07 October 2015

The Exciting Possibility of Joe Biden

There is a very different bar for "would you marry this man?" and "I do!" The list of people we might consider as spouses is much longer than the list of people we actually do marry. Dating often puts an end to exciting possibilities. Going to the polls is different than having someone query you for a poll.

Which brings me to this odd clamor for Joe Biden to run. He's at the stage of candidacy akin to your aunt telling you that you should date this guy because he's really nice. You're open to this possibility but given we're talking about meeting for coffee, it's hard to say "no." Later, before you actually begin shopping for a wedding dress, it'll be harder to say "yes." 

There are real issues in this campaign. By far the biggest and most urgent is 24/7 news agencies' need to run stories that drive ratings and click-throughs. As it turns out, we're less interested in politics than politicians, and it doesn't take us long to go through the entire cycle of intrigue, approval, skepticism, and dismissal with a candidate. The process from intrigue to dismissal has never been quicker and the period of serious campaigning has never been longer. So, there is a lot of demand for shiny new objects in the form of candidates. And while we aren't really sure that we want Joe for president, we are sure that we want him in that candidate parade. "We need you to run, Joe, if only for ratings bump."

05 October 2015

Mass Killing - What if it Has Nothing To Do With Mental Health?

If we legalized bombs and every time a crazy person detonated a bomb it killed 200 people, we wouldn't say that we've never had more problems with mental health.

If we legalized atomic bombs and every time a crazy person detonated an atomic bomb it killed a million people in a city, we wouldn't say that we have unprecedented levels of mental health problems.

If "More than half of the mass killers of the last 30 years possessed assault weapons or high- capacity magazines, [that] allow a gun to fire without the need to reload, maximizing damage, increasing body count and minimizing risk to the shooter," we might not have any more health problems than we had half a century ago. 

If mass killers can double the number of victims even if we could reduce the number of mass killers by half, maybe it is time to give some consideration to the technology we include under the umbrella of right to bear arms.

Baby Boom Now Senior Bust

After World War II, procreation resumed. The men who'd been shipped off to Europe and Asia came back and started families. Their children became a bulge in the American population that has re-shaped everything since.

When they hit campuses in the 1960s, they changed education, politics, and pop culture. Frank Sinatra gave way to Crosby Stills, Nash & Young. Segregation gave way to integration. And university enrollment grew at rates never seen before or since.

When they hit the work force, they drove up labor participation rates twice. Once because so many kids were becoming adults, transitioning from student to employee. Second because so many of those kids were enlightened females who were likely to take jobs rather than stay home to bake. The percentage of women working went up as baby boomers came of age.

When they formed families in the 1970s, their demand for housing drove up home prices. People got rich just building homes and speculating on their prices.

And now, when those baby boomers are retiring at a rate of 10,000 a day, workforce participation is dropping again. Baby boomers are the pig on the python, the big bulge in the population that distorts everything each time they enter a new phase of life.

In the graph above, you can see two things. For one, as they came of age, civilian labor rate participation rose and is now falling. Two, as they came of age, they drove up home prices. Home prices took their first real fall only as these baby boomers began to retire and downsize. 

Labor participation rate has fallen in part because of the Great Recession and our slow recovery from it. But the Great Recession hit in part because of falling labor participation rates that are simply a function of aging baby boomers.

The baby boom has become a senior bust. The ripple effect of this generational bulge is not over yet.

03 October 2015

Why Corporate Cash Hordes Make PE Ratios Look High

US corporations are holding more cash than ever. In 1980, they held nearly $500 billion. By 2011, they were holding nearly $5 trillion. [St. Louis Fed data and theories here.] In 30 years, the amount went up 10X.

Meanwhile, P/E are also higher than in 1980. Around that time, P/E ratios were about 10. Now, they are around 20.

While cash doesn't account for the whole of the difference in P/E, I think it gets overlooked in the popular press. 

