Edward Harrison — The failure of the Trump presidency

In sum, while Donald Trump, the cultural warrior, is failing as President on the economic front, not helping get us to the 3 or 4% growth he promised, he isn’t cratering the economy yet either. A US debt default or a military war could certainly change that though.

The US economy has been resilient. We are now back to 2% growth after a mid-cycle pause due to the (partial) bursting of the shale oil investment bubble. But, since we are in the ninth year of this economic expansion, you have to believe we are at the late stages of the cycle. That means we should be actively asking ourselves what the US economy would look like if a recession started in the next 12 to 24 months.

And that’s where my concern is. US households are spending beyond their means to sustain even 2% growth (see here and here). What happens when US consumers are forced to cut back? The hope has always been that tax cuts or wage increases would come before consumers do cut back. But nothing on the horizon shows this will happen. And Donald Trump’s ineffectiveness as President makes robust wage growth and tax relief for the middle class even less likely.

PS – The chaos in Charlottesville tells you that if you combined a failed Trump presidency with economic recession, you have the pre-conditions for some serious political extremism and revolt.

Credit Writedowns
The failure of the Trump presidency
Edward Harrison