WASHINGTON – The American stock market soared in anticipation of President Trump’s sweeping tax cuts and in the aftermath of their enactment.
The long, painful economic anemia of the Obama years appeared to be over, and the economy was racing toward faster growth rates, increased employment and a stronger economy.
But lately, the stock market has been in a nosedive, the economy has slowed, and its vital statistics aren’t anything to write home about.
Suddenly, “the good fortune is melting away, imperiling the props that have supported American economic confidence and incomes and intensifying pressure on President Trump to deliver the faster growth and higher wages he has promised,” The Washington Post reported Tuesday in a front-page story.
Stock market averages have fallen, economic growth rates remain at levels reminiscent of the Obama years, and inflation appears to be raising its ugly head.
“Consumer prices by a key measure are rising at their fastest point in seven years, with mass consumer companies such as McDonald’s and Amazon.com increasing prices on some of their popular offerings. Mortgages and business loans are becoming more expensive. And after peaking in late January, the Dow Jones industrial average is now roughly flat on the year,” the Post said.
Commerce Department analysts are also increasingly worried about a key pricing index, excluding volatile food costs, that showed prices rising 2.5 percent.
The U.S. economy grew at an anemic 2.3 percent in the first three months of 2018, the Commerce Department reported last week, down sharply from last year’s fourth-quarter pace of 2.9 percent.
President Trump ran on a pledge to increase jobs, but a growing number of industries and other businesses are complaining that they can’t find enough skilled workers.
That will increase pressure from many industries to boost immigration levels for skilled workers, something Trump has opposed.
Nevertheless, the purpose of the Trump tax cuts was to boost capital investment and accelerate economic growth, and that requires the availability of more skilled labor.
But with the unemployment rate at a low 4.1 percent, and first-time unemployment claims at their lowest point since 1969, that raises a huge impediment to growth.
That can only be solved by more automation, and that means fewer available jobs and fewer consumers.
Missing from this debate over the economy’s troubles is the role that Trump’s tariffs on steel and aluminum play in all of this.
As everyone, except the president, expected, our trading partners responded by hiking tariffs on our exports to them. And that’s resulted in a trade war, which means higher consumer prices here and higher prices for our products overseas. And that’s a lose-lose proposition.
Eventually, even Trump got the message, and in a last-minute decision Monday night, he announced that he was postponing the tariffs on the European Union, Mexico and Canada.
Remember when U.S. business leaders complained that President Obama’s tax-hike proposals created uncertainty in our economy that prevented capital investment deals from being made? What Trump is trying to do is force our trading partners to make concessions, but that’s not a sure thing. In the meantime, he is creating uncertainty among industry and business leaders here, and abroad, and that is hurting our economy.
“What President Trump has done is make everything uncertain in trade policy,” said Chad Bown, a senior fellow at the Peterson Institute of International Economics.
Of course, other factors are at work here, such as the Fed’s future actions on interest rates.
“With clear signs that inflation is rising pretty rapidly now, the Fed will need to tighten more aggressively this year, and that will lay the seeds for an economic slowdown starting next year,” economic analyst Paul Ashworth of Capital Economics advised his clients.
Meantime, Trump’s mediocre job-approval polls haven’t improved much in the last 15 months.
On Tuesday of this week, USA Today reported that the Monmouth University Polling Institute’s latest survey found that 50 percent of Americans disapproved of his performance in office, while 41 percent approved.
The latest Gallup poll showed similar numbers: 53 percent of Americans disapproved of the job he was doing, while 42 percent said they approved.
Not a very promising start to his presidency.
Donald Lambro has been covering Washington politics for more than 50 years as a reporter, editor and commentator.
This article provided by NewsEdge.