A Short Word: The Smoke And Mirrors Economy

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Only a fool could look at the way things are today and claim that the economy has improved under Trump. Has the labor force participation rate improved at all since Trump took office? Has the federal funds rate improved above stimulus levels?

No, and they haven’t, because Trump’s economy is a farce.¬†Thanks to the corporatists infesting the Republican Party, the investment bankers and fund managers have made out like bandits in the last couple of years, but the stock market isn’t the economy.

The prices in the stock market can be manipulated by rumor, propaganda, and even political rhetoric, and it has been Trump’s trade wars and ignorant tweets, not necessarily economic conditions, that have caused large declines in stock prices.

The stock market is a “betting zoo” that only cares whether stocks will go up or down. Investors are always trying to find some way to get a return on their investment, which is why the stock market recovered months before the end of the Great Recession.

As far as the stock market is concerned, investors don’t really care about what’s going on in the economy. They only care about prices, of which the economy is one of many factors. If the economy had no impact on stock prices, they wouldn’t care at all.

The day Trump took office, black labor force participation was at 62.3%. It has been above 62.3% since January 2017. It has been below 62.3% since January 2017. But, as of the latest labor data available, it is at 62.3%. Things are not better. They are the same.

So, aside from the stock market, the rest of the economy isn’t doing that well. While a few uneducated, white, blue collar workers in the Rust Belt and in coal mines may have been put back to work, any job gains there have been offset by job losses in downstream.

The structural problems within the economy (uncompetitive labor prices and minimum wage) remain, even if Trump has dealt with some (but not all) of the regulatory impediments (ex: ObamaCare).

The trade war with China isn’t going to end before 2021, because the Chinese don’t believe Trump is going to win reelection. That’s why they walked away from trade talks and are unlikely to seriously engage in any talks with the Trump White House.

For all of Trump’s bluster about how well things are going in the U.S. economy, the fact remains that Trump’s “record economy” isn’t consistently creating the jobs needed to improve labor force participation or to sooth the concerns of the Federal Reserve.

Worse still is that this president continues to make it ever more likely that the Democrats will win the White House in 2020 and hold it in perpetuity, which would ensure that the structural problems in the economy become even further entrenched.

Trump is clearly not the answer to America’s woes, but the Democrats aren’t either.


Liberty is For The Win!

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