Trump can talk up the economy, but Wisconsin isn't feeling it

You may have heard our President is heading to Titletown this evening. Inside the Resch Center, I will imagine Trump will bring up the surprisingly strong GDP report that hit on Friday, which showed the US economy grew at a 3.2% annual rate in the first 3 months of 2019.

That figure even exceeded the Atlanta Fed’s predictions of a 2.7% growth rate, and it was relatively broad-based, with no one sector adding more than 0.9% of that growth.

At the same time, there’s some caution with that report. You can see that in that chart that inventories have grown for each of the last 3 quarters. And with consumer spending slowing down, that’s not a good combination, which leads this former top Obama economic advisor to give a warning for the coming months.

PDFP includes two components: consumption which was weak this quarter, slowing to 1.2%. And non-inventory investment which was also weak at 1.5%.

— Jason Furman (@jasonfurman) April 26, 2019

Now maybe March’s strong bounce-back in retail sales takes some of that surplus off the shelves. But keep an eye on upcoming reports, because there has to be a point where the current direction changes for either inventories (which will hurt the economy) or consumer spending (which will help it).

One other thing that stands out in the GDP report is that figure benefitted from surprising tame inflation in the first 3 months of the year.

The price index for gross domestic purchases increased 0.8 percent in the first quarter, compared with an increase of 1.7 percent in the fourth quarter (table 4). The PCE price index increased 0.6 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.8 percent.

Really? The $2.75 a gallon I see at the gas pump is telling me something very different on the inflation front. And it flies in the face of the Consumer Price Index reports, which showed prices rising at an annual rate three times faster what the GDP report indicated (0.6% for 3 months, 2.5% annually).

The low reported inflation number covers for the fact that nominal GDP had its slowest growth in almost 2 years, and is basically at the trend that we have seen for most of the last 3 years (the post-tax cut rush of Q2 last year is the exception)

With Trump heading to our state, it seems important to specifically look at Wisconsin’s economic performance since Trump took office at the start in 2017. Particularly since national media constantly says in its all-too-frequent profiles of blue-collar white guys in the small-town Midwest that many of these people voted for Trump out of hopes that their economic fortunes would stop stagnating.

An example of this meme comes from this article based out of Crawford County, Wisconsin a few weeks after Trump took the oath of office.

“If you ask anybody here, we’ll all tell you the same thing: We’re tired of living like this. We’ve been railroaded, run over by the politicians and run over by laws,” said Mark Berns, leaning through the service window in the small-engine repair shop downtown that he can barely keep open anymore. He drives a 14-year-old truck with 207,000 miles on it because he doesn’t make enough profit to buy a new one.

Berns watched Trump’s first days in office half-hopeful, half-frightened.

“He jumps on every bandwagon there is. It’s a mess,” he said, bemoaning what he described as a quantity-over-quality, “sign, sign, sign” approach to governing. “I just hope we get the jobs back and the economy on its feet, so everybody can get a decent job and make a decent living, and have that chance at the American dream that’s gone away over the past eight or 10 years.

That article ended with this memorable scene involving Bernard Moravits, who works 10,000 acres filled with cows and crops near Bloomington, Wisconsin.

Moravits isn’t sure Trump is going to “Make America Great Again” for farmers. But he feels he had to take the gamble.

“He might have us in a war in two weeks,” he said. “We’ll come back here in six months, drink a 30-pack of Busch Light and talk, because no one knows now what’s gonna happen.”

He laughed, then shrugged and pantomimed rolling the dice.

So what have Wisconsinites like Bernard Moravits gotten in exchange for rolling the dice on Trump in 2016? The most farm bankruptcies in the US and nearly 60 dairy farms closing a month, in no small part due to plummeting prices that are fallout from Trump’s tariffs.

And off the farm, job growth in Wisconsin is slower than it was before Trump got into office, and has fallen near 0 in recent months. That’s in stark contrast to the country as a whole, as job growth has been on a slight rebound over the last year.

What I wouldn’t give for Trump to say something to Scott Walker (who will be at this clown show in GB on Saturday), and have it be along the lines of “Hey Scott, things are going so well in America, why isn’t Wisconsin keeping up? You’re making me look bad here!”

And while Scott Walker and WisGOP were exceptionally destructive, Wisconsin is far from the only state in the middle of the country to be lagging. Check out all of the states in the Midwest with a job growth rate of 1% or below in the last 12 months.

Which means if Donald Trump talks up the economy on Saturday, he’s setting himself up for a backfire now and for the next 18 months. Trump is telling a story that is far too rosy for what we will likely see for 2019 as the stats catch up to the rising prices and stagnating job and wage growth that is the reality in much of America. And that’s doubly true in the flatlining states that he needs to hold onto to have any chance of staying in office after 2020.

The rubes attending this weekend's hate rally may not care about this, but most Wisconsinites recognize the state has fallen even further behind during the 2+ years Trump has been in office. They'll also remember the checks that many of us just had to write to the IRS because of the provisions in the Trump/GOP Tax Scam. So if Trump tries to sell “look at how much better things are than when I took over,” every Sconnie that’s not a weak-minded MAGAt will ask “What are you talking about? I’m not seeing it here.”