Is Donald Trump Good for the American Economy? An Honest Review

Is Donald Trump, President of the United States, good for the American Economy? I’ve asked myself this question quite a few times and it’s an incredibly difficult one for me to answer. Here’s why…first, I simply do not like the man as a human being. His actions and words have painted him as a racist, a mysogenist, and a liar. Second, I don’t like his political stance about social issues because I believe in open borders, body rights (such as right to abortion and right to assisted suicide), and common sense gun control. Third, I don’t like his economic policies because I believe in rational socialism, healthcare as a right, organized labor, and I am against crony capitalism in all of its forms. It’s hard for me to look at anything Trump does in a positive light. However, in regards to the American economy- I feel like it is important to look at the policies of his administration and the direct effect they have had on the American economy as a whole.

The Strength of the American Economy

After 2007-2008, the American economy was a mess. Over the next 8 years, Presidetn Obama and the Federal Reserve used a common sense strategy of limiting exposure and creating a healthy and low-risk borrowing environment. These policies slowly brought the economy back to a point of strength where jobs were slowly being added, consumer spending was increasing, and economic output measured by GDP (gross domestic product) was increasing. Increased regulation and oversight was making it more expensive to do business in the USA while at the same time forcing business to build in a rational but slow progression. There was also a focus on preserving nature, protecting the environment, and making sure that business did not discriminate against minorities or protected classes.

Enter Trump in 2017

The first (and only) major piece of legislation in the first year of his administration was a major tax break for business and the wealthy. The new tax plan also gave workers a tax break, but only for a limited amount of time as the tax breaks for individuals are set to expire in 2025 but for business they are permanent – note that most wealthy people have their wealth sheltered as a business but workers generally do not.

The effect of this tax plan was to light the economy on fire. Suddenly, business had a lot more money to spend, the wealthy had more money to invest, and workers had the illusion of extra money in their pockets which drove consumer spending higher. Bottom line, tax cuts work for the economy even if they work against the bottom line of the government.

In addition, enviromental regulations have been eased, labor and discrimination regulations have been eased, and the United States has left or renegotiated numerous trade deals that were biased against the United States for international economic stability reasons. All of these things have made doing business in the United States more profitable for purely financial reasons.

Trump’s tariffs and threats of tariffs have driven the price of foreign companies down and generally not had negative effect on domestic business. In many cases, his trade policies have driven domestic share prices higher. In general, Trump’s policies have lit a slow growth economy on fire. But there have been some mis-steps. Trump’s attacks against Amazon – arguably the most important American driver of economic growth turned the market negative in early 2018. This along with his politically ill-advised (and short lived) push for a weaker dollar started to show some of the weakness inherent in his current model – but being a brilliant political animal, Trump saw the decline in his polling numbers among his base and reversed course – and his numbers recovered along with the economy.

Trump’s administration has also been easing regulations around investment banking (Glass-Steagall) and easing credit restrictions. These two things have increased investment, borrowing, and spending. They have driven the economy to repeated new highs.

In summary – Trump’s policies thus far have lit the economy on fire. In his less than two years in office. US GDP has risen from $17.78 Trillion to $18.51 Trillion U.S. dollars – a rise of $365 billion per year on average. Compare this to Obama’s $15.33 Trillion to $17.78 Trillion in eight years which comes to $316 billion increase per year on average. Trump’s GDP growth  also exceeds George W. Bush’s $260 billion annual growth and $205 billion from Bush, Sr and even exceeds Reagan’s $275 billion annual GDP growth,  but doesn’t quite hit the mark of Bill Clinton’s $428 billion year by year GDP growth average. If the economy keeps growing at the same pace, Trump stands to have presided over the fastest growing American economy in modern times by the end of his second term in 2024.

There is no question that President Donald J. Trump has been good for the growth of the American economy so far…

Economic Sustainability and Volatility

Can he keep it up? This is the big question that no one knows the answer to. Trump’s adminstration is riddled with problems from the Mueller probe which questions the validity of his election and even whether or not he is a puppet of the Russian government to daily scandals ranging from affairs and hush money to insider trading and what can probably best be described as economic date-raping where Trump and his cronies are profiting from the use of the power of the presidency. So, there is the question of whether Trump himself will survive – but he is nothing if not a political mixed-martial-arts fighter – his short political history has shown that it never pays to count Donald Trump out – as much as many of us would have liked to.

Also, there is the question of economic sustainability. The stock markets continue scaling giddy heights and reaching new all time highs, the dollar’s strength has thus far worked to our economic advantage, and the fallout from tariffs and leaving trade deals has yet to hit our shores. The Federal deficit is spiking to new all time highs and the loosening of credit and environmental regulations create the dual dangers of inflating new bubbles only to pop them with defaults and of future environmental catstrophe. The student loan crisis is a real and as yet unexperienced pitfall which is coming at some point unless it is addressed – Trump’s administration seems to have no desire to do so. The consumer credit and auto credit bubbles are getting pumped daily. These are just a few of the dangers which sit on the horizon.

And then there is Trump himself – he is nothing if not volatile. One never knows what he will do from day to day whether it is attack a political enemy, negotiate with our enemies, tweet attacks against American companies, or as he once suggested he could do “walk out in the street and shoot someone” – while extremely unlikely, it’s not outside of the range of possibilities because with Trump, nothing is. He could start a war just because he is offended…

The truth is that none of these policies are long term sustainable. Trump is very good for the American economy RIGHT NOW but the big question is whether the economy will implode while he is in office or whether a successor will have to clean up the messes he is creating. Long term, nothing he is doing is sustainable – but most people don’t care about long term. He is actively creating an environment where American workers can compete with Chinese workers and that means lower wages, less bargaining power, longer hours, and less economic power for average working Americans. He is creating an anything goes as long as profits rise business environment. He is shifting the burden of carrying the expense of the United States government with taxes from the wealthy and big corporations to building a huge deficit for the future to deal with. He is actively decreasing the fringe benefits of being American by eliminating the Affordable Healthcare Act, reducing government programs, and taking away protected status from wildlands, forests, and monuments. His policies are contributing to the future degradation of the environment, the exploitation of labor, the continued rise in wealth disparity, and ultimately to the downfall and collapse of the United States as we know it.

Full disclosure here – I am making some money in the stock market from all of this. I trade volatility and I’m buying into companies that are benefitting from the Trump Administration policies. Personally, I generally choose not to invest in oil companies, big banks, or defense contractors for moral reasons – but aside from that, I’m making the most of the chaos and investing in the rising tide while keeping an eye out for the inevitable collapse.

Trump could potentially keep this boat rising for the next six years – but while he is doing that, he will be stripping away everything that makes this country great – very similarly to what President Erdogan of Turkey has done – and with a similar end result.

Conclusion

Trump is very good for growth of the American economy right now – but in the longer term – he is destroying it.

(If you are curious about the 18k Gold Toilet in the picture – you can find that story here)

 

What do you think?

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