For instance, Microsoft is selling for about $45 a share and its P/E ratio is just over 30. But Microsoft also has $12 of cash per share. If you pay $45 for Microsoft, you're really just paying $33. Your first $12 gets you $12. You pay cash for the stock and immediately get $12 in cash, almost like a rebate. (Okay. You don't actually get the cash. It stays with the corporation. But it is easier to price cash than it is to price future profits.) If you adjust Microsoft's P/E for this, the P/E is closer to 23. That's still high (apparently investors are still excited that Steve Ballmer has been replaced by the new CEO Satya Nadella? They really like Windows 10? Who knows?)
7 Biggest US Companies by Market Cap, PE Adjusted for Cash

Adjusting for cash adjusts PE ratios for companies to varying degrees. Apple's PE drops from 12.76 to 12.05. Berkshire Hathaway's PE ratio drops from 17.89 to 14.32. Johnson & Johnson's from 16.54 to 14.38. Google's 29.54 to 24.89. The companies with higher PE ratios are still companies with more exciting growth potential but PE ratios are generally higher because of all this cash. (PE is the ratio of today's price to the earnings, or profits, of the last 12 months - not the next 12 months. If your profit is expected to double in the next year, your PE ratio should be double that of a company whose profits are expected to remain unchanged.) 

Again, higher PE ratios are not just a function of companies carrying more cash, but adjusting for this phenomenon does lower PE ratios to something closer to historic norms. And it buttresses another claim as well. We live in a time when capital no longer limits. As investors look for places to put their trillions of dollars in capital, they are more likely to use it to purchase stock. Even if stocks seem over-priced by historic standards, what else are they to do with their money? Bonds pay ridiculously low rates. Commodities - even oil and gold - are falling in price. So they put their cash towards the purchase of companies. 

Oddly, the companies they're buying also have more cash than they know what to do with. Maybe its time to start shifting all that capital into entrepreneurial ventures that promise to create new jobs and wealth.

02 October 2015

So, What's Really Going on in the Job Market? (Why 2015 Will Still Be the 2nd Best Year of The Century)

Many analysts were disappointed in the jobs report today. The forecast - based on ADP's Wednesday report - was for 200,000. Not only did the jobs report come in 57,000 below that (it hit 143,000), but the two previous months were revised downwards by 59,000. When the dust settled, the economy had nearly 120,000 fewer jobs at 8:30 eastern than people had been assuming at 8:29. That's a lot of jobs to lose in a minute.

So is that reason for concern?

First of all, let's put it in perspective. The longest run of uninterrupted job creation streak before this was exactly four years. The next longest was 46 months. This streak? It is now at 5 years and counting. No streak on record (data goes back to 1939) has ever stayed above zero for this long. And when this streak falters .... it hits 144,000 jobs gained? 60 months in, the next two longest streaks had "faltered" to the tune of losing 1.6 million and 856,000 jobs. At this point they weren't falling below average for the streak. No. They were instead shedding jobs at a rapid rate. If job gains of 144,00 is our equivalent to actual job losses of around a million, let out a loud hallelujah now.

Secondly, the question is whether this is meaningful. In any given month, the American economy destroys and creates more than 2 million jobs. We might talk about a net gain of 144,000 jobs, but obviously there were jobs lost in September as well as gained. The jobs report gives us the difference between these two. In a typical month during this recovery, the economy might create 2.4 million jobs and destroy 2.2 million for a net gain of 200,000. (Which is about the average for this 5 year streak.)  Missing a consensus forecast by 70,000 means that one of those numbers was off by about 3%. It is noise in the signal, static on the radio, normal variation.

Even with the weak numbers, the number of employed Americans is up about 2.2 million from this time last year. Meanwhile, an estimated 10,000 baby boomers are retiring every day. This works out to about 3.6 million in the last year. The job participation rate is dropping now as they leave the job market just as it rose when they entered it in the 1960s. (This point about job participation rate is made here by urban camel.) Baby boomers are like a pig in a python - creating a bulge in the numbers every time they enter a phase of life (whether university enrollment, job creation, home prices, or - now - retirement).

