President Trump, you surely could not have wanted your partial government shutdown, your tariffs, your corporate tax cuts and your war on undocumented immigrants to hobble economic growth and to hurt farmers, factory workers, airline passengers, government contractors, retailers, Coast Guard members and F.B.I. agents. But the economy can take only so many bad policies.
A $19.4 trillion economy is losing momentum as fast as your approval ratings. Growth is slowing down in spite of a $1.5 trillion tax cut that is blowing up the deficit while helping companies like Goldman Sachs, which earned $2.5 billion in the fourth quarter, thanks in part to a $467 million tax benefit.
Government workers have already missed an average of $5,000 inpay because of the shutdown. These unpaid federal employees may represent only 0.53 percent of all payrolls, according to the economist Ian Shepherdson, but because these employees have above-average earnings, the harm to the economy is greater than that proportion might suggest. Presumably, they'll get back those wages at some point. Even then, some of those earnings will have to go to pay late fees on credit card and mortgage bills that are piling up. None of that money, though, will compensate for restaurant meals not eaten; movies not seen; Frappuccinos not sipped; or supermarket runs not made, at least not by Coast Guard members who are heading to food banks instead. Those sales, and sales taxes, are lost forever.
The shutdown is also aggravating damage you've already caused. You must have thought your audience was just a bunch of hayseeds when you told the American Farm Bureau Federation this week that "we're setting records together for farmers and for agriculture." Farmers are losing sales to China, Mexico, Canada and elsewhere because of your trade policy. They've lost customers who may never return. And now, because of the shutdown, they can't get services ranging from crop financing to vital information about commodity supplies from the Department of Agriculture. Farmers have crucial decisions to make before the spring planting season begins, and the shutdown is keeping them in the dark. And in the red.
Will that mean they'll start buying less machinery, too? The manufacturing sector could be running out of steam. Both the Institute for Supply Management's manufacturing index and the Empire State manufacturing index, leading indicators of activity in that segment, turned sharply lower amid concerns over tariffs and a slowing Chinese economy. Nor can the steel industry that you tried to protect with tariffs escape market forces. Prices for steel have fallen drastically after the industry first tried to use the tariffs to raise prices. Customers don't take kindly to being price-gouged, and they adjust their purchasesaccordingly.
Damage from the trade war with China is spreading. China's economic growth is expected to slow to 6.3 percent this year, the worst in decades, in part because of the Trump tariffs. This means China buys less from every nation. The export-focused German economy slowed last year because of diminished exportsto China. Any sluggishness in Germany reverberates around Europe and then ultimately makes it way across the ocean. The World Bank has already taken its global growth estimates down a notch — and the risks are increasing.
Even what seemed like sweet news to your supporters in the mining industry has turned sour. The "war on coal is over," your former Environmental Protection Agency boss said, pulling back pollution regulations that protect our air and our health. He was right; it is over, and coal lost. Production in 2018 is expected to have hit a 39-year low. Utilities, out of concern for expenses more than over the environment, continue to replacetheir coal-burning plants with cleaner, cheaper gas-burning units, as well as wind and solar generators.
Your immigration policies aren't working out so well for the economy, either. Last year, many business owners, in both high-tech and low-tech areas, complained that they didn't have enough workers. We need more immigrants, not fewer.
New York Times editorial board, January 18, 2019.
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January 22, 2019
Post Script. This is a painful summary of what #TrumpShutdown is doing to the economy....
