“We were a dead country, and now we have the hottest country in the world,” Donald Trump told press at his visit to his Scotland golf club a couple of weeks ago. Hottest? “Dumpster fire,” is more like it. Rather than “booming” as Trump claims, the Trump economic scheme is bombing, as we saw on Friday.
The anemic jobs report (the economy added only 73,000 jobs in July) was disastrous on multiple fronts. “Revisions cut down the jobs growth originally reported for May and June by a combined 258,000. That left May as having added just 19,000 jobs and June just 14,000,” the Wall Street Journal reported. “The unemployment rate rose slightly to 4.2% from 4.1%. The number of people unemployed for 27 weeks or longer increased to 1.83 million from 1.65 million in June.”
Naturally, Trump received the evidence of his failing policies, and promptly fired the messenger, the well-respected economist who headed the Bureau of Labor Statistics (BLS), Erika McEntarfer. Doing so will only deepen concerns about the accuracy of economic data coming out of the Trump regime. Reaction was swift and brutal.
Paul Schroeder, executive director of the Council of Professional Associations on Federal Statistics, told The Guardian,
Not only does it undermine the integrity of federal economic statistics, but it also politicizes data which need to remain independent and trustworthy. This action is a grave error by the administration and one that will have ramifications for years to come.
Former car czar Steve Rattner called the firing “appalling and almost unimaginable” while Sen. Ron Wyden (D-Ore.) slammed Trump’s move as “the act of somebody who is soft, weak and afraid to own up to the reality of the damage his chaos is inflicting on our economy.”
University of Michigan economics professor (and frequent guest of The Contrarian) Justin Wolfers likewise noted, “Firing the BLS Commissioner — the wonk in charge of the statisticians who track economic reality — is an authoritarian four alarm fire.” He added, “It will also backfire: You can’t bend economic reality, but you can break the trust of markets. And biased data yields worse policy.”
Former chair of the Council of Economic Advisers Jason Furman warned, “Policymakers like the Federal Reserve Board members need reliable data — as do financial markets, including investors lending the United States trillions of dollars to finance our huge budget deficits, and businesses making decisions.” While there are hundreds of civil servants at BLS, “The bad news is that it is not impossible to corrupt data. And either way, the confidence investors and the public have in the data could suffer a serious and senseless blow.”
Meanwhile, inflation continues to ratchet up. “The Federal Reserve’s preferred measure of inflation picked up last month, the latest sign that President Trump’s tariffs are starting to bleed through into consumer prices,” the New York Times reported. Consumer prices were up .3% for the month and 2.6% year-to-year, while “core prices” (excluding food and energy) rose 2.8% year-to-year.
Consumer sentiment remains depressed in comparison to a year ago. The Michigan Consumer Sentiment Index inched up 1.6% (1.0 point) to 61.7 “but still reflects historically low levels of optimism. Consumer sentiment has fallen by 7.1% (4.7 points) compared to a year ago.”
To top it off, the Dow plunged over 500 points on Friday (about 1.2%) while the S&P 500 fell 1.6% and the Nasdaq Composite dropped 2.2%. It’s unclear who Trump will try to fire in response to those numbers. (He might start with his Commerce Secretary Howard Lutnick, whose reputation for dissembling stands out even in the Trump crowd.) The dollar, as one might imagine, also tumbled.
At the root of much of the economic turmoil are Trump’s long-discussed consumer taxes (“tariffs”). The Financial Times headline got points for accuracy: “Donald Trump reignites global trade war with sweeping tariff regime.” Slapping tariffs on key trading partners including Brazil (50%), Taiwan (20%), Canada (35%), India (25%), Switzerland (39%), and even the EU (15%) amounts to the worse self-inflicted economic disaster in modern times. When the full effect ripples through the economy, Friday could reasonably be branded Trump’s Black Friday.
“America’s effective tariff rate is due to rise to 18% on August 7th, according to the Yale Budget Lab, nearly eight times the prevailing rate last year, and back to levels last seen in the Depression,” The Economist reported. The nonsensical argument that Trump is “winning” because he is imposing tariffs is born of sheer economic ignorance. “Years of experience show that tariffs do not harm the sellers of goods as much as they harm the buyers. The more the president raises tariffs, the more his own compatriots will be deprived of choice at low prices.”
Trump’s compulsive dishonesty about the state of the economy (and…everything else) has taught us to assume that whatever comes out of Trump’s mouth is rubbish. Unfortunately, we will soon have to disregard the once-reliable economic data coming from government offices. And that—along with the inane trade war, rising unemployment plus inflation (raising the threat of stagnation), and crony capitalism—may convince a great number of investors and trading partners to go elsewhere. Perhaps someplace a little less “hot,” where economic numbers are reliable and the rule of law intact.
That didn't take long. At the beginning of January, the Biden Administration had built the U.S. economy to be the most robust in the world, the price of groceries be damned. Now this fool has tanked us in a matter of months, and things aren't going to get better. They're trying to steal the mid-terms, and if they get away with that... I shudder to think.
MAGA math. The same guy who claimed, "You know, we’ve cut drug prices by 1,200, 1,300, 1,400, 1,500%,” said Trump.