Though it’s traditional that an incoming President has six months if not a full year before the economy can be considered their responsibility, Trump was barely provided a week and even worse, some claim he should be held accountable for what hasn’t happened yet and might never happen.
The criticisms of President Donald Trump are legion, as they would be for any chief executive who presides over the most powerful office in the known universe in a highly polarized era, and yet we can see something of a disturbing difference compared to the traditional slings and arrows of his predecessors, even beyond the need to turn everything up to eleven that has accompanied the Orange Man since he first declared his intention to run in 2015. The difference is simple: Much of the most recent hysteria, and to be sure it is hysteria, is directed at what might happen, rather than what actually has happened, taking a doomsday scenario that might never occur and acting as if it has already occurred. Thus, cuts to the government, amounting to less than ten percent of the workforce and a fraction of spending, are prompting various “fears” that supposedly vital services will be disastrously affected, everything from planes falling from the sky to infected food on store shelves with delays in vaccines and other medical treatments leading to needless deaths in between. On the international front, we are repeatedly informed in stentorian tones that President Trump has abandoned our allies, upended the entire international order, and sold Ukraine to the Russians, though the only thing he has done so far is attempt to make a deal with an intransigent Ukrainian President and in the aftermath of that same intransigent President attempting to negotiate the deal in real time followed by claiming the end of the war was “far, far away,” temporarily paused future funding. They say this even though the reality right now, whatever his detractors claim is that NATO still exists, Russia is still engaged in a bloody stalemate, and no deal or proposal currently under consideration will change that. At this point, one can suffer from whiplash at the pace of events and the rapidity of the turnarounds. Last Friday, Ukraine was consigned to its fate, and only the European Union could save them, but by yesterday, President Volodymyr Zelensky himself claimed he’s ready for peace and still wants the deal. While we cannot say for sure whether or not things will change again in the future, particularly regarding Ukraine, this hasn’t prevented an ongoing freakout so fierce, one would swear the world has already ended at times with all of us living in a post apocalyptic future. Perhaps nowhere is that thinking more apparent than when it comes to the economy, where the media and mainstream Democrats have suddenly discovered that prices matter. In fact, the instant President Trump took office, some were blaming him for the price of eggs, though the data was actually compiled under his predecessor.
Though it’s traditional that an incoming President has six months if not a full year before the economy can be considered their responsibility, Trump was barely provided a week and even worse, some claim he should be held accountable for what hasn’t happened yet and might never happen. Jared Bernstein, ironically the former chair of President Joe Biden’s Council of Economic Advisers, recently encapsulated this phenomenon for MSNBC claiming, “Economic data is trending downward – and Trump’s policies are to blame.” Perhaps needless to say, the particular policies that are to blame and the expected impact on actual economic data is largely left unsaid. Instead, we’re treated to a near random mix of “people’s feelings about Trump’s tariffs, DOGE’s layoffs and budget cuts, and the lack of attention to pre-existing stressors such as grocery and housing prices.” In his view, all of this and perhaps more, has “spooked consumers, businesses, and investors,” leading to a decline in sentiment in some cases. This includes a decline in the Consumer Confidence Survey, which fell in February – as it has for three straight months, which Mr. Bernstein failed to mention. “This is the third consecutive month on month decline, bringing the index to the bottom of the range that has prevailed since 2022,” explained Stephanie Guichard, senior economist of global indicators at The Conference Board which compiled the survey in question. She continued to note that “Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high,” and that the drop of confidence was felt across all age groups and most income groups, excluding those making less than $15,000 and those making between $100,000 and $120,000. Inflation “expectations” also rose, and here we might actually see some impact of the Trump Presidency, “This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs,” Ms. Guichard explained.
Regarding tariffs in particular, “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.” While I wouldn’t consider a drop in sentiment good, the fact that it has been part of a trend that preceded President Trump retaking office is certainly notable, as is the reality that the survey is about fears and expectations, rather than actual results which might or might not happen. Further, the reality that DOGE and other policies were not mentioned as potential drivers is equally notable, meaning at worst people are concerned about the future impact of one particular policy rather than all of them, and yet once again, Mr. Bernstein repeats his everything except the kitchen sink approach when he claimed just a few paragraphs later, “The upshot is that consumers are nervous, and so are businesses and investors, due to the sharp rise in uncertainty about where relevant policy and government actions — trade policy, layoffs of federal workers, cutting of public spending and private contracts — are headed.” Alas, it is only after getting through this litany of horrors that hasn’t happened yet, when Mr. Bernstein actually gets to the facts, while finding time to praise his former boss’ moribund economy, somehow. “But what impact does this all have on the real economy, meaning jobs, incomes, and business investments? After all, during the Biden administration, we lived through years of bad vibes but strong growth, especially consumer spending. In fact, the so-called ‘hard data’ — jobs, GDP, unemployment — still look good.” As you might have guessed, however, reality simply isn’t good enough when it comes to opportunities to criticize President Trump. There are, you see, “worrying signs.” These include a downtick in real consumer spending in January – which Mr. Bernstein claims “may portend trouble” even though it’s “just one month in a noisy data series, January was unusually cold, which can dampen some spending (though not online spending, of course), and spending at the end of last year was strong, so maybe this is just a pause.”
