Trump’s Economy Is Failing Exactly Where He Needs It to Succeed
S E E D E D C O N T E N T
When shockingly poor data on U.S. manufacturing was released Tuesday morning, President Donald Trump was ready with his usual response to any bad economic news: He blamed Federal Reserve Chairman Jay Powell. Increasingly, however, it is getting harder for the president to avoid responsibility for regional weaknesses in the economy — and the effects on his chances for re-election could be devastating.
The current economy is tracking dangerously close to the one that derailed Hillary Clinton’s candidacy in 2016. Regardless of whether the U.S. is headed for a full-scale recession , according to this latest data it has almost certainly entered a sectoral or mini-recession similar to 2015’s. The latest readings of the Institute for Supply Management’s manufacturers survey are actually below those of early 2016, and the trajectory is far steeper.
From January 2015 to January 2016, the index slid from 54.1 to 48. (Numbers above 50 indicate expansion, while those below 50 indicate contraction.) Over the past six months, the index has collapsed from 55.3 to 47.8. To make matters worse, the index of new export orders — which have served as a rough guide of future readings — has fallen to 41 .
In fact, there is not much in the outlook that is encouraging. While most of the U.S. economy is insulated from trade, manufacturing is linked to the rest of the world through several channels. First and most obvious are direct exports of U.S. heavy machinery. They take a double hit from tariffs, which raise the cost of their materials and also reduce foreign demand from trade-driven economies such as China, Germany and Japan.
Weaker national economies are also a drag on oil prices . Attacks in Saudi Arabia have given them a bit of a boost recently, but weak global demand has weighed on them since the summer. Low oil prices lead to slower investment in fracking in the U.S., which in turn leads to lower demand for manufactured equipment.
Lastly, retaliation from China has hit U.S. agriculture hard. That means farmers have less demand for new equipment. Just as the slump in 2015 was driven by falling demand for oil and agriculture products as the Chinese economy slowed, so this current one is propelled by the trade war.
This slowdown might not seem like a big deal. Indeed, most Americans barely noticed the 2015 dip. With a closely divided electorate, however, the slowdown was probably enough to tip the scales against the Democrats. Even more important this time around, sluggishness in manufacturing and agriculture is hitting particularly hard in several important battleground states.
Manufacturing employment growth in Wisconsin and Michigan has already fallen below the 2015 rate. Pennsylvania is dangerously close. At best, this makes it difficult for Trump to claim that his policies have led to a revival. At worst, it suggests that his policies have backfired.
Trump could conceivably turn the situation around, but at this point it’s hard to see how. Even if he announced an official end to the trade war tomorrow, it would be months before farmers and businesses could be confident that he was serious. After that, there would be yet more delays before equipment orders rebounded, and still more before a rise in manufacturing employment.
So maybe it’s unsurprising that the president is sticking to his guns and blaming the Fed. And while that strategy might work with his die-hard supporters, swing voters tend to be among the least informed about campaign narratives and instead vote based on economic conditions they themselves experience. As those conditions deteriorate, so do the president’s chances for re-election.
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No wonder he wants to talk about Shifty Schiff all day.
Which Democrat are you attempting to put forward as my alternative option for next November?
The pos liar in chief thinks the stock market took a dive because of the impeachment talk and the fed. The asswipe doesn't get it's him and his trade bs and the tariffs that he said and I quote...tariffs will pay for themselves.
I hope the people of Wisconsin, Michigan and Pennsylvania remember the old saying
"Fool me once, shame on you. Fool me twice, shame on me."
I certainly hope they won't be fooled by the socialists and their free crap or higher taxes again.
Surely you do not mean giveaways like Trump's giant tax cuts for the already uber wealthy and big multinational corporations that blew up the deficit to more than a trillion dollars during relatively good economic times?
I hope they remember...
"A fool and his money are soon departed"
I'll remember the cost of tariffs to my budget, no worries. Tariffs and trade are a reason for the stalling economy. Oh, and check out how many dairy farms in Wisconsin went under just since Trump has been president. Manufacturing also down. The deficit has exploded with the tax cuts to the top and the lower and middle classes are hit by both the tax cuts (didn't help them and they were temp if they did) and tariffs, which go into most consumer goods purchased by Americans.
So maybe you would care to answer why the renegotiated NAFTA deal is cooling on Nancy's desk? Mexico and Canada have both signed it months ago. That is also a part of the problem. Of course the Dems can't give Trump the win.
As for the Tariff wars. What is the Democrat's plan to deal with the massive trade imbalances with China and our so called "allies" in Europe? Drop them all and beg forgiveness? Pretend that the US is not being robbed blind while being the military for the world?
Trump bad. Got it. At least he is trying to fix the damn mess. Which is more than can be said for the establishment politicians on both sides of the isle.
Anyone remember this?
Trump said trade wars were ‘good’ and ‘easy to win’
I wonder how going to take for him to figure out the actual facts?
Tariffs Are Taxes and Everybody Loses In Trade Wars...
Only those that insist on buying the products that had a "Tariff" put on them.
Other companies and countries make the same stuff too ya know !
Buy their stuff instead !
Remember.....Buy American ? No Tariffs there.....right ?
Says someone who doesn't understand the global economy.
Says someone that actually is in Business, and actually owns that business !
Your accomplishment on Global business Knowledge, or just business knowledge in general, is …..what again ?