Data vs. Narrative

This blog post by Brian Wesbury, chief economist of First Trust Advisors, illustrates that the data do not confirm some of the narratives that the economic media are running with. Instead, the data has been positive and point toward continued economic growth in the US and away from a recession. Wesbury addresses 3 narratives and shows that the data do not support the narrative. Here is a summary of Wesbury’s blog:

Narrative: Tariffs are causing trade uncertainty which will cause the US economy to slow, perhaps into recession.
Fact: US worldwide trade has grown by 16.3% since 2016. Trade with China is down about 12% but trade with Vietnam is up 33% and trade with Taiwan is up 20%. Other countries are picking up the slack due to the drop in trade with China. As Wesbury points out, trade is dynamic.

Narrative: Business investment is weak, meaning the stimulus from the 2017 tax cuts has ended.
Fact: Business fixed investment (including equipment plus structures and intellectual property) has grown at a 4.5% annual rate, and real business investment in equipment only has grown at 3.4%. These do not suggest a slowdown, much less a recession.

Narrative: The jobs report last week was weak and this points to the end of the “sugar high” and a looming recession.
Fact: Private sector job growth was strong. Civilian employment grew by 590,000. Wages and labor force participation grew and initial jobless claims remained low. Again, no indication of a recession.


I believe the outlook for the US economy is good and that we are not about to be in a recession any time soon. We have a mountain of debt but rates remain low so it is manageable for now. Data in the private sector particularly point to continued growth. This is bullish for stocks as well as for real estate.

First Trust is a leading manager of mutual funds and ETF’s

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