Part of America Is Still Forgotten Under Trump

To win election, Donald Trump made great promises of "Making America Great" again to the part of the America's populace that is often described as "forgotten."  In addition, Trump used open racism and religious extremism to play on the prejudices and insecurities of these so-called forgotten Americans. namely working class whites without a college education.  They took Trump's promises as true and by a narrow margin in three states they voted for Trump and handed him an Electoral College victory.  Trump still panders to racists and religious extremists, but the economy that he brags about has largely left them behind and some of his policies - think his self-created trade wars - have been financially devastating, especially to Mid-West farmers. As the 2020 presidential campaign ramps up, the question of the hour is whether these voters will realize that they have been played for fools and while Trump may fly in for his rallies (where he often stiffs the localities for expenses incurred), but meanwhile the economic death spiral for many continues - even as the wealthy have reaped a bonanza in increased wealth. A column in the New York Times looks at this reality seeming lost on those Trump has forgotten outside of his Nuremberg style rallies. Here are column excerpts:

Trump declared in his State of the Union address that “our economy is the best it has ever been.”

Put aside the Trumpian hyperbole, and it’s true that the economy is strong — and that this is critical to Trump’s chances for re-election.

Yet we live in two Americas, and there’s another side of the country that Trump didn’t mention — one that helped elect him but that he has neglected since. In the other America, suicide rates are at a record high in the post-World War II era, and more Americans die every two weeks from drugs, alcohol and suicide — “deaths of despair” — than died in 18 years of war in Afghanistan and Iraq.
 These deaths are symptoms of a larger economic malaise for working-class Americans that predates Trump. It’s not his fault, but neither has he tried seriously to address it; in some ways, especially in health care, he has worsened it.
 Important new research finds that 20 million Americans, particularly those with low levels of education, describe all 30 of the last 30 days as “bad mental health days.”

“These men and women report in effect that every day of life is a bad day,” said David G. Blanchflower, a Dartmouth economist who conducted the research. Blanchflower noted that self-reported happiness in America has continued to fall.

One-third of Americans say that they have been in pain “often” or “very often” in the last four weeks.  Some of the pain probably results from a lack of universal health care. Millions of Americans endure constant toothaches in a way that doesn’t happen in our peer countries.

In effect, we have a bifurcated economy, marked by prosperity for millions of Americans and by a Social Great Depression for millions of others.

It’s strange to make a comparison to the Great Depression, for output is surging. But consider the effect on mortality: Even during the Great Depression, life expectancy rose strongly, while in three of the last four years it fell because of deaths of despair.

We’re used to thinking of a depression as geographic, but this one is demographic. Working-class Americans, often defined as those without a college degree, are caught in a dust bowl.

“The crisis is almost invisible for those with a college degree,” noted Anne Case, a Princeton economist who is an author, with her husband, fellow-economist Angus Deaton, of an excellent book coming out this spring about deaths of despair.

It is these working-class Americans, white and black alike, who have seen earnings collapse, family structure disintegrate and mortality climb. These Americans are earning less on average, adjusted for inflation, than their counterparts back in the 1970s.

“Our story of deaths of despair is essentially a long-run account of destruction of the working class,” Deaton said.

In the 1930s, President Franklin Roosevelt worked hard to address the Depression with the New Deal. This time, Trump in some ways has exacerbated the pain — such as by chipping away at access to health care. Some 400,000 children have lost health insurance under Trump.

It’s true that unemployment has dropped . . . But Case says that even so, almost half of Americans aged 25 and over with only a high school diploma are no longer in the labor force.

Meanwhile, the central fact of America today is not its economic vigor but its profound inequity.

I noted that private wealth has increased by $800,000 per household. It’s similarly true that whenever Jeff Bezos walks into a room, average wealth there shoots up so that each person becomes, on average, a billionaire. Interesting, but not very meaningful.

  Of that $800,000 increase in wealth, very little - if any - is found in working class or middle class households.  No, instead, it has gone to the few top percentages of income households, thereby only increasing inequality. 

