Democrats’ tariff panic ignores signs of recovering economy

As Democrats pray for a global stock market collapse over tariff uncertainty, they are ignoring signs that under Trump policies the economy is rapidly healing from numerous wounds. 

Ever since liberal pandemic policies economically assaulted Main Street in ways that Wall Street and Washington never really understood, relentless additional pressures have been purposefully added to the economy by liberal progressives that have been bad for regular folks.  

Under former President Joe Biden, economic growth lagged and inflation pressures have eaten into paychecks, while Democrats offered a variety of “alternative reality” explanations as to why rising costs and job insecurity have been good things in actuality.   

However, the recent obsession over tariffs, trade and the markets have masked what have been remarkable signs that the U.S. economy, and the stock market, are beginning to right themselves after years of being abused.  

Last year at this time, for example, oil prices, which have a huge bearing on inflation, were around $87 per barrel. In July 2024 those prices were trading at $80 per barrel. 

But since July, when a series of events combined to make it look like a Trump presidency was becoming more and more inevitable, oil prices have been in retreat.   

According to Reuters, oil trades today near $58 per barrel, the lowest price since Feb 2021, one month after Biden took office.  

Interest rates have followed a similar path.  

A one-year chart on the two-year T-Bill shows the key Treasury bond interest rate topping out at about 5% in April 2024.  

Since then, the rate has tumbled to 3.8%, as of Wednesday’s close.  

Interest rates and oil are key drivers of inflation. While higher interest rates eventually lead to lower inflation by cooling the economy, they first pass along costs to consumers.   

Similarly, the jobs reports from December to March looks robust, reflecting a healing economy.  

During this period, around 712,000 jobs were created, according to the Bureau of Labor Statistics (BLS) reports, which matches well with the “strong” job growth that was touted during the Biden years.  

The difference was the Biden growth was propped up by unprecedented government spending,  

What’s most extraordinary about the job growth since Trump was elected is that much of it came as Democrats and the legacy media are decrying a “bloodbath” for federal government workers – losses which appear to be roughly around 40,000 jobs lost. 

By any estimate then, 228,000 jobs gains is impressive, especially since 232,000 people entered the labor force who had previously given up looking for work, according to the Associated Press.  

In other words, while government workers were losing their jobs, private hiring was gearing up rapidly.  

Then there is the stock market, which despite some recent losses, still reflects healthy prices relative to profits. 

Historically, price-to-earnings (PE) ratios for the S&P 500 in the modern era have been around 20.4 times earnings.  

In January, the S&P 500 PE was near 29 times earnings. 

Even after the April market correction, the S&P still trades around 24 times earnings, much higher than the historical norm. 

There are many who have suggested the market has been overdue for a correction, even before the tariff imbroglio. 

The U.S. federal government has spent $16 trillion on stimulus measures since the pandemic. 

Broadly speaking, that money has not gone into the pockets of individuals. Instead, it has benefited institutions, and we see that in dislocations throughout our economy. 

That money has fueled inflation in high prices in energy, housing, labor costs, college education, healthcare costs, the federal budget deficit, and, yes, the stock market.  

Stock market collapses don’t happen because of trade policies. They happen because the government pushes too much money to too few people, who use that money to drive market prices – and all other prices – upward. 

It happened during the internet bubble, and it happened in the prelude to the Great Recession. 

The pandemic stimulus created excess money supply on an order of magnitude many times larger than the excess money supply that doomed previous stock markets.   

For decades, people on the left have complained that the economy only works for Wall Street and Washington while Main Street pays the bill. 

Trump seems to agree with that premise.  

The process that’s playing out in the markets is simply what one should expect as the economy becomes more broadly representative of Main Street.  

It’s messy, but necessary. 

And it shouldn’t mask that the economy is becoming healthier as the stock market grows less dependent on federal largess.