Terry H. Schwadron
So, is it an economic mess that Team Trump is handling or a healing economy with promise of rising success, as the Fed seems to think?
Obviously, individual views reflect personal circumstances: Enough people clearly felt left behind economically as to support Mr. Trump in his election campaign. Thus, we have administration promises to recreate the national budget in its own image, to threaten trade wars and huge unbalanced tax cuts, and to goose job creation, albeit through tools of deregulation with selective corporate incentives and pressures that may or may not ever produce the kind of promised job return described in the campaign.
Likewise, we have a Presidential view of economics that affect the administration’s desires for change rather than a useful reflection of the current woes. The story that seems to fit the administration’s needs most directly is an economy that can be saved only by the Trump program of lower corporate taxes and serious elimination of regulations and consumer protections that big and small businesses find objectionable.
The Fed, charged with looking at the big picture, continues to remind us all that, as a nation, we are not feeding “disaster,” as the President calls it every time we hear him talk. In fact, the wide reading of the decision by the Fed to raise interest rates says that, on the whole, the economy continues to grow gradually, that we are starting to see results from several years’ worth of policy work, and that wages are starting to reflect growth too.
Indeed, those who understand these trends better than me see real conflicts ahead between Team Trump and the Fed about the overall assessment of economic health. In that regard, Mr. Trump chooses to ignore many accepted economic figures, is quick to suggest that growth can double, and insistent that he alone can produce the necessary changes.
Team Trump wants to claim credit for anything positive in the job world, the stock market, a rising consumer confidence number and the serial announcements by incented or pressured corporations to make announcements that support the notion that deregulation and the promise of lowered corporate taxes are enough to create oodles of new jobs.
Personally, I don’t really care about the Trumpists taking credit; I simply don’t think that it is accurate. Indeed, the announcements in the auto industry seem a combination of long-term plans that were in the works or trade-offs to get lowered emission regulations from the government. Politically, however, the credit game will tend to help Republican campaigns ahead.
Actually, we continue to learn that there are limits to what the Presidency can do in economic arenas. It seems clear that the Trump administration’s short attention span results in wanting to own automobile recovery, but that the driver here, so to speak, is the rising purchases of new cars. That market response alternately has fueled or dampened job numbers.
What the new presidential budget ideology underscores is that if Mr. Trump had faced the same problem as had former President Obama, he would not have created and supported the government guarantees that brought the same auto industry back from total failure.
The Fed’s pronouncements generally leave me pretty cold. Changes in basic lending that move by a quarter of a point at a time don’t create that much difference; the direction of the changes, however, do.
What those directional signs tell us, however, is that the economy is basically healthy, balanced and growing. That message differs from administration views that we are an international joke, stuck in trade deals that hurt us more than help, and looking at ruinous debt. Indeed, Republicans and the presidential budget will increase that debt, the new worry is that the dollar is getting too strong, putting pressure on trade with the U.S., and that tariffs and border tax proposals to level international trading will cause consumer prices in the U.S. to rise, even for American-made goods that depend on international supply lines.
I fully expect that presidents will stretch economic truths to support their world view, but the degree to which Team Trump’s vision diverge from the Fed’s explanations for its actions leaves me, as a taxpayer, wondering why I can’t get a straight answer from those in charge.