Last August, only four months ago, many economists thought that there was a 50 percent chance of a recession in 2020. Few think so today. The Christmas shopping season has been robust, to say the least. (In my town of 5,000 people, Amazon delivered over 1,000 packages through the local post office yesterday. The place was a madhouse.) “Help Wanted” signs are sprouting like mushrooms after a spring rain, driving up wages. And the November Jobs Report was a knock-out.

And Wall Street? Yesterday the Dow-Jones Industrials, NASDAQ, and S&P 500 indexes all closed at record highs for the 10th or 11th time this year, as did the Stoxx Europe 600 for the first time in four years. And the Dow-Jones is now up more than 10,000 points since Donald Trump’s election, a 54 percent gain. (Eat your heart out, Paul Krugman.)

Elizabeth Warren and Bernie Sanders apparently think that financial assets are held by the few (and that therefore taxing that wealth would have few adverse macroeconomic effects), but that is not true. Indeed, about 60 percent of American families own stocks or bonds in their own name. About 70 percent of financial assets are held in 401k accounts, IRAs, public and private pension funds, and insurance annuity accounts. In other words, they are held by the middle class or fiduciaries for the middle class.

With these assets moving sharply upwards, a “wealth effect” is created. As people see their net worth rising, they feel richer, and they are, therefore, more inclined to undertake purchases and projects they would have otherwise avoided, further boosting the economy.

Incumbent presidential election years have traditionally been good for stocks. Since 1952, when there has been an incumbent running for re-election, stocks have risen an average of 10.1 percent. If that were to happen in 2020, the Dow-Jones Industrial Average would be over 30,000 by election day.

This might explain why, regardless of the impeachment drama unfolding in Washington, Trump’s poll numbers have been rising. In one poll released on Tuesday, he beats all the leading Democratic candidates by 3 to 10 percentage points. Without a major third-party candidate in the race, no incumbent president has lost re-election with the unemployment number below 7.8 percent. It is now at 3.5 percent.

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