Business Confidence In Trump is Collapsing

The Republican Party likes to maintain the myth that it is fiscally conservative and a friend to the business community.  Both are lies as the ballooning federal deficit due to the Trump/GOP tax cuts for the wealthy and the erratic at best Trump trade policies underscore in spades. Now, with the 2020 elections little more than a year away, it appears the economy may be headed for recession even as significant parts of the economy - agriculture and manufacturing - are already in recession thanks in no small part to Trump's trade wars. Making matters worse, the outlook of business leaders is pessimistic due in no small part to the uncertain the Trump/Pence regime casts across the business world.  As one Nobel prize winning economist states "they are facing up to the reality that Trump and his team . . . . have no idea what they’re doing" and are fearful to invest and/or expand their businesses when don't know what curve ball could be thrown there way at any moment. Here are highlights from a New York Times column that looks at the gathering clouds:

Last spring Donald Trump and the people around him probably thought they had a relatively clear path to re-election.

On one side, it looked as if Trump had weathered the threat of politically fatal scandal. The much-awaited Mueller report on Russian election intervention had landed with a dull thud; the details were damning, but it had basically no political impact.

At the same time, Trump was convinced that he could run on the basis of a booming economy.

What a difference a few months make.

Everyone is following the impeachment story, and I don’t have much to add, except a warning: At every stage of this process, Republicans have proved willing to engage in stunningly bad behavior. Did anyone foresee Wednesday’s physical attempt to disrupt the House inquiry? The point is that as the net closes in, the G.O.P. response is likely to be uglier than you can possibly imagine.

What’s getting less attention, understandably, is the way the Trump economic narrative is falling apart. . . . important parts of the economy are lagging. Manufacturing production is down over the past year; combined with weakness in shipping and very hard times in agriculture, around a fifth of the economy is effectively in recession. In particular, manufacturing employment has been falling in Michigan, Wisconsin and Pennsylvania, states that chose Trump by tiny margins in 2016, giving him a win in the Electoral College despite losing the popular vote.

And overall growth, while still positive, is definitely slowing: “nowcasts,” which use partial data to estimate what official economic data will say when it’s eventually released, suggest an economy growing at an unimpressive annual rate of less than 2 percent. . . . this is not good news for Republicans.

You can see this collapse several ways. One is through surveys of business executives, who spent Trump’s first two years being very bullish, but have now become remarkably pessimistic.

You can also see it in the bond market, a much better indicator of economic expectations than the stock market. . . . 10-year bond rates have plunged, from more than 3 percent last year to 1.75 percent as I write this. The last time we saw this kind of plunge was 2010-11, when investors finally realized that recovery from the Great Recession was going to be slow and painful, not a repeat of “morning in America.”

So what happened to the Trump boom? The collapse in confidence began late last year, when it became clear that Trump was serious about waging trade war on China; it continued as evidence accumulated that the 2017 tax cut was a big fizzle, doing basically nothing to boost business investment and providing at most a brief sugar high to overall growth.

But the truth is that even pessimists expected the tax cut to do more good, and the trade war less harm, than they did. Why have things turned out so poorly? One answer, to which I’ve subscribed, is that in addition to its direct impacts on U.S. exports and businesses that rely on Chinese suppliers, the trade war has created damaging uncertainty. Businesses that rely on global supply chains won’t invest for fear that the trade war will get even worse; but businesses that might move in to replace imports also won’t invest for fear that Trump will eventually back down.

I suspect, however, that there’s even more to the story. Business interests spent a long time in denial, but now even they are facing up to the reality that Trump and his team are very strange people who have no idea what they’re doing — and the uncertainty that reality implies.

Next year’s election should be about Trump’s betrayal of his oath of office. Realistically, however, it also matters that the economy probably won’t be his friend.

The Trade War’s Risks for Trump

For years now the Republican Party has used appeals to racism, homophobia and evangelical Christian extremism to convince voters in their base to vote against their own economic interest.  Donald Trump has embraced this playbook with gusto and ramped it up to new levels, with outright appeals to white supremacists and Christian dominionists. Now, the question is whether his ill-conceived trade wars and the damage being wrought on agriculture and manufacturing in swing states be enough to finally convince some in the GOP base to rethink their blind support for Trump.  Given that Trump's Electoral College win - a demonstration why that antiquated system needs to be repealed - was roughly 70,000 votes spread across three states, even a slight erosion in farming and manufacturing worker support could prove fatal.  A piece in Larry Sabato's Crystal Ball looks at the situation and the evidence that at least so far, policies embracing racism, homophobia and religious extremism are still working for Trump.  Here are excerpts:

Trump has taken a hard line on trade. He’s imposed tariffs on steel, aluminum, and on a wide variety of Chinese products. In response, China has slapped tariffs on American products.

