Dem
47
GOP
53
If you wanted to derail the world's mightiest economy, there are a few things you might do, if you happened to be the President of the United States. For example, you might adopt an erratic trade policy that has no consistency, and no clear purpose. You might add to that instability in the job market. And then, for the whipped cream on top, you might chat with the media and badmouth the very economy you are supposed to be shepherding.
Donald Trump has done all three of these things. Readers know, at this point, about the on-again, off-again tariffs against Canada and Mexico. Over the weekend, Trump insisted that they will be on-again with a vengeance on April 2, specifically teasing plans for a 250% tariff on dairy products. Does he really mean it, or is he, as The New York Times' Binyamin Appelbaum argues, just looking for another round of begging from the leaders of those two nations because it makes him (Trump) feel powerful? And if begging is all he wants, will he actually get it from Canada's new PM? (see below)
As to the job market, the effects of DOGE are being felt. Thus far, about 60,000 federal employees are definitely out of work (with more to come). This, in turn, is causing private business concerns to increase their rate of terminations. As a consequence, the number of job losses last month jumped 245%. That is the biggest single-month increase since July 2020, which was in the middle of the pandemic. It's the worst February since 2009.
And as to Trump's verbiage, well, he didn't get the memo that the president is supposed to be the economy's #1 cheerleader (if only they'd presented that memo in picture form). So, he went on Fox this weekend and said some... impolitic things. Trump declared that "You can't really watch the stock market." This from a fellow who did only that when the stock market was going up at the start of his first term. He also said that the United States should not be thinking short-term, and that "If you look at China, they have a 100-year perspective." Again, that represents a pretty big change of course from his first presidential term, and from his 2024 campaign. Trump concluded that his economic policies might cause "disruption" and conceded that there might be a recession.
It is pretty obvious what Trump's game is here; he knows that things could get rocky this year, or next, or both, and he doesn't want to take the blame. So, he's trying to rewrite the rules of the game. However, what he's really communicating is "even the president thinks things are probably headed downhill." And that is the kind of thing that the markets respond to, and not in a good way. Yesterday, in what some commentators are calling a "bloodbath," the U.S. stock market lost $1.75 trillion in value. The Dow fell 900 points, the NASDAQ was down 4%, and the S&P was down 2.7%. It's the worst day the market has had since September of 2022, and all value that has been gained since Trump became president was wiped out.
Hit particularly hard, incidentally, was Tesla stock, which dropped 15% in value yesterday, resulting in a $30 billion hit to Elon Musk's wallet. We make a special note of this for two reasons. First, we would tend to guess that if Tesla is hit extra-hard, it represents some sort of reaction to the Trump administration. Second, if Tesla stock keeps dropping, either because Musk is not doing his job as CEO, or because his actions are making the brand toxic, then his current arrangement will become untenable. He might have to give up his side gig and start doing his real job(s). Alternatively, the board of Tesla might decide they are better off without him than with him.
Naturally, as part of the "It's never Trump's fault" campaign, there is already much finger-pointing in the direction of Joe Biden. Trump is doing it, and so are members of Congress, like Rep. Nicole Malliotakis (R-NY). She sat for an interview with CNN yesterday and opined:
Well, there's been talk about a recession for well over the past year. This is something that has been a threat going back to the Biden administration... You can't disregard the damage that the Biden administration did to our economy with their regulations, with their inflationary spending, with the interest rates that have skyrocketed because of his policies. You can't, you can't negate that.
If you would like to hear it for yourself, the footage is here.
This is not inherently an unreasonable position. The economy is a complex, often slow-moving beast, and there can absolutely be delayed effects when a presidential administration leaves office. Perhaps the most obvious example of this is that the sequence of events that led to the Great Depression had as much to do, or even more to do, with the policies of the Calvin Coolidge administration than the Herbert Hoover administration. Poor Herbie was just left holding the bag.
That said, it's a bit harder to accept Malliotakis' thesis here. First, an honest actor, even if they were laying some/most of the blame at Biden's feet, would also have to admit that Trump's policies have not helped (in the same way that Hoover's tariff policies helped worsen the Great Depression). Malliotakis is not conceding that.
Second, neither Trump nor Malliotakis nor any other Republican is really enunciating a clear cause-and-effect argument for why Biden is to blame. They toss out a bunch of buzzwords like "spending" and "inflationary" and "regulations," but don't clearly explain how those things produced what's happening in the economy right now. The Inflation Reduction Act was passed 2½ years ago—why would its effects be felt now, and so suddenly?
Third, take a look at this chart from the Atlanta branch of the Federal Reserve:
That does not look to us like the culmination of a downward trend that commenced 6 months or 12 months or 18 months ago. It looks like an economy that was humming along until someone took a sledgehammer to it, perhaps by mounting a pseudo-trade war, or by slashing a bunch of government jobs willy-nilly. (Z)