[Vision2020] 3-31-19 Article on Economy: "The Trump slump is coming. It may be here already."
starbliss at gmail.com
Mon Apr 1 21:29:43 PDT 2019
While I certainly do not want to defend in total the Trump administration
economic policies, the downturn in the US economy which is being predicted
this year or within a couple of years, is to some extent part of an
economic cycle of growth and eventual recession or slowdown that could also
be occurring if H. Clinton had won the presidency. Trump to a large degree
has taken undo credit for the growth in the US economy that was started
after the 2008 disaster, by economic policies during the Obama years.
One pattern that is rather obvious with Trump: Don't give Obama credit for
anything, especially economic growth!
Vision2020 Post: Ted Moffett
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The Trump slump is coming. It may be here already.
Ian Reifowitz <https://www.dailykos.com/user/Ian%20Reifowitz>
March 31, 2019
It appears this was the week where the economic fantasies put forth by The
Man Who Lost the Popular Vote came back to reality. The headlines on
Thursday were not pretty:
*Wall Street Journal*
U.S. Economy Had Less Momentum Heading Into 2019 as Corporate Profits
Economy slumping faster than expected, with fourth-quarter GDP revised down
GDP revised downward for 2018 as U.S. economy shows more signs of slowing
As the headline of a *New York Times* analysis put
“Trump Owns the Economy Now, for Better or Worse." Trump, both before and
since taking office, has repeatedly promised
increase U.S. economic growth to 4 percent per year: “We're bringing it
(the GDP) from 1 percent up to 4 percent. And I actually think we can go
higher than 4 percent. I think you can go to 5 percent or 6 percent.”
Putting aside legitimate concerns about the usefulness of GDP as a measure,
we now know that Trump has failed, again, to not only reach 4
percent annual growth, but even to reach 3 percent.
The only way he got within shouting distance of 3 percent for 2018 was by
enacting a budget-busting, $1.5 trillion bonanza of tax cuts aimed mostly
at billionaires and millionaires that has done little other than lead to
stock buybacks that pad the corporate bottom line. According to the Tax
Policy Center, households in the top 1 percent will walk away with a bigger
of the benefits
Trump’s plan than will those in the bottom 60 percent combined. That kind
of temporary economic growth reflects
“sugar high”—and any parent or caregiver knows what happens not too long
after that sugar high goes away. The “headache” is coming soon.
Trump’s Rich Man’s Tax Cut passed in December 2017, and, as sure as your
car goes faster when you step on the gas pedal, economic growth
accelerated. It reached 4.2 percent in the second quarter of 2018, and
Individual 1 crowed: "We're on track to reach the highest annualized growth
in 13 years." His son—you know, the one who was happy to accept
about Hillary Clinton from Russian government officials—took a shot at his
predecessor: "Remember when Obama said you need a magic wand to make that
happen? Well 'abracadabra,' Obama. We're doing it." People who, unlike Don
Jr., are actually employed as White House economic officials made similar
regular growth levels above 3 percent. Since then, it’s turned out to be
less “abracadabra” and more “Avada Kedavra
As the graph to the right demonstrates, growth has fallen each of the
subsequent quarters since Q2 2018. Even with their absurd tax policy—one
whose negative budgetary consequences will be with us for years—Trump still
couldn’t beat the strongest quarters achieved under President Obama, and
2018’s calendar year growth only matched Obama’s best year, 2015.
Furthermore, it’s the trend that matters most going forward, and that's
really where it looks like the Trump slump is really going to hurt.
Thursday’s revisions to economic growth in 2018’s fourth quarter did more
than just render Trump’s tweet
a few days earlier—which claimed that growth was the best it had been in 14
years, completely non-factual—the report made clear that economic growth is
slowing because of key factors, namely that consumer spending and business
investment are weakening
There was even a 0.4 percent decline
corporate profits, the first since the first quarter of 2017. These are not
good signs for 2019.
Even worse for Americans, these trends appear to be negatively affecting
growth in the current year as well. Another report released this week showed
spending in January came in below expectations, growing only 0.1 percent,
and the report revised December’s consumer spending down from a 0.5
percent drop to an even worse 0.6 percent decline. Personal income dropped
0.1 percent in January and rebounded only 0.2 percent in February, a fairly
pathetic overall reading for the first two months of 2019. According to
*Reuters*, the data overall:
“suggest[s] the economy was fast losing momentum after growth slowed in the
fourth quarter...The weak consumer spending report extended the run of soft
data ranging from housing starts to manufacturing that have flagged a sharp
slowdown in growth early in the first quarter. The economy is losing steam
as the stimulus from $1.5 trillion in tax cuts as well as increased
government spending dissipates.”
Legitimate economic outfits, like the Federal Reserve and the International
Monetary Fund, have significantly reduced their economic outlook for 2019
and beyond. And here’s Moody’s Analytics economist Mark Zandi
"2018 will be the high-water mark for growth in the Trump administration."
Zandi predicted growth would slow to 1.1 percent next year, and sees a
recession in 2020 as more likely to occur than not. Of course, Trump’s own
political appointees are still apparently still unwilling to say anything
that might contradict their boss. I know you’re as shocked by that as I am.
After you’ve recovered, take a look at the graph to the right.
Although Donald Trump is, to put it mildly, not a normal president, we do
know that incumbent presidents usually win reelection when the economy is
strong (Clinton, Reagan) or at least improving after a crash that began
under the other party’s watch (Obama).
Trump inherited a strong overall economy from Obama, one that featured low
unemployment and quite manageable budget deficits (around 3 percent of
GDP). If, after priming the pump—and doing so largely by sending billions
of dollars up the economic ladder—Trump is running in 2020 with a slowing
economy, growth levels at or below where they were when he took office,
trillion dollar deficits as far as the eye can see, and rising
unemployment, he’s going to have a very hard time convincing voters he
should be re-elected on the basis of his economic record. Having had
Republican majorities in Congress for his first two years, and thus having
been able to implement his fiscal and economic priorities as well as his
dangerous de-regulation policies—which he claimed would unleash growth—he
won’t be able to run away from a Trump slump.
Between the race-baiting, the media-bashing, and, most recently, his
renewed support for taking away health coverage from 20 million Americans
by repealing Obamacare through the courts, Trump has demonstrated no
interest in expanding his coalition. All these actions serve as Trump
doubling down on his right-wing base.
The one thing that might, perhaps, help Trump bring in voters who didn’t go
his way last time would be if he had a positive economic record in terms of
growth—not that that would change the fact that his policies have benefited
only a narrow slice of American households while doing little for the rest.
Even if growth remains strong, the evidence that the economy will help him
is dubious, as his approval ratings are locked
a narrower range than that of any president since regular polling began. If
the best he can do is 42 percent approval in the year that looks like it
will be his strongest in economic terms, that does not bode well for his
As Democrats, we want our country to succeed. Republicans may have no
qualms about rooting
the economic policies of their opponents to fail, even in a time of
economic crisis worse than any since the Great Depression. I still can’t
fathom that Rush Limbaugh said, upon the inauguration of President Obama in
2009, that he hoped for the new president to fail. When a president’s
policies don’t work, people we care about suffer, and the country we love
is harmed. But we Democrats are not blind, and we will not pretend that
failed policies are not failing.
*Ian Reifowitz is the author of The Tribalization of Politics: How Rush
Limbaugh's Race-Baiting Rhetoric on the Obama Presidency Paved the Way for
in May 2019).*
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