President Trump’s manic outbursts on everything from Greenland to American Jews and his frenzied reversals on the need for payroll tax cuts were alarming, to be sure. However, that might just be a warm-up act. Once he gets hold of the most recent news, he might start claiming he’s the Messiah. Oh, wait. Anyway, there is more disconcerting news.
CNBC reports: “Federal Reserve members worried over future growth are highly concerned about the U.S.-China tariff battle, citing the issue multiple times during discussions at the central bank’s July meeting. Members spoke about trade on multiple occasions, saying it was one of the chief headwinds for the economy, according to meeting minutes released Wednesday.” Trump might want to blame the Fed for his own counterproductive policies, but Fed members are not shy about assigning blame and documenting their concerns. The Fed warns that despite Trump’s happy talk, all is not well going forward. (“Tariffs and generally slower economic conditions combined ‘could have significant negative effects on the U.S. economy’ while a softness in business investment was ‘pointing to the possibility of a more substantial slowing in economic growth than the staff projected.’”) Yikes.
Meanwhile, Trump’s quest to outperform President Barack Obama on the economy took another hit. The New York Times reports: “Employers added a half-million fewer jobs in 2018 and early 2019 than previously reported, the Labor Department said Wednesday. … After the revision, hiring probably averaged under 200,000 jobs per month last year, down from the 223,000 initially reported and only modestly better than the 179,000 monthly jobs added in 2017.” In the last three years of the Obama administration, the average monthly job growth was 251,000 in 2014; 227,000 in 2015; and 193,000 in 2016. Trump’s average was 179,000 in 2017; 223,000 in 2018; and 165,000 so far this year.
Moreover, with the reduced job-growth numbers, Trump’s tax cuts look even less productive. “Wednesday’s update is also the latest evidence that the economy got less of a jolt from President Trump’s tax cuts than it initially appeared,” the Times report notes. “Last month, the Commerce Department lowered its estimate of economic growth in 2018 [to 2.5 percent].” We sure got more debt than we bargained for, however.
And that, too, is a problem. The Post reports: “The annual U.S. deficit will come close to hitting $1 trillion in 2019, an unusually high number during a period of economic growth, the CBO added. Driving that number is spending as well as a large tax cut in corporate and individual income taxes passed by Republicans in 2017.” Worse, we have fewer ways to address a slowdown. (“The new deficit estimates could deepen worries that U.S. policymakers face a shortage of tools to bolster the economy should the country fall into recession, some economists say. In addition to potentially less room to spend or pass tax cuts, the Federal Reserve cannot reduce interest rates, which are quite low, as much as it has during previous downturns.”)
To be blunt, we blew our money on a tax cut that didn’t work as advertised. Trump’s singular legislative “win” turns out to be a net-negative, and his trade policy is an even bigger loser. Trump has real reasons to be freaking out. Not only is his reelection outlook looking cloudier, but he also might go down as one of the worst presidents for the economy, one who finally put the stake in supply-side tax cuts.