If Trump’s trade strategy poses risks for the economy, it also poses risks for his reelection strategy. That’s because farmers and manufacturers in battleground states are facing retaliatory tariffs on their products.

To measure Trump’s degree of risk, we analyzed 14 battleground states — 10 of them won by Trump in 2016 and four won by Hillary Clinton.

Eight of the battleground states we studied are reliant on manufacturing and agriculture to a greater degree than the nation as a whole. In descending order, these eight states are Iowa, Wisconsin, Michigan, North Carolina, Ohio, Minnesota, Texas, and Pennsylvania.

Notice anything about these states? Trump won seven of them in 2016, making the core of his Electoral College majority at special risk from fallout from tariffs. Especially notable is the inclusion on this list of the three narrowly divided states that made his victory possible: Michigan, Pennsylvania, and Wisconsin.

[O]nly one state saw agricultural production grow between 2017 and 2018 — Georgia. The other 13 states saw declines in the agricultural sector during that period.

And the worst-performing agricultural states? Six of the seven worst-faring farm states were won by Trump in 2016 — those same three cornerstone states (Michigan, Pennsylvania, and Wisconsin) plus Arizona, Florida, and North Carolina . . . Two other Trump states, Iowa and Ohio, also fared worse than the national average.

[T]he most recent data available — the annualized change between the fourth quarter of 2018 and the first quarter of 2019 — shows a broad manufacturing slowdown.

Ten battleground states saw lower annualized manufacturing growth in the first quarter of the year than they saw during the previous full year. These included seven Trump-won states, three of which were the pivotal ones — Michigan, Pennsylvania, and Wisconsin.A key question, though, is whether any of this will matter electorally. When we checked with political observers in these states, they said that losses among farm and factory families pose a risk to Trump’s electoral prospects, but they added that there’s little hard evidence of that happening yet.

University of Northern Iowa political scientist Christopher Larimer — who calls this “the fundamental question heading into the 2020 election” — said he has “yet to see anything” that would suggest these voters are going to abandon the GOP in significant numbers. That could change as more polls are fielded as the election approaches.

One unknown is whether Democrats make a play for these demographic groups, said Terry Madonna, director of the Franklin and Marshall College poll in Pennsylvania.

“The Democrats still have not been regularly courting the working class, except for an occasional foray into places they predominate,” he said. In Pennsylvania, he said, Democratic gains seem more likely to come from Republicans in suburban areas turning against the president.

Depressed turnout among disaffected farm and factory voters might be more likely than actually switching rural and blue-collar Republicans to support whoever the Democratic nominee is.

Especially in the three pivotal states of Michigan, Pennsylvania, and Wisconsin, it wouldn’t take much to shift the balance.

Craig Gilbert, a political journalist for the Milwaukee Journal Sentinel, has reported extensively from the swing rural areas of western and southwestern Wisconsin. He said he hasn’t encountered any sign of mass defections from the historically strong levels of Trump support in 2016, but he added that it remains an open question whether more modest shifts could occur.

Bottom line: Trump’s trade policy could weaken his support in key states, but for now at least, there’s little evidence of widespread damage to Trump’s standing among the farm and factory demographics. Until further notice, cultural issues appear to be taking prominence over economic ones.

Economic Storms Gather in Swing States

Abandoned factory.

As approval of the impeachment inquiry continues to rise, Donald Trump has continued his standard approach to everything: lie and and try to distract, even lying about knowing Rudi Giulian's newly arrested Russian cohorts. Meanwhile, his self-created trade wars are wreaking havoc on the economies of the swing states critical to Trump's re-election hopes: Michigan, Wisconsin, and Pennsylvania.  Particularly hard hit are manufacturing - which Trump promised to restore - and, of course, farming which is being further damaged by climate change in the Mid-West, a phenomenon that Trump claims is a Chinese hoax. A piece in Politico looks at the growing economic storm clouds hanging over states that, if they reject Trump, could end in his defeat in 2020, assuming his isn't removed from office before then.  Here are highlights:

Donald Trump shocked the world and won the White House in 2016 on bold promises to bring greatness back to the industrial Midwest.