Is there reason to worry? Always. Just as there are always reasons for hope in a recession. The economy could turn within a quarter. Having said that, the reports of the last few months are not cause for alarm. They fall within normal variation for this recovery.

My prediction? The last three months of this year will be so strong that the analysts will change their tune to one of wonder. This year will turn out to be the second best year of this century for job creation. (That means at least 243,000+ jobs a month average, between revisions and new reports.)

27 September 2015

Why You Will Never Again Earn Interest Rates Higher Than Zero (or, why capital wants to be free in a post-information, entrepreneurial economy)

In The Fourth Economy, I argue that capital no longer limits. We now have trillions in capital and unsurprisingly, returns to capital have fallen. When the market is flooded with potatoes, the price drops. When the market is flooded with financial capital, the price drops. The price of capital shows up as risk-free interest rates, and those seemingly want to be zero. Or less.

Frances Coppola concludes her post today with this (emphasis added)

 I suspect the post-Depression natural (real) rate is lower than we would like it to be, and it's just taken us best part of a century to understand this. If so, then this is not simply a matter of getting fiscal and structural policies right. It raises serious questions about the ordering of society. After all, a large number of people depend on there being significantly positive real returns on essentially risk-free assets. If significantly positive real returns on risk-free assets are a thing of the past, we owe it to those people to stop pretending we can restore their lost returns through "confidence-boosting fiscal consolidation" and "growth-friendly structural reforms". They simply aren't going to be able to live comfortably in their old age on the interest on risk-free savings.
The truth is we do not know when, or if, positive real returns on risk-free assets will return. If the future path for growth in future is low to zero, then they may never return. If this is the case, then the solution to the "Great Divergence" must be for nominal risk-free rates to drop. Permanently.

Gavyn Davies at the Financial Times questions whether the Fed might be wrong to raise rates this year. If Yellen is wrong about the economic recovery, and triggers a recession, she'll have little room to maneuver. Rates will still be low and she won't have many options then. Better, he suggests, not to risk another recession just yet and to keep rates at zero for a while longer.

Pete Spence reports on Sweden's Riksbank in the Telegraph. They have lowered interest rates to below zero.  Sweden has the third highest savings rate in the developed world and unemployment is still high. They have plenty of capital but low interest rates still don't seem to stimulate investment enough to create jobs.

What does this mean?

During the Industrial Economy from about 1700 to 1900, financial and industrial capital was the limit to progress. There was not enough of it and returns to capital were high. Returns to capital made the West rich.

During the Information Economy from about 1900 to 2000, knowledge workers were the limit to progress. Creating the public school systems to educate them took a lot of capital. So did creating the corporations for them to work in, the R&D labs, the information technology, and the factories able to produce the new products they designed. Between the demands of government and the burgeoning private sector, capital was still in demand and the price of capital - interest rates - was still high.

We seem to be past the limits of capital and knowledge work now. That doesn't mean that capital and knowledge workers are unnecessary.  It means that they no longer lead progress. Entrepreneurship is the limit.

Last century, we popularized knowledge work. In the US in 1900, less than 10% of 14 to 17 year olds were formally enrolled in education. By 2000, less than 10% were not. In a century, we transformed from an industrial economy dependent on child labor to an information economy dependent on adult education. The knowledge workers who were rare - who were often forced to be autodidacts who taught themselves during the 1800s - became the new normal.

Now, we will popularize entrepreneurship. Entrepreneurs who were largely self made in the last century will increasingly become the product of the system, just as knowledge workers are today. Along with a growing number of entrepreneurs, more employees will become more entrepreneurial.

