GDP grew at just 1.9 percent in the third quarter, well below last year’s average of 2.9 percent and far below the Trump administration’s prediction for 3.2 percent for all of 2019. Trump will be lucky if the economy delivers 2 percent growth for the year.
The Fed duly cut rates, but low interest rates can only do so much. Mainly, they are pumping up a speculative stock market.
Why is the economy slowing? Global growth is weakening, and Trump’s on-again, off-again tariff war is spooking business planners. They are holding off investing. One thing business hates is uncertainty.
In most sectors, the low unemployment hasn’t translated into wage gains, because the gig economy is growing, while the economy of secure payroll jobs is not. The UAW victory over GM was a happy exception to the general weakness of labor bargaining power.
And Trump’s four-trillion-dollar tax cut did almost nothing to promote business investment. The main boosts to growth were Keynesian, via an annual budget deficit that now tops a trillion dollars. That deficit stimulus would have been far more effective had it been in the form of public investments rather than tax cuts.
Bottom line: It will be awfully hard for the economy to play to Trump’s advantage in 2020. If anything, the economy will be even weaker than it is now, and a tanking stock market is far from out of the question.
All the credit for fumbling the recovery that he inherited goes to Trump. It’s painful to crow about a weakening economy, but it’s a small price to pay for assuring a one-term presidency.