The Economy—Trump’s Bragging Right Until the Recession
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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.
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Dante reserved an entire circle in hell for people who make predictions about the future. Even without an actual Hell, life is often unkind to them. Reading Kahneman and Tversky, it’s argued that the most well established prognosticators only need be right on occasion to be revered, but in the long run the flipped coin does as well.
So I won’t stick my neck out as to how soon the inevitable downturn will occur. I will confidently say it will however. Of course didn’t start the trend that started nearly a decade beforehand and a President doesn’t have his foot on some gas pedal. At best he is a factor and psychology has more to do with what we perceive as success than success itself. Economic cycles are a fact of life and wages are a trailing factor in my opinion. It looks better therefore to inherit a strong economy than to foster one.
One of the ways politics works is to find enemies and heroes, so Obama who had a good deal to do with staving off a depression, was a communist and Trump who has literally done nothing to with the continuing trend is the hero. Heroes are not really born or made – they’re put together from plaster and straw – and in this case, bullshit.
But we will need luck if the economy crashes because the GOP will just insist and Fox will just report that it’s doing well and they will get away with it.
huh…I’m not sure where these higher wages are…unemployment, more people have dropped off the rolls or are working multiple jobs. I work in retail…the economy is not spectacular. The tariffs are killing consumer buying power and the smoke screen is about to be exposed….