Saturday, September 28, 2024

Biden-Harris economy grew even more than we knew, while Trump policies = stagflation, job loss

In addition to the strong positive revisions in disposable income (which I detailed in this post), we found out this week that economic growth under the Biden-Harris Administration was even stronger than we already knew it to be.

For 2019, the increase in real GDP was revised up 0.1 percentage point, from 2.5 percent to 2.6 percent, primarily reflecting an upward revision to consumer spending (Table 2).

» For 2020, the decrease in real GDP was the same as previously published at 2.2 percent, primarily reflecting an upward revision to government spending that was offset by a downward revision to consumer spending.

» For 2021, the increase in real GDP was revised up 0.3 percentage point, from 5.8 percent to 6.1 percent, primarily reflecting an upward revision to consumer spending.

For 2022, the increase in real GDP was revised up 0.6 percentage point, from 1.9 percent to 2.5 percent, primarily reflecting upward revisions to consumer spending and nonresidential fixed investment.

For 2023, the percent change in real GDP was revised up 0.4 percentage point, from 2.5 percent to 2.9 percent, primarily reflecting upward revisions to consumer spending, nonresidential fixed investment, and residential fixed investment.
This revises away most of the inflation-related decline in real GDP that was originally reported for the first half of 2022, and shows a very good track record of growth in the Biden-Harris years.

American incomes are also significantly higher than what we originally knew, especially in the last couple of years.

However, I'll note that much of that increase in income for 2023 comes from even-larger corporate profits vs increases in wages and salaries. Which tells me that corporations can afford to return to the higher pre-GOP Tax Scam tax rates that they would face in 2025, and that a whole lot of 2022's and 2023's inflation was indeed greedflation.

Know what could derail this good economy and unwind these trends? ELECTING DONALD TRUMP. Especially in light of a new analysis which says Trump’s plans (or “concepts of plans”) would cause significant damage to the US economy and re-ignite inflation.
The Trump agenda would cause weaker economic growth, higher inflation and lower employment, according to a working paper released Thursday by the Peterson Institute for International Economics. In some cases, the damage could continue through 2040.

“We find that ironically, despite his ‘make the foreigners pay’ rhetoric, this package of policies does more damage to the US economy than to any other in the world,” the Peterson Institute working paper from researchers Warwick McKibbin, Megan Hogan and Marcus Noland concluded.
Well that doesn’t sound like a good idea at all. Why would Trump’s policies be such a self-inflicted wound?

Even in a “low” scenario where only 1.3 million undocumented workers are deported and other countries opt not to retaliate against Trump’s tariffs, employment (measured as hours worked) would fall by 2.7% in 2028 relative to a baseline forecast, according to the paper.

Inflation would climb to 6% by 2026, the researchers found. By 2028, consumer prices are [cumulatively] 20% higher…..

The researchers also modeled a “high” scenario that incorporates retaliatory tariffs from other nations and 8.3 million undocumented workers getting deported. In that scenario, employment would be 9% lower than baseline by 2028 and inflation would surge to 9.3% by 2026. GDP would be 9.7% lower than otherwise.
Here’s the report for yourself. Feel free to dig in for yourself and see what other tidbits you find in it.

I do note a couple of charts that show the effects on specific industries, and one industry in particular that could lose a lot of jobs is durable manufacturing.

Now, the argument with tariffs and deportations by Trump is that the workers that are left will make more money, and that more items will be made in America because it becomes more cost-effective to do so. But in order for that to work, you need demand for all products (US and otherwise) to stay near where they would have been, which means that people aren’t thrown out of work, and businesses can still grow.

The Peterson Institute says that wouldn’t happen, and the price spikes would be an extra hit to a whole lot more Americans beyond the 4 million+ (based on 2.7% decline in baseline employment) thrown out of work.

Sure, the Peterson Institute has a neoliberal point of view, where they think free trade is best for everything and that nothing should be done to protect American industry or workers. So have a grain of salt with this report. But we also lived through Trump's tariffs and border controls of 2018-2019, when US manufacturing fell into recession and this was a common headline in our part of the country.

We're coming up on the 5 year anniversary of Trump's AG Secretary telling farmers to "get big or get out" at the World Dairy Expo, by the way.

Let's not return to the bad old days of Trump-onomics and keep going in the right direction with Kamala Harris and other Dems, shall we?
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