But his promise now faces a brutal reality: The U.S. manufacturing sector is spiraling into recession, victimized by Trump’s trade wars and sagging confidence among corporate executives who have little idea how to plan for an uncertain economic future.

Unless Trump can ram his revised North American Free Trade Agreement through Congress and cut a deal with the Chinese to erase historically high tariffs, he may find it difficult to repeat wins in states like Michigan, Wisconsin and Pennsylvania that drove him into office in 2016 by the narrowest of margins.

“Manufacturing is in recession right now. This is what all the data show,” said Torsten Slok, chief economist at Deutsche Bank Securities. “And everywhere I go in the world, the fear I hear is that we are going to be driven deeper into recession because this is all about uncertainty caused by the trade war.”

Broad national gauges of manufacturing are already troubling, countering some of the president’s claims of success. The Institute for Supply Management manufacturing survey . . . . has shown a declining sector two months in a row, recently hitting a level not seen since the end of the Great Recession due to a sharp drop in new export orders. Respondents to the survey blamed a trade war that has reduced export demand and increased costs for parts used in manufacturing.

At the county and state level, the environment looks even darker for Trump.

The negative news on manufacturing comes as senior Chinese officials arrive in Washington for another round of talks aimed at reaching a deal with Trump that would reduce heavy tariffs that have imposed significant economic costs on both sides.

It’s unclear whether Trump would accept such a deal that could eliminate tariffs and relieve some of the pressure on the manufacturing sector, and he told reporters Wednesday afternoon that he didn’t think China was lowering expectations for a trade deal.

It’s not certain that even such a deal will reverse negative trends in the manufacturing sector, which overall is a small slice of the American economy but an important part of overall corporate profits. Manufacturing also supports all kinds of ancillary service-industry jobs that suffer whenever factory work declines.

Overall, the growth in manufacturing jobs — one of Trump’s biggest promises — has essentially vanished. After adding as many as 25,000 new manufacturing jobs per month last spring, the numbers began to decline as the trade war with China intensified. In September, the sector lost 2,000 jobs. That number could grow for October when striking GM workers are included.

“To the extent that the manufacturing slowdown continues unabated, which is likely unless there is a de-escalation in trade tensions, the electoral map could be more difficult for President Trump and Republicans in 2020,” Deutsche Bank analysts wrote in a report this week.

The still-strong national employment numbers, with a jobless rate at a half-century low of 3.5 percent, can also tell a misleading political story. . . . But dig deeper and large numbers of the jobs are coming from uncontested states like California. States that make up Trump’s coalition are not doing quite as well.

“It’s an existential political risk,” said Moody's Analytics chief economist Mark Zandi. “He won the election based on carrying Pennsylvania, Michigan and Wisconsin and appealing to those voters who work in manufacturing or related industries. He promised he would bring manufacturing jobs back and his policies are doing the precise opposite. Jobs losses are mounting, particularly in those states.”

Trump’s trade battle with China has also slammed rural states where farmers have been unable to sell soybeans and other products into one of their biggest markets. Trump has responded by moving to dole out $30 billion in bailout money and praising “patriot farmers.” Many of the states hit by the drop in agriculture exports like Indiana, Nebraska and Kansas are solid Trump country. Others like Iowa could be a problem for the campaign.

Trump is also trying to make inroads in Minnesota, where he narrowly lost in 2016, and plans to hold a rally there Thursday night. But Minnesota is feeling pressure both in manufacturing and agriculture, as are states like Iowa and Pennsylvania.

And it’s not clear that even a quick and limited deal with the Chinese could reverse some of the major negative trends in manufacturing.

Ultimately, Trump’s reelection could come down to three states — Michigan, Pennsylvania and Wisconsin — where manufacturing trends are working against him and where he will need a sharp turnaround. “In those three key states, the economies are weakening. Unemployment is low but rising,” said Zandi. “If it continues to rise between now and Election Day it will be very difficult for him to recover. The trend lines don’t look good.”

The trend lines may not look good for Trump, but are a net positive if they end up removing the orange cancer from the White House.