IN THIS ISSUE:
1. The Most Interesting Things I Read Over The Holidays
2. GDP: Largest Quarterly Loss, Then Largest Quarterly Gain
3. First President to Be Impeached & Then Run for Re-election
4. Both Biden & Trump Got More Votes Than Any US President
5. First Recent President From The “Silent Generation”
6. Record-Breaking One-Year Increase In The National Debt
Overview – Most Interesting Things I Read Over The Holidays
Each January 1 as we turn the page to a new year, we are inundated with articles which summarize what important things happened in the outgoing year, both good and bad. I tend to avoid writing about such lists because we all know what happened last year.
There is a general agreement that 2020 was an awful year, mainly because of the COVID-19 pandemic which has now claimed over 350,000 lives and millions of American jobs, many of which are never coming back. Of course, we know this all too well.
However, there were several events which we experienced last year which fall into the category of “never before and probably never again” phenomena unique to 2020. Admittedly, we should avoid the use of the word “never,” but several things occurred in 2020 which have not happened before and are very unlikely to repeat in the future.
There were at least FIVE of these ‘never before, never again’ occurrences in 2020 which I find particularly interesting. I’ll summarize them for you today as we kick-off the New Year. Let’s start with the economy.
GDP: Largest Quarterly Loss Followed By Largest Quarterly Gain
Never in US history has there been such a severe decline in Gross Domestic Product as we saw in the second quarter of 2020 with a plunge of -31.4% (annual rate). That is what happened when a robust economy was forced to shut down due to the COVID-19 pandemic.
No previously recorded quarterly decline even comes close to what occurred during April, May, and June. For comparison, during the Great Recession (2007-2009), the largest GDP decline was -8.4%, recorded during the 4Q of 2008. Decades earlier, in the first quarter of 1958, there was a 10% decline. The worst previous decline was -13% during the Great Depression in 1932.
Then, in the 3Q of 2020, GDP growth exploded by an annual rate of 33.4% as the lockdowns ended and the economy rebounded. Likewise, it was the most powerful quarterly growth in American history.
Never before and likely never again will our nation experience such back-to-back lows to highs. Meanwhile, the economic recovery continues, albeit slowly, and the economy will still show a small loss for all of 2020. For the entire year, the US economy is expected to have contracted by about -3.5% (annual rate). By comparison, the GDP growth rate in 2019 was 2.3%, down from 2.9% in 2018.
Therefore, even though the US economy experienced a “never before” swing between the second and third quarters, potentially ending 2020 with only about a -3.5% decline in growth is still bad but certainly not a disaster.
Will we ever see another up and down swing like we saw in the 2Q and 3Q? While it is not impossible, most economists feel it is unlikely – unless we go into another economic shutdown – which looks unlikely. Now let’s turn to some never before, never again occurrences in politics last year.
First President to Be Impeached &Then Run for Re-election
President Trump is only the third US president to be impeached in American history, preceded by Andrew Johnson (1868) and Bill Clinton (1998). Impeachment charges were brought against Richard Nixon (1974) but he resigned before he was formally impeached.
You would think President Trump’s impeachment in 2019 would have been a very big deal in the 2020 presidential election campaign; yet it was hardly ever mentioned in the months leading up to the contentious election. But here’s how this fact falls into the never before, never again category.
Donald Trump is the only US president to be impeached and run for re-election.
The very notion of an impeached president running for re-election – uncontested at that – is a political abnormality befitting the plot of a movie or a Netflix series. Over time, historians will view this feat as a highly irregular chapter in presidential history, likely never to be repeated.
Both Biden & Trump Got More Votes Than Any US President
As we all know, President Trump still refuses to concede he lost the 2020 presidential election to Joe Biden. One of his justifications for refusing to concede is he received 74.2 million votes, according to the Federal Election Committee (FEC), which is more votes than any other presidential candidate in history.
The problem, of course, is that Joe Biden received 81.2 million votes, according to the FEC. Despite that, President Trump continues to challenge the election results, and there are numerous aspects of the 2020 election which are indeed questionable.
