An Open Letter from Former CEA Chair Jared Bernstein to President Trump

Trust me, Mr. President. I've been there: your economic agenda is making bad vibes even worse.

When it comes to the economy, you’ve got a serious problem. I know, because we had a similar problem when I worked in the White House, though I think yours is even worse. What’s more, you brought this on yourself. The bad news is that you’ve made a series of big, own-goal kicks. The good news is that I think you might be able to repair at least some of the damage.

Here’s your problem:

No matter how much you tell them otherwise, the American people are not happy with your economy. You can try to hide from these negative vibes all you like by hunkering down in your alt reality, but it won’t work. You can fire the messengers, swear up and down that the numbers are all wrong, you can blame the Federal Reserve, the Democrats, the Bidens.

It doesn’t matter, and it won’t work.

It’s your economy right now, and though you inherited solid economic conditions, you’ve squandered that inheritance, and the people know it.

As I said, I’ve been where you are. During the Biden administration, we were posting strong economic numbers, with job and growth rates you wish you had.

• In 2024, monthly payroll gains added 168,000/month; you’re coming in with less than half that: 75,000/month so far this year, decelerating to a paltry 29,000 over the past three months.

• You’ve got unemployment slowly ticking up now, as recent job gains are too slow to employ folks coming into the labor market. Underemployment (U6: the broadest measure of labor market slack) hit 8.1% last month, its highest since late 2021. The Black unemployment rate—6.1% in our last month in office—just hit 7.5%, up sharply by 1.5 points since just May of this year.

• Your policies have birthed a low-hire, low-fire job market. That second part is clearly good; we don’t have recessions without layoffs. But we can see the damaging effects—both in living standards and in vibes—in the rising duration stats for time spent unemployed:

  

• Real consumer spending has been the key driver of the economic expansion you inherited. It was up 3.1% in our last year in office. Under your watch, it’s up just 0.5% (annualized thru July).

Though most folks don’t know these statistics, they know something is very wrong. You don’t have to watch MSNBC to learn this. Here’s the Wall St. Journal ed board from over the weekend:

After going through some of the same numbers I cited above, the WSJ adds these reflections from actual managers trying to run businesses in your economy (my bold):

Nearly all industries on the Institute for Supply Management survey last month reported a slowdown from tariff uncertainty. “All decision making is currently dominated by tariff considerations,” a retail company said. A transportation equipment maker noted: “This current environment is much worse than the Great Recession of 2008-09.”

You need to come out of your shell wherein everything is always fine as long as you’re in charge—and full-on carnage otherwise—and take in what’s really happening here. Your trade war, DOGE cuts, and deportations have killed hiring. This isn’t just bad for working households, it’s also bad for the overall economy: The full-employment economy you inherited was in a virtuous cycle in which tight labor markets and falling inflation supported real wage gains, which in turn supported strong consumer spending (which represents almost 70% of nominal GDP).

Which brings us to the vibes. They’re bad now, and probably even worse than when we were in charge, when that virtuous cycle was in play. Yes, the stock market’s going up on your watch, and that’s good, especially for market-dependent retirement accounts. But we had that, too, and it doesn’t do squat for vibes.

How bad are the econ vibes right now? Your tariff-induced inflation is not just bad economic policy; it’s rocket fuel for bad vibes. Every poll shows that the No. 1 economic concern right now is affordability, and tariffs make things less affordable. This Axios doc collects the bad news for you:

• Trump's approval rating on inflation and cost of living currently sits at -24, nearing Biden's lows during the peak of the 2022–23 price surge….

• 52% of U.S. adults say the economy is "getting worse," while only 24% say it's getting better and 20% say it's about the same, according to The Economist/YouGov polling.

• Poll after poll shows Trump's Big, Beautiful Bill Act — which extended his 2017 tax cuts while slashing Medicaid and other safety net programs — is the most unpopular major piece of legislation in years.

• Trump campaign officials acknowledged the PR crisis in a closed-door briefing on Capitol Hill this week, where they urged Republicans to refer to it as the "Working Families Tax Cut Bill."

• Inflation is creeping higher as Trump's trade war continues to reorder the global economy, with some analysts predicting drug shortages and an uncertain holiday season.

• The labor market is softening: Layoffs are rising, and the number of unemployed workers now exceeds job openings for the first time since April 2021.

• The housing market is on shaky footing, with interest rates relatively high and supply stagnant.

• Manufacturing was supposed to be the biggest beneficiary of Trump's tariffs. Instead, economic activity has shrunk for six months running and now the sector is shedding jobs.

C’mon, man. Do you really think renaming your awful budget bill is going to help with any of this? You’re making the biggest, rookie, messaging-101 mistake there is: telling people they’re better off than they think they are.

That’s a bit weird, because your lizard brain rarely screws up like that. I suspect that’s because you’re “smoking your own supply,” i.e., you really believe the junk you tell people, like tariffs don’t raise consumer prices but they do boost factory employment.

But look at this figure, Mr. President. It shows that factory jobs were already losing ground under our watch, and that’s continued this year, including -12,000 in August. Meanwhile goods inflation—the sector most vulnerable to tariffs—has reversed course and is climbing.

Now that I’ve got your attention, like I said, there’s a pretty surefire way out of this mess: declare the trade war over. Claim victory, since I know you can’t resist that (note that you’ll also get ahead of the Supreme Court on this, as there’s at least a chance they’ll observe the law and end this tariff debacle for you; and, yes, you have other, more cumbersome ways to initiate new tariffs. Don’t do it!).

Same with deportations and DOGE cuts. Just say it’s over, you won, and you’re going to stop badgering the Fed and stocking the board with “your people” because, hey, it’s all good!

Businesses and consumers would breathe an audible sigh of relief and economic certainty would again be upon the land.

To be sure, your work would not be done. Stopping own-goal kicks alone won’t improve the vibes. You’ll still have to shift from renaming agencies to actually trying to do something about thing, housing costs, for example. But you’ll be on the right track.

Mr. President, I know you’re up here at the Contrarian, and you should know I’ve got a PhD in vibenomics. So, I’ll just say “you’re welcome” and let you get started fixing what you’ve broken.

Jared Bernstein is the former chair of President Biden’s Council of Economic Advisers. A version of this post appeared on Jared’s personal Substack over the weekend.

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