A Cushion for the Trump Economy

I strongly suspect the U.S. will be in recession at some point during Trump’s first term due to the Federal Reserve once again messing up monetary policy (which I think is inevitable at some point in the next five years, at least). Thus, I expect the U.S. labor market to worsen again (though far more mildly than in 08-09 due to the absence of bubbles). However, I also expect the economy to start growing reasonably fast again reasonably soon. Why? A revival of productivity growth. Since 2011, a key headwind for the Obama economy has been a lack of productivity growth, especially in manufacturing, generally associated with the slowdown of world trade and the reduction of the 2000-07 offshoring of less productive sectors to China.

Notice that manufacturing productivity has already started rising again, beginning in September 2016. Sadly, it still has not surpassed its previous peak. But it will, more likely than not this year.

Note, my prediction would be the same under a Hillary administration. Presidents do not have much of an impact over the economy. Though it does seem the total sum of the Trump’s team’s economic knowledge is a tad better than that of HRC’s, the difference is not huge, and both have similar assets and deficiencies about them.

Author: pithom

An atheist with an interest in the history of the ancient Near East. Author of the Against Jebel al-Lawz Wordpress blog.

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