Why the turnaround? I see three reasons: first, because of better policies as businesses embrace the substantial regulatory relief already delivered by the Trump administration. Second, the freeing and optimistic belief that a new growth paradigm now reigns in America as our decade of slow growth under the crony capitalism of the Bush and Obama regimes recedes. Third, and perhaps most importantly, a long-awaited rebound in productivity.
For the entire slow-growth Obama recovery, productivity — output per hour worked — languished. Companies invested in financial engineering via buybacks and dividends rather than in new workers, better plants, and innovative technology. Our country struggled to maintain even 1 percent productivity growth during the Obama pseudo-recovery. Now, just nine months into Trump’s tenure, productivity has surged to 3 percent and promises much wage growth ahead as workers can finally demand and justify a bigger share of the growing economic pie.