Wayne O'Leary

Wile E. Trump

Remember the old Coyote-Roadrunner animated cartoons of yesteryear? The main protagonist was an unfortunate character named Wile E. Coyote, whose futile purpose in life was to chase after the carefree, beep-beeping roadrunner, an elusive terrestrial bird, and continually fail to capture him. Time and again, Wile E. Coyote would do dumb things like running off the end of a cliff in pursuit of his quarry, belatedly realizing his mistake as reality in the form of gravity intruded, then plummeting helplessly to the bottom of a canyon. Splat!

When it comes to the economy, Donald Trump is a lot like Wile E. Coyote — fundamentally clueless. He’s off the end of the cliff now, eyes disbelieving, arms and legs flailing, looking into the abyss below and wondering what’s happening. Economics, he’s discovered, is more than shrewd business deals and tricky real-estate transactions.

The Donald and his economic team of supply-side true believers (Treasury Secretary Steven Mnuchin, National Economic Council Director Lawrence Kudlow, and White House Council of Economic Advisors Chairman Kevin Hassett) continue to insist the upward momentum of the Trump economy, which the president hyperbolically calls “incredible,” can’t be stopped, but events have obviously sown seeds of doubt. It now appears the $1.5 trillion in 2017 tax cuts alone won’t be sufficient; according to Chairman Hassett, more business deregulation, already at unprecedented levels, is needed.

Nevertheless, the trajectory is undeniable, Hassett confidently asserts, predicting bullish 3.2% growth for 2019. (His boss has gone as high as 5% over the long term in moments of euphoria.) The more rational Federal Reserve calls for 2.3% growth this year, in line with the recent past, as does the Congressional Budget Office, which has lowered its projection even more (to 1.7%) for 2020.

Most private forecasters, meanwhile, agree on a 2.2% consensus growth figure, rejecting out of hand the 3% plus Trumpsters claim is the new normal, which was reached briefly in 2018, but not since that time; it’s presently mired at 2.1%. GDP estimates aside, a survey earlier this year by the Association of Business Economists found 84% of corporate respondents saying the Trump tax cuts (supposedly the growth stimulant of all growth stimulants) were not encouraging their firms to increase investment.

There are other signs the bloom is off Donald Trump’s self-proclaimed rosy economy. Manufacturing, which created 20,000 jobs per month in 2017-18, has produced fewer than 8,000 per month so far in 2019. And factory output, responding negatively to trade fights, higher tariffs, and reduced demand, has slowed dramatically, especially in the industrial Midwest.

Most ominously, the worldwide boom in auto sales, which began in 2009, has apparently ended, a victim here of excessive industry prices and rising car-loan rates, imperiling the nation’s leading manufacturing sector (3% of GDP), the direct or indirect employer of two million workers. Even angry cajoling by a petulant Donald Trump could not dissuade GM from laying off 14,000 autoworkers in Ohio.

There are additional negative indicators. Worker pay, which lagged throughout the post-2010 recovery from the Great Recession, bumping along at an average increase of 2% per annum for nearly a decade, finally reached 3% in 2018, only to come to a screeching halt this year, notwithstanding outlandishly optimistic Trumpian projections for the future.

And it’s more than a matter of wages. An August analysis by the Associated Press listed the burdens employed workers now endure under the great Trump economy: eroding benefits, disappearing bonuses, increasing workloads, fewer workplace amenities, less job security, and widespread deunionization — a 50% decline in representation over the past four decades. Despite an official unemployment rate remaining below 4%, a Federal Reserve survey released last May concluded four in 10 Americans couldn’t cover an unexpected $400 expense.

Donald Trump can’t allow himself to believe any of this is true, and perhaps he really doesn’t think it is, since he exists in a moving, self-contained bubble of his own creation, shuttling between golf venues (where he’s spent a quarter of his presidential days by actual count), his White House TV set (tuned to Fox) and Twitter feed, and the MAGA rallies where his ditto-headed audiences pay homage to his nonsensical ramblings. He takes little serious account of the outside world and is therefore unmindful of news from abroad suggesting the mini-crash of his beloved stock market in mid-August (down 3% in one 24-hour period) may not be an aberration, but the canary in America’s coal mine.

The US economy dragged the rest of the developed economies into recession in 2008-09 by exporting its banker-led financial crash; now, those economies appear to be returning the favor by leading the current global downturn. Italy officially entered recession in late 2018. Germany, the economic engine of Europe, is close behind; another consecutive quarter of negative growth and it will join Italy. The continuing slowdown in China, made worse by Trump’s tariff war, has reduced Chinese factory output to its lowest level in 17 years. Other nations (Australia, for instance) are on the economic bubble.

Donald Trump, committed to a beggar-thy-neighbor foreign policy, thinks these are good things. Since economic conditions in the US are not yet quite as bad as elsewhere, that means America is “winning” in his zero-sum game. And Trump, who exacerbated the global economic turmoil by declaring trade wars on China and Germany — it’s also a product of domestic structural trends in the respective countries and geopolitical factors like Brexit — is too dense to realize his actions as the world’s trade grinch will inevitably come back to bite him.

What happens overseas won’t stay overseas any more than it did in the 1930s, especially if the self-anointed “chosen one” keeps lighting international dumpster fires. You could have asked two guys named Hawley and Smoot.

We are already seeing a hollowing out of the US retail sector as a result of administration tariffs on Chinese goods (appliances, apparel, toys, electronics), which make up the bulk of American consumer products and are costing average individual households $600 annually in higher purchase prices. Planned tariff-increases (to 25%) will shortly raise that to $1,000.

There’s more. Since January, the tariff war has led to the loss of 50,000 US retail jobs, and by year’s end, it will have generated an estimated 12,000 store closings, crippling America’s shopping malls.

Beep-beep, Donald.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, October 1, 2019

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