Courtesy of Pam Martens
Steve Ricchiuto, Chief U.S. Economist at Mizuho Securities USA
One year ago, investors could have purchased a one-year U.S. Treasury Bill with a yield of 2.47 percent. As of this past Friday’s closing price of the Dow Jones Industrial Average, the Treasury Bill would have beaten the performance of the Dow over the past year by more than three-quarters of a point (not taking into account dividends on the Dow stocks).
On Friday, August 31, 2018, the Dow closed at 25,964.82. This past Friday, August 30, 2019, the Dow closed at 26,403.28 That’s a gain of 438.46 points in a year or a return of 1.68 percent versus earning 2.47 percent on a T-bill.
You would have been saved yourself the agony of living through the 800-point market plunge on August 14 and the 3746-point rout in the Dow from the close of trading on November 30, 2018 until Christmas eve – marking the worst December performance since the Great Depression.
The meager performance of the Dow comes despite the $1.5 trillion tax cut that President Donald Trump signed into law on December 22, 2017. That tax cut, which reduced corporate tax rates from 36 percent to 21 percent, was supposed to boost economic growth and pay for itself. Instead, the U.S. Treasury Department reported earlier this month that for the first ten months of the government’s fiscal year, the deficit stood at $866.8 billion versus $684 billion for the corresponding period the prior fiscal year.
The Congressional Budget Office is projecting that the deficit will widen to $960 billion for the 2019 fiscal year; reach $1 trillion for the 2020 fiscal year; and then continue to rise every year for the next decade, reaching $1.4 trillion by the end of fiscal year 2029.
…
