What are the prospects for economic growth under Trump?
- The developed world, in particular, has experienced a dramatic reduction in manufacturing jobs
- The only bright spot is Trump’s plan for a jobs-creating infrastructure bill
- The president-elect will eventually discover the harsh truth, probably the hard way
President-elect Trump’s campaign promise to create more jobs in the United States has galvanized many voters who felt that globalization and unfair trade agreements have hurt American workers.
This is a worthwhile objective (Democratic presidential candidate Bernie Sanders’ too) considering the staggering loss of almost 8m manufacturing jobs since 1979 (the peak for American manufacturing jobs).
The decline of manufacturing jobs is a worldwide phenomenon, independent of economic policies enacted in Washington.
The developed world, in particular, has experienced a dramatic reduction in manufacturing jobs. Many of these jobs migrated to China.
However, China is not the only culprit. Technology is also causing the elimination of manufacturing jobs.
The United States, China, and Germany, among other major economies, are undergoing an economic slowdown, that is reverberating across the world.
Every year, millions of jobs are created and lost in the United States.
While Trump is pleased that carmaker Ford is planning to create 700 jobs in the U.S., Macy’s announced that it will close 68 stores and cut 10,000 jobs.
During the Obama presidency, 11m jobs were added to the American workforce. Many economists, rightfully or not, still question whether presidents play a critical role in expanding the economy.
WILL THE STRENGTHENING OF THE DOLLAR HURT THE ECONOMY?
Another adverse factor is the strengthening of the dollar, which is at a 14-year high. This might hurt U.S. manufacturing, making American goods more expensive to buy on the global market.
Furthermore, Congressional Republicans and Trump have pledged to repeal the Affordable Care Act (Obamacare). According to the Congressional Budget Office, the repeal of the law would increase the federal budget deficit by $353b over a decade.
The only bright spot is Trump’s plan for a jobs-creating infrastructure bill that might actually create jobs with decent pay. However, his plan is all about tax breaks and “privatizing” infrastructure projects.
Hopefully, Trump’s plan will evolve into a more genuine and meaningful infrastructure spending bill that would potentially provide millions of jobs.
Trump’s bravados may embolden and cheer up many Americans, but his hopeful messages may not materialize due to several unfavorable factors, both domestic and global.
The president-elect will eventually discover the harsh truth, probably the hard way (then again he probably knows it). Overpromising is like hallucinogens that over time lose their potency and leave the users in a far worse condition.
However, unfortunately, many users might experience hallucinations by just using placebos….