Market enthusiasm continued during the past week. All three major U.S. stocks indices (S&P 500, Dow Jones Industrial and NASDAQ) established new record highs.
The consumer sentiment index increased from 93.8 to 98.0. Productivity was up a strong 3.1 percent from year-ago levels (the highest in more than a year). ISM's non-manufacturing index, PMI's services index and factory orders were strong.
Although recent short-term economic activity has been mostly positive, the long-term trends are troublesome. Gallup released a report on the long-term decline of U. S. productivity to commemorate the 30th anniversary of the U.S. Council on Competitiveness. The report concluded there has been no recovery.
The study found that inflation adjusted (real) GDP per capita, increased at an average rate of one percent per year from 1980-2013. GDP per capita is one measure of standard of living. A relatively small increase has significant impacts on the standard of living. At one percent per year, it would take 72 years for our standard of living to double; but at four percent, it would double every 18 years.
The report concluded that most of the challenges in the economy are the result of low productivity growth and that three sectors were primarily responsible. Health care, housing and education have had large price increases without commensurate improvements in quality. The three areas rose to 36 percent of GDP in 2015, from 25 percent in 1980. Since then, the three areas have accounted for more than 50 percent of total inflation. Other things equal, higher inflation will lower real GDP.
Many of President-elect Trump's proposed economic policies (lower taxes, fewer regulations, encouragement to repatriate overseas dollars, etc.) will encourage economic growth. But to achieve four, five or even higher percentage growth rates, President Trump must defeat the giants of health care, housing and education inflation.
The story of David and Goliath is probably the most famous biblical example of defeating a giant. The picture of a handsome teenager, dressed as a shepherd with a sling shot and five stones is familiar to many. The teenager bravely faced Goliath of Gath, the champion of the Philistine army. The battle-hardened soldier stood more than 9 1/2 feet tall. His upper armor alone weighted more than 125 pounds. His spearhead weighed 15 pounds.
When Goliath saw David, the Scriptures say he despised him. The nerve of the Israelites, sending a boy to fight the most famous soldier in Philistia. Goliath had confidence in his size, experience and armor. David had confidence in the name of the Lord.
"Then David said to the Philistine, 'You come to me with a sword, a spear, and a shield, but I come to you in the name of the Lord of Hosts, the God of the armies of Israel, whom you have reviled. This day will the Lord deliver you into my hand" (1 Sam. 17:45-46a).
As Goliath came forward to meet him in battle, David ran to the battle line. He grabbed a stone from his bag and slung it at Goliath. The stone sank into Goliath's forehead, and he fell on his face to the ground. After David finished Goliath with his own sword, the Philistine army fled. The Israeli army was emboldened. The Lord had proved faithful (1 Sam. 17:48-54).
It is tempting to think David was unprepared. He had no experience in warfare. He was young. He had no armor. He had no weapons. But David was prepared. His example before he defeated Goliath is beneficial to all those who want to defeat their giants. Some of his preparations include:
1. David was fully committed to current assignments. When a lion or bear took a lamb from the flock, he rescued them at the threat of his life (1 Sam. 17:34-35).
2. David recognized that deliverance and protection resided in the Lord. David testified that the Lord delivered him from the lion and bear, and He would deliver him from Goliath (1 Sam. 17:37).
3. David was anointed. After Samuel anointed David, the Holy Spirit rested mightily on him (1 Sam. 16:13).
4. David knew how to usher in the presence of the Lord through praise. The evil spirit afflicting Saul would leave when David played the harp (1 Sam. 16:23).
The Bible is filled with individuals who defeated giants. When he was more than 85 years old, Caleb defeated the giants of Hebron to obtain his inheritance. His life of obedience and faithfulness allowed him to remain strong. We should do likewise.
Dr. James Russell is a professor of economics and undergraduate chair of the College of Business at Oral Roberts University.
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