The looming Trumpcession
Orange man bad (for the economy).
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The July jobs numbers, released last Friday, could not have been much bleaker.
The economy undershot the projection of 100,000 new jobs significantly, adding only 73,000. Even worse, the numbers for May and June were revised down by a ghastly 285,000 jobs. That means that the economy created only 33,000 jobs in May and June combined â anemic growth the likes of which we havenât seen the final months of President Trumpâs first term. In contrast, under President Biden, the economy gained some 420,000 jobs in May and June 2024.
Trumpâs response was as unhinged and authoritarian as youâd expect. In an unprecedented move, he abruptly fired Erika McEntarfer, the head of the Bureau of Labor Statistics, and as an excuse lied that the jobs numbers were âphony.â
Of course, the numbers were not phony. They were actually exactly what youâd expect given Trumpâs relentless effort to destroy the robust economy left to him by Biden.
The president usually has limited control over the economy, with downturns being caused by events beyond their control. In this case, however, Trumpâs policies are directly responsible for job losses, rising prices, wavering confidence, and a speedrun toward what looks like stagflation.
Flashing red
The jobs report is bad news. But itâs hardly the only sign that the economy is heading to a dark place.
The overall unemployment rate last month ticked up to 4.2 percent, but more worrying is the increase in Black unemployment to 7.2 percent. Thatâs the highest rate since December 2021, when the economy was still struggling to emerge from the covid pandemic. Black workers are often the last hired and the first fired. As a result Black unemployment rates often shoot up first when a serious economic downturn is on the horizon.
The economy is also struggling with stubborn inflation that will only be exacerbated by Trumpâs inflationary tariff policies. Current inflation indicators are all bad. The personal consumption price index has prices rising 0.3 percent from May to June, which means theyâve risen 2.6 percent from last year.
Usually, a hot job market can mean increased inflation, while lower inflation can lead to slower job growth. In the final years of Bidenâs presidency, the US managed to achieve both low inflation and record low unemployment. But Trump has reversed that. And now we may be looking at the worst of both worlds â stagflation, when jobs stagnate and prices spike.
The last time the US experienced serious stagflation was in the late 1970s under Jimmy Carter â and thatâs a big part of what led to Carterâs landslide loss to Reagan in 1980.
Most presidents do not want to suffer Jimmy Carterâs fate and so attempt to avoid massive unemployment, high inflation, and especially the combination of the two. Trump, in contrast, has been laser focused throughout his term on killing jobs and jacking up prices.
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While Trump claims that his senseless tariff fetish will somehow lead to awesome trade deals, the truth is that heâs simply imposing massive arbitrary taxes on consumer goods. Taxing goods raises prices. The nonpartisan Yale Budget Lab has concluded that the effective tariff rate under Trump is around 18.3 percent, the highest since 1934. That means that households will be paying an extra $2,400 each in taxes to the government on purchases.
Tariffs are a regressive tax â they are hardest to absorb for lower income households, since the taxes are a higher percentage of their income. Even worse, lower income households tend to be especially dependent on imported goods, which are often cheaper than domestic products. Ernie Tedeschi, director of the Yale Budget Lab, told NPR that Trumpâs tariffs seem âalmost tailor madeâ to harm lower income workers the most.
Republican own this
Thereâs been a great deal of discussion about the damaging effect of tariffs on the economy. Less discussed is the extent to which Trumpâs massive attack on jobs is likely to increase unemployment.
In an effort to purge the federal government of anyone who might disagree with him, Trump has (often illegally) eliminated at least 59,000 federal workers â and the number may be significantly higher than that. The administration has also cut billions of dollars in federal funding for science, the arts, and education.
Nor is that all. Trumpâs pointlessly vicious attacks on visitors to the US â both immigrants and tourists â has frightened away people who donât want to spend their vacation in an ICE holding cell. A recent estimate suggested that, while tourism is booming around the world, the US industry is likely to lose $29 billion because of Trumpâs policies.
ICE raids are also damaging US agriculture; employees are afraid to show up to work for fear that they will be hunted, detained, and even killed by government thugs. Again, itâs difficult to measure the impact, but a government assault on agriculture seems designed to slow the economy and raise food prices, adding to the array of economic woes.
Trump can deny, but he canât hide
Trump could respond to bad economic news by adjusting his policies. He could stop targeting tourists. He could lower tariffs. He could release billions in congressionally allocated funding. He could rehire federal workers. All of those would directly address unemployment, inflation, or both.
But of course Trump is doing none of those things. Instead, he just uses bad news as an excuse to whine and rage and get more and more fascist. Again, he has fired the head of the BLS. Heâs also demanding that Jerome Powell, the head of the Federal Reserve, lower interest rates. Thatâs an ugly attack on the Fedâs independence. It also ignores the fact that, while lowering interest rates can reduce unemployment, it can increase inflation.
Among other things, Trumpâs attacks on government data and the Fed hurt the economy by creating uncertainty. The markets have plunged after some of Trumpâs attacks on Powell. The chaos is also weakening the dollar.
Trump seems to believe that if he falsifies jobs numbers, bullies the Fed, and generally seizes all power and prevents criticism, he can make Americans believe that prices are low and jobs are plentiful. But no matter how much he rants and threatens, people are going to notice when prices at the grocery store go up and when they are fired from their jobs. And they are very likely to blame Trump and Republicans â especially when they boast about cutting jobs and throwing people out of work in sectors theyâve decided they donât like.
We donât know how bad the economy will get. Nor can we know how much a recession or stagflation will harm Republicans at the ballot box. One thing is clear, though â no administration in history has done so much so quickly to immiserate the American people. And no administration since Herbert Hooverâs seems less willing to change course as it barrels over a cliff.
Thatâs it for today
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âAnd they are very likely to blame Trump and Republicans â especially when they boast about cutting jobs and throwing people out of work in sectors theyâve decided they donât likeâ, a million people died because he botched Covid response and they still elected him!
Clots and prayers.