Donald Trump and Bernie Sanders aren’t optimistic about the present or future state of the American economy, and they have been vociferous in their doomsday predictions. According to the stats though, the US economy doesn’t seem to be as bad off as Trump and Sanders are leading people to believe. In fact:
- Companies are hiring at a steady rate.
- Consumer spending is rising.
- The economy ended the year up 1%.
- Unemployment is below 5%, something that hasn’t happened in nearly ten years.
- Projections for the first quarter of 2016 are expected to rise even more.
While America is still playing a dangerously slow gains game with its economy, it is unlikely that they are heading for a recession which was a realistic fear towards the end of 2015. So the question is who really cares about the rants and ravings of two politicians? The trouble boils down to sentiment.
Saying it Makes it a Reality
When Trump tells the Americans that the American Dream is dead and Sanders lambasts the middle class as a collapsing entity, people start to get disheartened whether or not the statements are true. Pessimism sets in, consumers stop making purchases, investors are more cautious about their investments, and the stock market begins to falter.
Warren Buffett was adamant about his disapproval for the Republican presidential candidate’s statements, stating in his annual Berkshire Hathaway shareholders letter that Donald Trump’s estimations of the US economic situation were “dead wrong”.
In addition to Americans losing hope in the economy based on this heresy, negative reports on the US economy can have global ripple effects that could have dire implications. Countries may stop investing as much in US stocks and companies and the financial ecosystem could crumble over a matter of biased opinion.
US Economic State
Is the American economy losing steam from all the pessimism circling? According to sentiment, not really. Yes, sentiment levels are lower than they were the previous year, but only marginally. With the S&P 500 down 5.5% in February many analysts blame the declining stock market for the lower sentiment more than anything the politicians are talking about. Oil prices probably have more to do with the state of the stock market than with the political speeches of Sanders or Trump.