Pulling together this conference for clients, shareholders, and friends is something we look forward to every year. In addition to the opportunity to share our story, it is a chance to present information related to the economy and the stock market which may be of interest to our guests. The remarks presented by our guest speakers represent their own views and do not necessarily reflect the views of Chase Investment Counsel. Like you, we review a lot of data as a basis for drawing our own conclusions.
Stephen Moore, Distinguished Visiting Fellow, The Heritage Institute, Chase Investment Counsel Client Conference, Nov. 18, 2020
Economist Stephen Moore left no audience member in doubt over his beliefs that the Covid-19 crises has generally been handled better by “Red” states versus “Blue” states. Nor did he hide his belief that the policies President Trump initiated before the Covid crises led to a great economy in the United States that was derailed by the epidemic but which is rebounding sharply and that president-elect Joe Biden may risk some of this progress by calls for higher taxes and more government regulation.
As of October 19th, 2020, the “Red” states had experienced 58 Covid deaths per 100,000 residents while the “Blue” states figure was 79 deaths per 100,000, Moore added, with New Jersey’s figure being 183 deaths per 100,000 while New York’s was 171.
Moore acknowledged that the epidemic has had a severe impact on the nation’s economy, but that it varied tremendously by state and by industry. Government, Moore added, was the only “industry” to see employment growth since January 2020 – with the federal government adding 273,000 jobs. The worst industry was, as one might expect, the leisure industry which has lost some 3.8 million jobs since January 1. These lost jobs were related to the various “lock-downs” imposed by various state governments to stem the spread of Covid. These lock-downs, Moore believes, had an inverse relationship to Covid deaths – states with the strictest lockdowns experienced 81 Covid deaths per 100,000 residents while those with no or minimal lockdowns had 59 deaths per 100,000.
The federal government has spent enormous sums helping deflect the economic damage related to Covid with about $2.7 trillion spent so far and another $4.5 trillion proposed but not agreed upon or implemented by Congress yet. As a percentage of GDP, debt is at record levels and may have consequences in the future.
Mr. Moore went on to add that “Red” states remain both faster growing and healthier economically than “Blue” states through September 2020. Three of the fastest growing states over the past decade were Florida, Texas and Arizona which added about 2.9 million people via immigration from other states while California, New York and Illinois lost 3.2 million people to out-migration. And in September the “Red” state unemployment rate was 6.3% while the “Blue” state average was 8.4% led by a 15% unemployment rate in Hawaii and a 13% unemployment rate in Nevada, both states with heavy tourist-related economies.
As of November 18th, Mr. Moore believes President Trump has a 20% chance of successfully challenging the Biden victory and urged audience participants to study the maximum tax rates President-elect Biden has proposed. These include:
- Raising the top corporate tax rate from 21% to 28%
- Raising the top individual income/payroll tax from 37% to 51%
- Raising the top marginal capital gains tax rate from 24% to 40%
- Raising the top tax rate on inherited stock from 0% to 40%.
Mr. Moore ended his talk by reminding the audience on how strong the economy was for various ethnic groups since the Trump administration took office. Household incomes have increased among virtually every ethnic group in the nation.
Click play below to watch Stephen Moore’s presentation.