The elections are upon us, and the outcome seems more uncertain now than it did before. Half the electorate believes Clinton is a chronic liar and deeply corrupt; if she wins, she will almost certainly face more scandals, a potential prosecution for felony offenses, and possibly impeachment. The other half is appalled that someone as uncouth and unpredictable as Trump should have access to immense power. Whichever one wins, he or she will face an uphill battle to impose an agenda. I think Trump would be more likely to change policies for the better (with the notable exception of trade), whereas Hillary's agenda would be uniformly negative. Under Hillary, the economy would very likely continue to limp along; under Trump there is a reasonable chance the economy could strengthen. I'm not a fan of either, but I'll take my chances with Trump.
Putting that all aside, the latest readings on the economy show no signs of emerging weakness or budding strength, in spite of all the worries. It's steady and slow as she goes. To me, it's an economy that is half full rather than half empty; there is plenty of upside potential waiting to be unlocked by whomever has the right keys (i.e., pro-growth policies). Here are some recently updated charts which tell the tale:
As the election approaches, markets have become more nervous, and stock prices have fallen. Given the great degree of uncertainty that surrounds the election outcome—and the outlook for future policy shifts—it's amazing the market hasn't dropped even further. I take this as a sign that the market has been skeptical all along.
Confidence has been slowly rising from unprecedented lows throughout the current recovery, but it is still far below levels that might be termed enthusiastic. As the chart above shows, the current level of confidence is only slightly above its long-term average.
Trade has been one of the economy's most persistent soft spots for years, after experiencing explosive growth in prior decades. The latest September figures show an encouraging increase in both exports and imports.
Industrial commodity prices are up almost 20% since late last year, in spite of a modestly stronger dollar (they usually move in opposite directions). That is a good indication that global economic activity has perked up somewhat.
The American Chemistry Council's index of chemical activity is up 4.5% in the past year, and at the very least this rules out any weakening in the economy's fundamentals.
The pickup in chemical activity suggests that industrial production is likely to pick up as well in coming months, as the chart above illustrates.
The ISM service sector indices suggest that the economy continues to experience moderate growth. It's encouraging to see a bit of a pickup in the service sector of the Eurozone.
Productivity continues to be weak, and this reflects a dearth of business investment; this has been and continues to be the economy's biggest problem since 2009.
Private sector jobs growth is poking along at just over 1.5% per year. With productivity running around 0.5% this suggests the economy remains on a 2% growth trajectory.