This matters to capital because it gives capital a place for a return. Risk-free returns for government and corporate bonds may remain close to zero. Perhaps even negative. There is an abundance of capital. But all of these entrepreneurial ventures - most of which will fail - will require enormous sums of capital. The entrepreneurial economy will mean higher risks and higher returns for capital but of course those can be mitigated as corporations and investors diversify.

There are so many implications for this new, entrepreneurial economy. But from the perspective of capital, it means that it is going to be harder to get a return on investments without actually taking the risk to finance something new. And it means that we'll continue to have bubbles with startups as long as entrepreneurship remains the limit.

Probably for the next decade or two, capital will chase returns in corporations and IPOs. Already corporations have more money than they know what to do with, sitting on trillions in idle cash. The IPOs that really do have great potential - the products of great entrepreneurship - will command ridiculous equity valuations. It is going to be awhile before we manage to popularize entrepreneurship to the point that entrepreneurship no longer limits. Until then, stocks and IPO prices will be highly volatile, with trillions in capital chasing too few new opportunities.

But there is so much good that follow from shifting into this fourth, entrepreneurial economy. Among other things, it will do for unemployment what economic progress since medieval times has done for starvation. All of these startups will require employees. Just as the 20th century saw a growing proliferation of products, in the first half of this century we will see a growing proliferation of companies.

For now, central banks are flummoxed by capital markets. Given that capital no longer limits, though, it doesn't make a huge difference when they flood the market with more capital. And given that there is an abundance of capital even without central bank intervention, there is little or no reason to raise interest rates. Risk-free interest rates will stay close to zero in the developed world.

All of this means that governments are going to have to come up with a whole new bag of tricks for spurring development. And this time, the effective new tricks won't center around monetary or education policies that make it easier to invest or become a knowledge worker. This time the new tricks will center around the popularization of entrepreneurship.

26 September 2015

The Republican Party Has the Same Problem as Islam

According to a 31 August poll from Quinnipiac University,

Only 8% of Republicans approve of the job Obama is doing as president.
Only 6% of Democrats approve of the job House Republicans are doing.

That is not a big difference. And it is hardly surprising given how different are the opinions of Democrats and Republicans about what makes for good policy. But the poll gets more interesting when it comes to each party's view of their own.

86% of Democrats approve of the job Obama is doing.
23% of Republicans approve of the job the House Republicans are doing.

That is a huge, nearly 4 to 1 difference. Most Democrats like their Democratic president. Few Republicans like their Republican House.

Obama's low approval ratings can be attributed to a difference in ideology between the Republican and Democratic Party. The House Republicans' low approval rating, by contrast, has to be attributed to a difference in ideology within the Republican Party.

I'm old. I can remember when Republicans were the more pragmatic party. You could question their policies but they were the first to point out that Democrats' starry-eyed proposals to end all suffering might not be practical or that certain regulations might make it nearly impossible for a small business owner to continue to operate. It's not like that now.

For a certain wing of today's Republican Party, pragmatism is an ugly word.They don't care about practical. Would freezing the debt ceiling and suddenly pulling 10% of GDP out of the economy actually trigger a recession? So what. It has to be done in order to protect their ideals of a smaller government. Would shutting down the government over funding for Planned Parenthood hurt the economy and potentially put people out of work? So what. It has to be done in order to protect the sanctity of life. For them, to give in a little on ideals is like being just a little pregnant. Compromising on ideals is proof that you aren't sincerely idealistic. It's proof that you are ... pragmatic.

Right now, the Republican Party has a fight similar to the one between factions of Muslims in the Middle East. On the one side are pragmatic moderates who are more interested in progress than ideological purity. On the other side are ideologues who are convinced that God is with them and to compromise with moderates shows a lack of faith, corrupts something pure. Whether you hate or love Muslims or Republicans, you better hope that the moderates among each win. Because ideologues prefer war to compromise.

