When will the media finally admit that the Trump economy hasn’t been ‘great’?
Throughout the presidency of Donald Trump, the media has parroted the GOP talking point that the economy is “great” (or “booming” or “strong” or “humming along” or whatever word Republicans happened to be using on any given day).
Never mind the fact that the economy Trump inherited from President Obama was doing pretty well, thank you very much, and that it has continued to grow, although any argument about which president had the stronger economy is still evolving and won’t be settled until after Trump’s presidency is over. But throughout the 2016 campaign, Trump continually trashed the “Obama economy,” and the media dutifully repeated his words, spreading the idea that the U.S. economy was failing under the 44th president. And too many voters believed both Trump and the media.
During the campaign, Trump continually lied about the unemployment rate, claiming that the lowered rate under Obama was much higher than reported and might even be as high as 42 percent. Trump bragged that the economy would boom once he was in charge, growing by 4% per year and maybe even as high as 6% per year. Need we add that such growth never occurred? It never even reached his downgraded promise of 3% growth, and quarterly growth rates keep being downgraded.
Certainly, cutting regulations for businesses and cutting taxes for those same businesses did create a temporary boost. But for the most part, instead of benefiting the average American, the GOP corporate tax cuts only enriched those at the top. Companies have been buying back stocks at levels never seen before — buybacks that have reached what some analysts are calling dangerous levels. All the while, corporate executives reaped the profits.
When the U.S. stock market tumbles and the Dow Jones Industrial Average drops 800 points in one day, that’s a big deal. The media and the markets declare that the sky is falling, while economists deliver doom-and-gloom predictions, describing the warning signs of a possible global recession.
Yet until very recently, most of the media continued the upbeat reporting about the economy, playing sound bites of Trump and other Republicans bragging about the U.S. economy and why it would be Trump’s trump card to win reelection.
If that’s the trump card, It sounds like the deck just got reshuffled.
There were economic warning signs before the precipitous stock plunge. Faced with a likely no-deal, hard Brexit in three months, the United Kingdom’s economy contracted in the last quarter, the first time since 2012. Government forecasts say a no-deal Brexit could send the UK (and perhaps other countries that are still part of the European Union as well) into a recession, causing the UK stock market to fall by as much as five percent.
The German economy also saw shrinkage in the second quarter. The contraction of 0.1% is being called the end of the golden decade for the German economy. China’s economy is growing at the slowest rate in nearly three decades. CNN now reports that five of the world’s biggest economies are at risk of recession—the UK, Brazil, Germany, Italy, and Mexico. The Washington Post lists an even larger count of nine countries — the five listed, plus Argentina, Russia, Singapore, and South Korea. And the U.S. could work its way onto the list.
What about the U.S.? Whatever happens, Trump always claims that it must be somebody else’s fault. From a Washington Post story on the stock plunge:
Whether the events presage an economic calamity or just an alarming spasm are unclear. But unlike during the Great Recession, global leaders are not working in unison to confront mounting problems and arrest the slowdown. Instead, they are increasingly at each other’s throats.
And President Trump has responded by both claiming the economy is still thriving while dramatically ramping up his attacks on Federal Reserve Chairman Jerome Powell, seeking to deflect blame.
Trump’s word-salad tweet blasts between rounds of golf claimed that the U.S. was still “winning,” that other countries were saying “THANK YOU to clueless Jay Powell and the Federal Reserve,” that “China is not our problem,” and that it was all the fault of the “CRAZY INVERTED YIELD CURVE” (he likely missed the lecture or failed the test when his Wharton professors were explaining that one, since he sounds like he doesn’t have a clue what he’s talking about).
Actually, there have been warning signs here in the U.S. for a while, even though the media didn’t report on them (much) and the Trump administration ignored them all. Here’s what most of the media have been saying about how the economy will affect Trump’s reelection chances. These are all recent headlines:
Los Angeles Times: How can Trump get reelected? It’s still the economy, stupid
But now media outlets are doing a 180, saying that Trump’s economic goose is cooked (some of these are opinion pieces):
MarketWatch: Economy will drag on Trump’s reelection hopes
Washington Post: How a recession could doom Trump’s 2020 reelection
Economists are still divided on what lies ahead for the U.S. economy. Here are just a few of the factors leading up to what might or might not turn into a recession:
The ballooning deficit. Besides making the rich richer, the GOP tax cuts did one thing spectacularly — it raised the deficit to never-before-seen levels. The deficit is up 27 percent over a year ago and could reach $1 trillion by 2020. While deficits by themselves aren’t necessarily negative, a deficit this big will give the U.S. less flexibility to pump up the economy during a downturn or even a crisis.
The U.S.-China trade war. The Trump tariffs have been hurting U.S. consumers ever since he announced the first round of 25 percent tariffs on $250 billion in Chinese goods. Prices on appliances such as washing machines went up 12 percent. Trump announced a new round of tariffs on Chinese imports but delayed their imposition until Dec. 15 so as not to remind U.S. consumers of higher prices when they’re doing their Christmas shopping. Some analysts are calling the escalating trade war a self-fulfilling downturn.
Income inequality. This is not just a talking point for Democratic candidates. The level of income inequality in the U.S. is unsustainable in the long run. There are many factors — technology, globalization, the rise of “superstar” companies like Apple and Amazon, the breakdown of unions. America’s top 10 percent average more than nine times as much income as the bottom 90 percent. The top 0.1 percent take in over 188 times the income of the bottom 90 percent. And the GOP tax cuts that rewarded the richest while leaving most of the rest of us behind made it worse.
Markets collapsing for U.S. farmers. Soybean farmers have seen huge losses as China stopped buying U.S. soybeans in retaliation for Trump tariffs. Total agriculture exports to China dropped by more than half last year and are down 20 percent this year. Soybean prices have dropped nine percent since the trade war began a year ago. And the payouts that the Trump administration has been making to farmers aren’t making up the difference.
U.S. economic isolation. Trump’s approach to global trade has not been winning him many friends on the world stage. The disaster of the U.S.-China trade war has no end in sight, and there are no dates set for the next round of trade talks with China. When Trump abruptly pulls out of trade deals like the Trans-Pacific Partnership and NAFTA, especially with no certain replacement, that doesn’t give our allies much reason to trust him on the economic front (oh, who are we kidding—on any front).
When the Dow dropped by 800 points, there was a good reason that #TrumpCrash, #TrumpSlump, and #TrumpRecession were trending by the end of the trading day. By the next day, markets were recovering in the U.S. and around the world, as they usually do. But the damage had been done to the perception of Trump’s approach to economic success.
If people stop looking at the U.S. economy as Trump’s ace in the hole to win reelection, he’s in trouble. When media start honestly reporting that the economy is not as great as he claims, he’s in even worse shape.
That must be why Trump is going all in on the white supremacy front. If he can’t convince his followers that their economic payoff is just around the corner, all he can do is fall back on bashing immigrants and expressing outright racism.
In other words, exactly the same way he started his campaign when he descended that golden escalator in Trump Tower in 2015.
Originally posted on Daily Kos on Aug. 18, 2019.