Trump’s Economy – Light Lifting (#78)
For this coming November 6th, mid-term election, Donald Trump has been taking credit for the ‘greatest economy ever, in the history of the Country’, unceasingly; and also for the greatest ‘stock market’ ever, and the greatest unemployment numbers, ever... and so on and so on. The economy and the stock markets have done well, and the unemployment numbers are really good, but most of the hard work was done by President Barack Obama, after the last Republican administration of George W. Bush had effectively destroyed the system through reckless greed and deregulation, which led to the ‘sub-prime credit’ collapse and the American triggered global financial system crisis of 2008. That is the precise time Barack Obama stepped into the Presidency, at the bottom of the collapsing economy and the financial World. Donald Trump on the other hand stepped into his Presidency at the top-end of a very long (8 year) upwards trend. See Chart below.
The economy is doing well as the Chart shows; it also shows where Obama picked it up from, and where Trump stepped in. There is no doubt that Obama did all the heavy lifting and Trump had the easier time of it. Trump is too mean spirited to give Obama any credit, but the facts are there for all to see. The long upward economic trend is Obama’s, with Trump attached towards the end of it.
Another important factor is – on becoming President, Obama had to immediately deal with an existential crisis that threatened to entirely collapse the American and global financial system. To prevent a total collapse, Obama’s administration did what is required in such circumstances; run large deficits and open the Fed’s and the other major Central Bank’s cash spigots and flood the system with liquidity. Obama did what was required in a crisis and saved the American and the global financial system, and handed a strongly growing economy, a booming stock market, and declining unemployment rates to Trump.
In better economic times one is supposed to re-tighten the taps and run balanced budgets. Not only does Trump not thank Obama for handing him America in such good shape, he is doing the opposite of what he is supposed to do as a responsible President, taking all the credit, running a massive budgetary deficit (a supposed Republican No-No), providing a massive tax cut for the wealthy (a fundamental economic No-No), and, he is constantly chastising the Fed for starting the tightening cycle, which is absolutely required towards the end of a long economic growth cycle. In other words, to keep the economy buoyant, Trump is will willing to spend like a communist, give huge tax benefits to the wealthy (while running a massive deficit, a bad idea), and keep the stimulus going (with low rates) long after that action is required. Not very sound economic policies for the long term.