Quinnipiac Poll numbers here:

25 September 2015

Why House Leader John Boehner Should Be Replaced by an Algorithm

John Boehner is retiring from his job as Speaker of the House 30 October. The next day, on Halloween, he might just dress up as someone with actual power.

If you look at history or even across the world now, it seems obvious that as countries advance, power is dispersed. Theocracy gives way to religious freedom. Monarchies are replaced by democracies.

What we sometimes miss is that this matter of democratization, this continual dispersal of power to more and more people, doesn't stop. The founding fathers of this country forced aristocrats to share their power. Later generations forced the founding fathers' type to share power even with people who weren't Protestants, weren't land owners, weren't men, and weren't white. Power continues to diffuse.

John Boehner has had to negotiate deals with conservative fundamentalists who have been prepared to wreck the economy in order to limit debt and de-fund Planned Parenthood. It's not enough that he has to negotiate with the White House and Senate, or even House Democrats. He has to negotiate with extremist factions of his own party.

The problem is not John Boehner. Or even these radical conservatives. The problem is the process for negotiating deals in the House and Senate.

A good process is realistic. The model of Speaker of the House negotiating in backrooms assumes that power is still concentrated in an individual or small group. John Boehner doesn't actually have much power. But neither does any other congressperson and any model that assumes they do is bound to be frustrating and flawed.

Liberals and tea party conservatives seem pretty excited about making it to Congress. The problem is, no matter what promises they made to their constituents, a single Congressperson has no power to affect change. Well, not "no power." Just "very little power." To be precise, as one of 435 representatives, the power of an individual Congressperson is 0.2%. That's two-tenth of one percent.

Rather than expect someone to negotiate a deal between rural conservatives and urban liberals, why not just turn vote mediation over to an algorithm? A simple spreadsheet could suffice.

One congressperson wants to increase defense spending by $30 billion. Another wants to cut it by $20 billion. 433 other congresspeople would like to change it by varying amounts. Why not simply let every congress person submit a budget and simply take the average of those? If the average of all congress person's votes is to cut defense spending by 7% or raise it by 13%, that's what gets sent to the Senate for vote there. (A vote that could be done in the same way, only with 100 senators instead of 435 representatives.)

This does more than disperse power. It means that the most conservative rural Kentucky district gets the same representation as the most liberal San Francisco district. Exactly. Regardless of who is in the majority.

Among democracy's many flaws is this: it can easily leave 49.9% of voters feeling like losers. Their guy doesn't get in and they feel like they've lost their voice. Better to let everyone have a voice - and with it the message that with 307,000,000 other Americans, their voice is just one of many. Everyone will expect to be heard and everyone will expect their shout to become a whisper as it is averaged with the views of hundreds of million other Americans.

It probably won't be on October 31, but eventually, John Boehner will be replaced by an algorithm. It's not just because of the evolution of technology. It's because of the evolution of power. It's no longer enough to give it to just 50.1% of the voters. Averaging in everyone's views will disperse power to something closer to 100% of the population. And that is the direction this dispersal of power is going.

State and Local Spending Finally a Boost to - Rather than a Brake on - Economy

We are finally at the point in the recovery when spending at the state and local level can be a boon to the boom.

The Commerce Department revised its final estimate of second quarter GDP growth upwards today. In current dollars, GDP is up 3.9%. In current dollar GDP is up by 6.1%, an increase of $264.4 billion, which brings GDP to $17.9 trillion.

Why is it up? In large part because personal consumption, exports and home construction are up. New home sales are at their highest since before the Great Recession. The revised numbers for July report that new home sales were up 12%, a fairly stunning leap. Sluggish home construction and home sales have been a brake on the economy until recently. The same could be said of government spending.

Federal spending has gone down in each of the last 3 years. During 2012 - 2014, on average, federal spending dropped by 3.3%. State and local spending dropped by nearly 1%  per year on average. Now, in the most recent quarter, federal spending was unchanged and state and local spending rose a remarkable 4.3%. This trajectory could continue, helping to prime local economies.

