Trump’s Meddling Sows Economic Trouble
Reprinted with permission from Creators.
One crucial test of leadership is knowing when to leave well enough alone. Fixing things that are going badly can be hard. What is easy is not screwing up things that are doing fine without your help.
These are among the many presidential lessons that Donald Trump didn’t learn before taking office and has ignored ever since. The virtues of silence and restraint are lost on him.
Barack Obama arrived in the depths of the Great Recession and was forced to confront a raft of crises, from rising unemployment to the instability of the financial system to the collapse of the auto industry. Trump came along when those problems were out of the way, and he had the luxury of riding an economic expansion that was well into its eighth year.
Thanks in part to the tax cuts he signed last year, which provided a jolt of fiscal stimulus, economic growth was up significantly in the past two quarters. Inflation is low; exports are rising; and unemployment is lower than it’s been since 1970. As the U.S. Chamber of Commerce said in May, “America’s economy has found the sweet spot.”
But lately, sour notes have been heard. The Dow Jones industrial average and the S&P 500 have erased virtually all of this year’s gains and are in the midst of their worst quarter since 2011.
“Investors’ worries run deep, taking into account not just the negative impact of a trade war but fading fiscal stimulus, rising short-term interest rates and declining bond buying by the world’s central banks,” reported The Wall Street Journal on Thursday.
Friday’s jobs report came in below expectations. A new forecast from the UCLA Anderson School of Management predicts that growth in real gross domestic product will decline from 3 percent this year to 2 percent next year to 1 percent in 2020.
Some events are beyond the control of the president, but much of the anxiety is the product of his policies.He claimed to have won major trade concessions from Chinese President Xi Jinping, but the Chinese have yet to confirm that, and Trump has threatened to inflict higher tariffs if he doesn’t get what he wants.
His impetuous, erratic pronouncements sow endless confusion. The monthly Economic Policy Uncertainty Index — maintained by economists Scott Baker (Northwestern), Nick Bloom (Stanford) and Steven Davis (University of Chicago) — has run consistently higher since Trump was elected than in the previous two years. Uncertainty makes it hard for businesspeople to gauge what they can expect to sell and what it will cost to make.
Trump’s tariffs on steel have hurt U.S. companies that use steel. Prices have risen 19 percent since Trump took office, making them higher than they are almost anywhere else in the world. That means soybean growers, who have seen their sales to China dry up, are also facing higher prices for their machinery, squeezing them from two directions.
As a candidate, Trump promised that the U.S. auto industry would thrive under him. But General Motors just announced it will close five North American factories and lay off 15 percent of its employees. Ford is ending U.S. production of sedans and is expected to make big cuts in its workforce.
After his meeting with Xi, Trump crowed that China would remove tariffs on American cars. But the White House later admitted there was no such agreement.
When it comes to his central goal of reducing the trade deficit, the president has completely whiffed. The gap has been growing, and in October, it was the biggest since 2008 — and the largest ever with China.
The oil industry, which was booming when crude went for $80 a barrel, has seen prices plunge — something Trump credits to his cozy relations with Saudi Arabia. He has urged the Saudis to boost production to cut prices still more. But The New York Times notes, “The United States became the world’s largest oil producer this year, and a collapse in prices could hurt scores of businesses and hundreds of thousands of workers in the energy and manufacturing industries.”
The economy would be stronger and the outlook would be brighter if Trump had simply taken the credit for the good times and done nothing to disrupt them. But he can’t resist meddling.
The wisdom of Calvin Coolidge would have served him well. “Don’t you know,” he once asked, “that four-fifths of all our troubles in this life would disappear if we would just sit down and keep still?”
Steve Chapman blogs at http://www.chicagotribune.com/news/opinion/chapman. Follow him on Twitter @SteveChapman13 or at https://www.facebook.com/stevechapman13. To find out more about Steve Chapman and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.