Yahoo Finance This week in Trumponomics: The recovery stalls
At least 44 times during his presidency, Donald Trump has tweeted about “jobs, jobs, jobs!” He even boasted about job gains in June and September, when the economy was clawing its way back from the coronavirus recession.
But Trump has gone silent on the economy, preoccupied, apparently, with his election loss and the prodigious fundraising opportunity it presents. Trump was essentially invisible this week, with no meaningful public appearances and a Twitter feed filled with bogus pleats about election fraud, and little else.
To be fair, there isn’t much economic news to brag about. Employers added just 245,000 jobs in November, which would be a good number in normal times but is a bad number now. Employment is still 9.8 million jobs below where it was in February, before the coronavirus pandemic exploded.
Employers added 10.8 million jobs from May through August, erasing about half the job losses caused when businesses abruptly shut down in March. But job gains have slowed drastically since then, in opposite proportion to the tragic autumn surge in coronavirus infections and deaths. November’s job gains were the weakest since the recovery began, by a lot.
“The labor market is losing momentum,” economist Ryan Sweet of Moody’s Analytics wrote in a Dec. 4 analysis. “The initial phase of the recovery has mostly run its course, and the next phase will be more difficult.” At the November pace of job growth, the economy wouldn’t be back to pre-pandemic employment levels until 2024. And December job numbers will probably be worse.
Trump is perpetuating the fiction that somehow he didn’t lose the election in November. But he’s behaving like the lame-duck president he is—losing interest and checking out. In the weeks before the election, Trump called for Congress to pass a huge stimulus bill. But he’s silent on that too, now that he won’t be in office to take credit for it. Whatever, is how he probably feels.
The economy needs help and it’s not getting it. This week’s Trump-o-meter reads FAILING, the second-worst rating.
Is Congress getting serious?
The perverse upside to the gloomy November job news is Congress finally seems to be getting the message. After four months of posturing and bloviating, leaders in the House and Senate say they’re finally getting serious about a new stimulus bill, and they really mean it this time, no fooling. There won’t be a giant $2 trillion or $3 trillion package like House Speaker Nancy Pelosi said she wanted in the fall. But by the end of the year we might get more help for the unemployed and people at risk of eviction or mortgage default. Maybe a little something for states and cities that will have to fire cops, firefighters and teachers if Washington doesn’t help.
The latest plan looks like an effort to piggyback stimulus aid on ordinary budget legislation Congress has to pass by Dec. 11 to keep the government functioning. Stimulus could come piecemeal: More weekly unemployment aid of $300, say, in the upcoming spending bill, with promises of more later. Democratic and Republican leaders are still fixated on the two Jan. 5 Senate runoff elections in Georgia, which will determine which party controls the Senate. Neither side seems willing to play its full hand until that’s over and the balance of power in Congress is clear.
Piecemeal aid may not be enough. Economists at S&P Global Ratings this week estimate GDP growth with and without a $1 trillion stimulus bill by the end of 2020. Either way, they expect a decline in GDP heading into 2021. With more stimulus, they expect a modest dip in output, with a real recovery picking up steam around the spring or summer. Without stimulus, they say, we’re headed for a clear double-dip recession, with recovery taking a lot longer, as this chart shows. The baseline forecast includes stimulus, while the downside forecast does not:
Incoming President Joe Biden weighed in on this week’s job numbers, sounding more presidential than Trump. “It’s a grim report,” he said in a speech on Dec. 4. “We remain in the midst of one of the worst economic and jobs crises in modern history.” Whatever Congress does by the end of the year, Biden wants more once he takes office on Jan. 20. He might not get it, but at least he’s aware of the problem.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: rickjnewman@yahoo.com. Click here to get Rick’s stories by email.
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