Most of the states mandate balanced budgets. Taxpayers have this naive notion that this makes for sound policy, arguing that households have to balance their budgets and so should government. This is absurd, of course. What it means in practice is that during a recession, states are a huge drag on the economy and during a boom, their spending is likely to overheat the economy. During a recession, states have to layoff employees, adding to the employment carnage. They might also raise taxes to help fund services like, say, third grade classrooms; this adds to the pressure on households to cut back on spending, further exacerbating the recession. During a recovery, this amplification process is reverses. States spend more because they have more, and that adds to the boom. Even if they "given the money back to taxpayers" through tax cuts, they stimulate the economy because now households have more money to spend. Mandated balance budgets is a farce fueled by confusion. And at least for now, it is going to work in our favor.

24 September 2015

Headlines I'd Like to See for Pope's Visit to US

Pope visits White House gift shop: passes on "I Slept in the Lincoln Bedroom" t-shirt and buys Supreme Court Justice souvenir robe instead

Pope visits NY, is kicked out of performance of Book of Mormon for laughing too loudly and shouting, "19 Year Old Proselytizers! Damn that Joseph Smith!"

Pope spokesperson apologizes for pope's behavior next day. Says pope was still confused that something as innocently named as a "hoppy ale" could be so disorienting.

Pope visits Philadelphia and adds his signature to Declaration of Independence. Shouts, "Down w/ the Church of England! Damn that King Henry!"

Pope spokesperson apologizes for pope's behavior next day. Says pope is sleeping off his first Cheese Steak and Hard Cider, still confused that a cider could be so disorienting

Pope weary of Explaining that He Was Not Referring to Doris Day in His Speech to Congress, snaps at reporter

Pope misquotes Yogi Berra in New York: Hell? Nobody Goes There anymore. It's Too Crowded.

Pope, driving Fiat, is pulled over by a New York cop for driving onto sidewalks, pulling up beside frightened hot dog vendors and shouting, "Is this the drive up window? Could you make me one with everything?" before turning to reporters to confess, "I stole that joke from the Dalai Lama." 

Pope spokesperson holds press conference to apologize for pope's behavior next day. After scanning sea of reporters, folds his notes, sighs, and just walks to the back of the room to help himself to a hard cider.

23 September 2015

Vonnegut's Rule Predicts the Political Furor Over the Pope

The rarely seen dual pope
Vonnegut once quipped, "Thanks to TV and for the convenience of TV, you can only be one of two kinds of human beings, either a liberal or a conservative." You might consider this Vonnegut's rule.

Of course it is true that a century ago, in the days before TV, politics in this country was rich and varied. We actually had anarchists and communists, progressives and conservatives, royalists (yes - still) and robber barons, people whose politics centered around issues like abolishing religion and marriage or people whose politics was defined strictly by staying out of all foreign entanglements, from Cuba and the Philippines' movements' to gain independence from Spain to World War I and of course peace mongers who saw the League of Nations as prelude to one world government that would end war (Einstein was in this last group). Politics was fascinating and more varied than it is today.

TV today has to be quick, though. They don't have time for that much variety and confusion. They have commercials to get to. Any political stance that takes more than 2 minutes to fully explain won't be heard. This isn't just true of casual commentators on TV talk shows. Even candidates running for office have to stop talking after 90 seconds by most debate rules. Concision compels conformity to pre-existing conditions.

Now, the Pope is here and liberals are upset that conservatives are upset about his positions on climate change and income inequality. Popes - who predate Charlemagne, Machiavelli, Cromwell, John Locke, Thomas Jefferson and even Ronald Reagan - are now required to neatly fit into a pre-made mold of conservative or liberal that hasn't even remained static since the 1980s. And of course people tend to forget that this pope is free to take chances. Pope Benedict is still alive. For the first time in 600 years, there is a back up pope. If you have no quarterback on the bench, you play him carefully. If, on the other hand, you do have a backup quarterback, you can run plays that include comments about atheists making it to heaven, the acceptance of gays, criticism of capitalism, and riding around in a toy-sized Fiat rather than an imposing SUV or pope-mobile.

