It appears the new 'narrative' from The White House is simple – keep distracting from the failures of massive policy reforms, and focus on the stock market and soft-survey hype.
President Trump's opening tweets this morning keep the story going….
Business is looking better than ever with business enthusiasm at record levels. Stock Market at an all-time high. That doesn't just happen!
— Donald J. Trump (@realDonaldTrump) August 3, 2017
But, as we noted yesterday, "business" doing well may not mean what he hopes it does… (as we noted previously). With corporate profits rising rapidly in recent years, this has been almost exclusively at the expense of wages and compensation. This is shown in the chart below, which shows that while the profit share of GDP has stabilized over the past quarter, labor Share of GDP is at an all time low, and has fallen further in recent periods. And while labor share of GDP may increase as wages (finally) grow rises, increased capex, especially into productive assets, will limit this growth.
The chart is especially troubling for Trump because it was the collapse in the labor share of GDP that prompted the populist revulsion against the status quo, and got Trump elected in the first place. Should Trump wish to cheer the record divergence between the corporate and labor share of GDP, his days in the White House may be even more curtailed expected.
So taking full credit for it (not the central banks of the world), and adding that he's still working on it…
I am continuing to get rid of costly and unnecessary regulations. Much work left to do but effect will be great! Business & jobs will grow.
— Donald J. Trump (@realDonaldTrump) August 3, 2017
We wonder who he will blame if/when stocks actually fall, or confidence slumps? Congress?
via http://ift.tt/2vlJZfp Tyler Durden