However the election results turn out, what is important to point out is both the winning and losing candidates won over 70 million votes. This has never happened before.
In 2016 when Hillary won the popular vote (but later lost the Electoral College), she received 65.8 million votes. Obama in 2012 won 65.9 million votes with 69.4 million in 2008. Bush in 2004 won 62 million, and 50.4 million in 2000.
In 2020, voter participation was record large at 66.7% of the electorate and accounts for Trump and Biden’s historical totals. How does that voting percentage compare to the last five presidential elections? Take a look:
|2016 – 61.4%||2012 – 61.8%||2008 – 63.6%||2004 – 63.8%||
2000 – 59.6%
Whether voting participation at 66.7% is a 2020 never again abnormality is a good question. Indeed, it was due to the extreme partisanship and dire circumstances (COVID) facing the nation – which one hopes will never be repeated.
But for clues as to what will happen in the future, we’ll have to wait for the 2022 midterm elections. During the 2018 midterms, there was a record participation rate of 53.4%, up from 41.9% in 2014, and 2018 heralded 2020’s record turnout. And of course, there is the question of whether Trump will run for president in 2024 as he is threatening to do. We’ll just have to see!
First Recent President From The “Silent Generation”
At age 78, Joe Biden is the oldest president to be elected and the first from the so-called “Silent Generation” born between 1928 and 1945.
After Dwight Eisenhower, every postwar president was born either part of the “Greatest Generation” (born 1901 to 1927) or a “Baby Boomer” (1946 to 1964). The switch between these two large and influential generations occurred in 1992 (with no going back) – until Biden broke the chain in 2020.
Here are the seven Greatest Generation presidents and four Baby Boomers in order of serving and their birth year:
In modern American presidential history, once a generation comes of age and gains a White House foothold, that generation usually serves for decades – even fending off attempts by much older candidates. For example, in 1996, the Greatest Generation’s Bob Dole lost to Bill Clinton. Then in 2008, the Silent Generation’s John McCain lost to Barack Obama. But Biden’s win is the exception.
Whether or not the Baby Boom generation has run its presidential course remains to be seen. (VP-elect Kamala Harris was born in 1964 at the tail end.) And for now, Joe Biden’s generation is no longer “silent” in the White House, with the no “going back” to older candidates quirk just another abnormal political occurrence in a bizarre year.
Record-Breaking One-Year Increase In The National Debt
Changing subjects again, but still on the never before, never again theme, the US national debt is just over $27.5 trillion, up from $22.7 trillion in 2019. The record increase of $4.8 trillion last year is another never before statistic. But “never again” is unlikely based on this number: The U.S. Debt Clock projects that in 2024, at current rates of spending, the national debt will increase to $49.1 trillion. That averages to a nearly $5 trillion increase every year over the next four years.
In perspective, and for now, the current one-year debt increase is alarming. For example, in 1980, the debt was $934 billion. Ten years later, in 1990, it had jumped to $3.2 trillion. Then in 2000, it was $5.6 trillion. By 2004 it climbed to $7.5 trillion. And in 2017, the debt had crept up to $20.2 trillion. Currently, and only three years later, the national debt has increased by $7.3 trillion to $27.5 trillion and climbing fast.
Remember when Republicans were the party of fiscal responsibility? Not anymore! Now, get ready for the “tax and spend” Democrats, assuming Joe Biden is our next president.
In conclusion, although 2020 has been a year with numerous “never before, never again” events and occurrences, the projected yearly national debt increase of $5.4 trillion represents a future acceleration due to off-the-charts spending that may continue unabated. This could well be our national undoing.
Finally, my thanks to Myra Adams, a media writer/producer and former campaign consultant to former President George W. Bush and former Senator John McCain, for reminding me of several of these milestones of 2020.
Wishing you a healthy, happy & prosperous New Year,
Gary D. Halbert
Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. All investments have a risk of loss. Be sure to read all offering materials and disclosures before making a decision to invest. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.