Of course it is absurd to think that the pope would fit so neatly into boxes designed for maximum reaction and minimal thought. You don't ask the world's last remaining absolute monarch what party he belongs to. And even if he did belong to a party, it certainly wouldn't be the party of a foreign country. His position on contraceptives and abortion, and women's role in the church aligns him squarely - perhaps even to the right of - most of this country's conservatives. And his position on poverty and income and wealth inequality aligns him neatly - perhaps even to the left of - most of this country's liberals. It's not just his fashion choices and hats that make him hard to neatly categorize.

And in this sense, the pope is probably like more of this country's population than the parties would care to acknowledge: a character whose sensibilities defy easy categorization. But we don't have time for nuance or elaboration before the commercial break. Besides, nothing is more exhausting than actually having to consider someone as unique. So, the pope, like everyone else, is required to abide by Vonnegut's rule. He's either with us or with them. Even with that distinctive hat, he can't be allowed to stand outside of our clearly demarcated lines.

19 September 2015

The President Reminds us Where The Economy Was 7 Years Ago

I read a wide variety of sources. Still, I don't see anyone as simply report the facts as the president. No wonder his approval ratings remain low: his focus on facts makes him an atypical politician.

Here is an excerpt of remarks made by President Obama about the economy the day after the GOP debate.

Seven years ago today was one of the worst days in the history of our economy. If you picked up the Wall Street Journal that morning, you read that the shocks from AIG and Lehman were spreading worldwide. The day before, stocks had suffered their worst loss since 9/11. In the months after, businesses would go bankrupt, millions of Americans would lose their jobs and their homes, and our economy would reach the brink of collapse.

That’s where we were when I became chief executive. Here’s where we are today: Businesses like yours have created more than 13 million new jobs over the past 66 months -– the longest streak of job growth on record. The unemployment rate is lower than it’s been in over seven years. There are more job openings right now than at any time in our history. Housing has bounced back. Household wealth is higher than it was before the recession. We have made enormous strides in both traditional energy sources and clean energy sources while reducing our carbon emissions. And our education system is actually making significant progress with significant gains in reducing the dropout rate, reading scores increasing, math scores increasing. And, by the way, more than 16 million people have health insurance that didn’t have it before.
So this progress is a testament to American business and innovation. It’s a testament to the workers that you employ. But I’m going to take a little credit, too. It’s a testament to some good policy decisions. Soon after we took office, we passed the Recovery Act, rescued our auto industry, worked to rebuild our economy on a stronger foundation for growth. Other countries in some cases embraced austerity as an ideology without looking at the data and the facts, tried to cut their way out of recession. The results speak for themselves. America has come back from crisis faster than almost every other advanced nation on Earth. And at a time of significant global volatility, we remain the world’s safest, smartest investment.
Of course, I will not be satisfied -- and we as a country shouldn’t be satisfied -- until more working families are feeling the recovery in their own lives. But the fact is that what I’ve called middle-class economics has been good for business. Corporate profits have hit an all-time high. Slowing health care prices and plummeting energy costs have helped your bottom lines. Manufacturing is growing at the fastest clip in about two decades. Our workforce is more educated than ever before. The stock market has more than doubled since 2009, and 2015 is on pace to be the year with the highest consumer confidence since 2004. And America’s technological entrepreneurs have continued to make incredible products that are changing our lives rapidly.

Now, you wouldn’t know any of this if you were listening to the folks who are seeking this office that I occupy. (Laughter.) In the echo chamber that is presidential politics, everything is dark and everything is terrible. They don’t seem to offer many solutions for the disasters that they perceive -– but they’re quick to tell you who to blame.