FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
November 5, 2019

IN THIS ISSUE:

1. 70% of Millennials Say They Favor a Socialist in 2020

2. The Question Is: How Can This Be? Answer: Liberal Education

3. Consumer Spending Strong, But Business Investment Weak

Overview

A disturbing new poll out last week found that 70% of Millennials plan to vote for a socialist in next year’s presidential election. That’s the highest number ever recorded. The question is, why? There are several theories but I firmly believe it’s because we’ve allowed our kids to be educated by liberals in higher education, many of whom espouse socialism.

Following that discussion, we’ll take a closer look at last week’s initial report on 3Q Gross Domestic Product. While the headline number of 1.9% was positive and above pre-report expectations, the Commerce Department also warned that business investment spending declined by 3% in the 3Q. It was the second quarterly decline in a row.

While robust consumer spending continues to keep the economy in positive territory, consumer confidence has declined the last three consecutive months. Should that trend continue, along with the continued decline in business investment, we have a recipe for a new recession. We should watch this closely just ahead.

70% of Millennials Say They Favor a Socialist in 2020

Millennials, those between the ages of 23 and 38, are increasingly embracing socialism over capitalism, according to a new poll which found that 70% of Americans in that age group were “extremely likely” or “somewhat likely” to cast a ballot for a socialist presidential candidate next year. Wow! That’s by far the highest ever.

The percentage of Millennials who say they are “extremely likely” to vote for a socialist candidate next year has doubled from 2018 to 2019 – 20% from 10%. The 50% who now say they are “somewhat likely” to vote for a socialist is also up significantly over last year. Shocking!

And there’s more: Generation Z, those born between 1997 and 2012, also have severe qualms about capitalism. Just 49% percent of Generation Z respondents expressed a positive view of capitalism, while 64% said they would vote for a socialist candidate.

Here’s why this is so scary: Millennials and Generation Z are expected to make up 37% of the electorate next year, according to a recent survey by Pew Research. If they turn out in large numbers, which remains to be seen, their impact could be huge!

The survey conducted by YouGov concluded that if Millennials and the younger generation of voters hit the voting booths in big numbers in 2020, it could be a great day for Independent Vermont Senator Bernie Sanders – assuming he is on the ballot, which looks highly questionable.

Sanders calls himself a “Democratic Socialist” and is one of the top three candidates in the huge field of Democratic primary contenders – led by former Vice President Joe Biden, considered a centrist candidate, and Senator Elizabeth Warren, D-Mass., another ultra-progressive. Even though Ms. Warren does not identify as a socialist, I believe a lot of young people would vote for her anyway – especially if  Sanders is not on the ballot.

According to the YouGov survey, capitalism is taking a beating in popularity among younger voters, largely due to widening income inequality and the fact that most Millennials are loaded down with student debt. The poll also showed that 36% of Millennials approve of communism, up from 28% in 2018 – which is a huge jump in just one year.

Socialism is a dirty word bandied about for just about everything Republicans don’t like, but it is quickly gaining in popularity with the country’s future leaders, which should come as a shock to anyone who knows anything about communism and socialism. Yet that’s exactly what they’re being taught at colleges and universities – and widely reinforced in the mainstream media.

The Question Is: How Can This Be? Answer: Liberal Education

The latest survey cited above is not the first to illustrate this troubling shift among America’s largest generation. This trend has been underway for years. The question is: How could this happen in the wealthiest and most free nation in the history of the world?

Unfortunately, the answer is as clear as day. For decades we have allowed liberals – many of whom advocate socialism – to dominate our colleges and universities at all levels. They have taught our children that capitalism is unjust and socialism is utopian – even though it has failed miserably virtually everywhere it has been tried.

Many of these left-leaning professors have also taught our children that the founding of our nation was also unjust, and that the Founding Fathers were racists and bigots, most of whom owned slaves – rather than the patriots we older Americans have rightly deemed them to be. This is nothing short of a travesty! But sadly, we have allowed it to happen right under our noses.

Here’s another head-spinning tidbit from the YouGov poll: 22% of Millennials think “society would be better if all private property was abolished.” Almost 45% of all Millennials and Generation Z members also think that “all higher education should be free.” Nearly 40% of Millennials described the United States as one of the most “unequal societies” in the world.

The poll also touched on world peace and the biggest threats to it. US President Donald Trump (27%) topped dictators Kim Jong-Un (22%) of North Korea, Vladimir Putin (15%) of Russia, Xi Jinping of China and Nicolas Maduro of Venezuela as the single biggest threat to world peace. Can you believe that? Sadly, this is not the first poll to show such disdain for a US president.

Given the critical importance of this topic, I’ll have a lot more to say about it going forward. But before I leave this topic, let me just emphasize that this is only one poll, and it is not indicative of the attitudes of my two Millennial children and their friends.

Consumer Spending Strong, But Business Investment Weak

Last week’s preliminary report on 3Q GDP, up 1.9% annual rate, once again showed that US consumers continue to drive this economy, as I discussed in last Thursday’s Blog. However, what didn’t get much attention was the fact that US business investment sank to the lowest level since 2015 in the 3Q. The question is, why?

The GDP report showed a second-straight quarterly contraction in nonresidential (business) investment, which fell an annualized 3% after declining 1% in the second quarter. Net exports were a slight drag on the expansion, subtracting 0.08 percentage point from growth as inventories also weighed slightly.

The weakness in business investment was led by structures and equipment, which both dropped the most in more than three years. Structures contracted at a 15.3% rate, shaving nearly a half a percentage point from growth. Computers and aircraft led the decrease for equipment.

Yet by far the biggest drag on business investment is concerns over the trade war. Businesses are simply not comfortable planning for expansion or increasing their workforce when they do not know what’s coming next in President Trump’s trade war with China and others.

As a result, a key measure of hiring by US companies fell to a seven-year low in September, and fewer employers are raising pay, reversing a trend which had been improving earlier this year.

Just one-fifth of the businesses surveyed by the National Association for Business Economics said their companies have added to their workforces in the past three months. That is down from one-third in July. Job totals were unchanged at 69% of companies, up from 57% in July. A broad measure of job gains in the survey fell to its lowest level since October 2012.

The hiring slowdown comes as more businesses are reporting slower growth in sales and profits. Business economists also expect the economy’s growth to slow in the coming year, partly because tariffs have raised prices and cut into sales for many firms.

With business investment spending in decline, this raises the question of how much longer consumer spending alone can carry this economy. As I reported last week, consumer confidence has declined the last three consecutive months. If these two trends continue, a recession is surely not far behind.

At the end of the day, the question is whether or not President Trump’s advisors can convince him to end the trade war with China well before next year’s election and head-off a recession. A recession could doom Mr. Trump’s re-election – especially with 70% of Millennials planning to vote for a socialist.

Some politicos believe President Trump is too hard-headed to back off on the trade war with China. Others believe there’s no way China will agree to a major new trade deal because they don’t want to see Mr. Trump re-elected.

Let’s hope they are wrong! We’ll see what happens.

Best regards,

Gary D. Halbert

SPECIAL ARTICLES

5 Reasons Why Millennials Favor Socialism

America’s Public Schools Promote Socialist Indoctrination

Business Investment Fell 3% in 3Q, Largely Due to Trade War

Gary's Between the Lines Blog: US Economy Slowed In 3Q, As Did Consumer Confidence

 

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