Under Trump Uncertainty Is The Only Economic Certainty

Last week the masses finally got the memo that the Trump Recession was coming. People like (and certainly not limited to) me have been saying that for some time now. I’ve looked beyond just leading economic indicators and the timeline. Today I’d like to give a recap and look at just how bad Trump has been bad for both the global and American economies. Let’s explore.

The event that triggered things last week was when the rate paid on long term investments dipped below that paid for the short term. When a financial institution is unsure as to the future they want to stay short term. That doesn’t speak well for long term growth or confidence.

Former House Speaker John Boehner and I agreed on almost no economic policies. The one thing we agreed on, and anyone with any economic sense agrees on, is that markets hate uncertainty. Trump’s “economic policy” is the very definition of uncertainty. (Unfortunately it is coupled with ignorance and a good dose of apathy.) Monday’s policy and Tuesday’s reality are often 180 degree opposites.

Perhaps the best example is a farmer. The farmer knows it will cost X dollars to plant, grow, harvest and deliver a crop to market. They must make X+ dollars to make a living. If their market and therefore their price is a major question mark the whole process is no longer a business; it is a gamble.

In his trade war with China Trump has often imposed tariffs which he insists the Chinese not the American consumers are paying. That is patently untrue but he has Bubba believing it; for the moment anyway. The other day he announced a new round of tariffs only to rescind them a day or so later. His stated reason is that he didn’t want to interfere with Christmas shopping. If, as Trump claims, the American consumer is not paying the tariffs therefore the retail prices wouldn’t go up. So what negative effect could the tariffs have on Christmas shopping? Having a difficult time reconciling that? You are not alone.

Trump is constantly changing the rules of the game. How does a CEO or independent business person do long term planning when they do not know what the rules will be in the future. Why build a new plant (or buy new farm equipment) when you don’t know if the President is going to destroy your market?

I remember learning the importance of the American economy on the world stage a long time ago. The illustration we were taught is that if the American economy sneezes the European economy catches a cold. To add to the spectacle Trump has been on a mission to destroy every trade deal his predecessors made, especially if their name was Obama. He is destroying American credibility in the process. Why would a foreign country have confidence in entering into a trade agreement with a country so politically unstable that it may simply walk away from the deals it made in a previous administration? How do you build a new factory with a lead time of several years when its economic viability may have a four or eight year “shelf life”?

We enter marriages in a ‘till death do us part deal fully well knowing that a significant percentage will not last that long. Still, nobody would get married if it had an expiration date of January 20th four years from that date. Especially in industrial situations it is longer than four years from inception to the first production let alone first profit.

By the calendar alone we are overdue for a recession. Trump’s lack of a clear and coherent economic policy only exacerbates that situation. The Trump Recession is coming; it is only a question of when and how bad. You can’t drive home drunk every night without ever getting arrested, hurt or both. That much is certain.

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One thought on “Under Trump Uncertainty Is The Only Economic Certainty”

  1. Trump has always referred to himself as “the king of debt”. Well, what does that mean? It means that he has been living off of other people’s money. We are the other people. And he doesn’t care anymore about the American people than he has ever cared about the people off of whose money he has lived all his life, and the people who he has defrauded all along the way.

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