While self-awareness and an understanding of irony is lacking among Democrats these days in general, it’s rather hard to take Mr. Bernstein seriously when he simultaneously praised President Biden for having undeservedly bad economic vibes while bashing President Trump for potentially bad vibes at some point in the future. To be sure, tariffs in particular are a reasonable concern and it’s not surprising that both businesses and consumers are wary. They are almost universally opposed by modern economists, those real card-carrying experts the media loves, for various reasons, namely they are likely to put at least some upward pressure on prices. At the same time, these same experts are frequently, if not, always wrong as we have seen all too many times in recent years. Remember, it was only four years ago, when President Biden was taking office, that they were predicting smooth economic sailing powered by government stimulus. For example, here was US News & World Report, in an article helpfully titled “Anticipating 2021 boom,” quoting Sung Won Sohn, an economics professor at Loyola Marymount University, who claimed “You have massive government stimulus, low interest rates from the Fed, and the vaccine supply is growing. The economy is beginning to fire on all cylinders.” When inflation first started rising the following year, many assured us it was transitory and would not have a deleterious effect on the economy. When it led to economic stagnation, they told us it was merely the vibes and we didn’t understand how good we had it. Today, they are telling us the opposite, partly for political reasons in my mind at least. The reality, however, is that no one, not even Donald Trump himself knows the full impact of aggressive tariffs. I used the term “likely” earlier to describe the impact on prices because even that isn’t as clear cut as the experts claim. While tariffs increase costs in principle, they aren’t the equivalent of sales or value added taxes in practice, where you can simply apply a percentage and predict the impact. In most cases, they apply to either the cost of raw materials or wholesale goods, both of which are far from the retail prices paid by consumers. Some or even all of the increase could be offset by efficiencies elsewhere in the supply chain or by choosing different suppliers not subject to tariffs. In other words, the price increases are likely to be much less than advertised, if at all, and specific to certain products, unlike more generalized inflation.
Further, tariffs, like other taxes, raise revenue, revenue that can be used to reduce the deficit and-or taxes, which could have a beneficial impact on the economy. They also modify behavior and in the medium and long term, we can expect companies to respond by altering their supply chains, manufacturing, and other business practices to avoid them whenever possible, knowing that a competitor that does the same will have a price advantage. Apple, for example, recently announced “its largest-ever spend commitment with plans to spend and invest more than $500 billion in the U.S. over the next four years. This new pledge builds on Apple’s long history of investing in American innovation and advanced high-skilled manufacturing, and will support a wide range of initiatives that focus on artificial intelligence, silicon engineering, and skills development for students and workers across the country.” This includes a new manufacturing center for servers in Houston that will replace a facility that currently operates outside the US. “We are bullish on the future of American innovation, and we’re proud to build on our long-standing U.S. investments with this $500 billion commitment to our country’s future,” Apple CEO Tim Cook said in a statement in late February. Many have attributed this move at least partially to increasing tariffs on China. We can likely expect other companies to reconsider as well. One of the reasons countries around the world rely on tariffs in general is to incentivize domestic manufacturing and we should reasonably believe the US to benefit in the same way. Of course, how other countries respond remains a wild card, with Canada in particular promising a trade war that could well spiral to both of our detriment. With that in mind, it’s possible that the unintended consequences are severe, but again, this history isn’t written yet, bringing us right back where we started.
Ultimately, I’m reminded of a lost Bruce Springsteen classic, “Livin’ in the Future.” Written in the wake of the disastrous Iraq War, the speaker imagines catastrophe after catastrophe, “The earth it gave away, The sea rose towards the sun, I opened up my heart to you, It got all damaged and undone, My ship Liberty sailed away On a bloody red horizon, The grounds keeper opened the gates And let the wild dogs run.” In the chorus, however, we learn that these things haven’t actually happened, “Don’t worry, darlin’, No baby, don’t you fret, We’re livin’ in the future, And none of this has happened yet.” While it’s certainly a fine song, one of my favorites of his lesser known tracks, and believe it or not, it was my wife and my first “official” song when we were dating to the point where it was even played out at our wedding, it makes for poor political criticism. President Trump’s detractors will never change, but everyone should be aware that fantasies of the future, however dark they may be conceived, are no substitute for reality. The future will come soon enough in whatever form, and if the calamities occur, he can easily be blamed for it then. In the meantime, I’m putting my money on the President rather than the experts. It’s not like he hasn’t proved them wrong countless times before.
Confessions of a Conservative Atheist 