last quarter’s 1.9 percent. Adding jobs, especially in the manufacturing sector — the economy’s most powerful for driving economic growth and income gains — is essential in accomplishing that. The president is off to a strong start, and his performance so far will be taken as a promise for more. If the economy succeeds, the president succeeds.