The Economy—Trump’s Bragging Right Until the Recession
Recession business and stock crisis concept. Economy crash and markets down 3D illustration. Screen pixel style.
by Michael John Scott
It’s about record job growth, historic low unemployment and rising wages. Even the Washington Post—hardly President Trump’s biggest backer—is virtually breathless over the US economy, but some experts are wondering whether the party can last.
First, let’s share the good news:
Employers tacked on 263,000 new jobs in April and US unemployment sank to 3.6%, marking 103 consecutive consecutive months of job growth (a record) and the lowest unemployment since 1969. Wages are up for many, the stock markets are strong, and expected high inflation isn’t happening. “‘Spectacular’ is the only way to describe this jobs report,” says a Loyola Marymount University economist. “It is hard to believe that this 10-year-old recovery keeps pumping out home runs.”
Now, let’s look under the hood:
- Is it Trump’s? “The job market had already been improving for years when President Trump took office,” per the New York Times, but “warnings that trade wars and erratic management style would throw the economy off course have proved wrong so far.”
- Can it last? The Financial Times warns of a coming downturn. It says the cheery 3.2% expansion reflects factors like higher government spending and rebuilt inventories, which can’t last. And personal consumption and business investment did poorly.
- Looming debt: John Mauldin, who predicts a recession starting around 2020, points to debt danger. “High levels of debt reduce interest rates, productivity, and GDP growth, exactly as we see in Japan,” he writes at Forbes. “To some degree, we already see the first evidence of that in the US.”
- No way: Kenneth Rapoza pooh-poohs that, writing at Forbes that “there is no recession sight here at home” and “no recession on the horizon in China either.” He says Trump tax cuts and regulatory reductions are working.
- 2007 redux? Trump’s policy resembles George W Bush’s: higher spending, lower taxes, and deregulation. “Both presidents were also offered a similar opportunity: to put the nation’s finances on more solid ground,” writes Richard Carroll at Bloomberg. Don’t be surprised, he says, if this high-wire act also crashes.
- Good for now: Trump clearly plans to ride these numbers in 2020, the AP reports. “I’ll be running on the economy,” he said Friday.
- Bad for Dems: Democrats are mostly avoiding the economic numbers as they run for president, reports Fox News. Bernie Sanders and Elizabeth Warren are emphasizing income inequality while Joe Biden says, “The middle class is hurting, it’s hurting now.”
The Democrats need to be careful when stepping over the land mines of a Republican economy. It can be difficult as it does give Trump bragging rights. Fortunately for the Left, Trump doesn’t know how to take advantage of his advantages.
Thanks to Newser for contributions.