By David Harsanyi
Friday, November 15, 2019
This Thursday, Federal Reserve chairman Jerome Powell
told the House Budget Committee that there was “no reason to think, that I can
see, that the probability of a downturn is at all elevated.” Not every economic
indicator is perfect, but wages are rising (especially on the lower end),
unemployment is still at historic lows, and markets are booming.
You might remember that only a couple of months ago,
there was a torrent of stories cautioning us about the imminent downturn. Some
of the scary coverage, as Robert Shiller warned, consisted of “self-fulfilling
prophecies.” Some seemed almost giddy about the political prospects of a
downturn. Others just said what they felt. “I feel like the bottom has to fall
out at some point,” Bill Maher explained at the time. “And by the way, I’m
hoping for it because I think one way you get rid of Trump is to crash the
economy. So please, bring on the recession.”
One of the nation’s leading doomsayers has been the New York Times’ perpetually mistaken
Paul Krugman, who warned shortly after the 2016 election that Trump’s victory
would trigger a global recession “with no end in sight.” We could file that
under “post-election hysteria,” but as late as April of this year he was still
telling crowds that the bond-market signals predicted “a pretty good chance of
a recession sometime in the next year or so.” And he has kept this going all
year:
February 11: Paul Krugman expects a global recession this
year, warns “we don’t have an effective response.”
August 1: “Why Was Trumponomics a Flop?”
August 15: “From Trump Boom to Trump Gloom”
September 5: “Trumpism Is Bad for Business”
October 3: “Here Comes the Trump Slump”
October 24: “The Day the Trump Boom Died”
A couple of weeks after the Trump Boom expired, CNBC
reported that “October job creation comes in at 128,000, easily topping
estimates even with GM auto strike.” This cycle has been going on for three
years.
(My favorite Trump-era Krugmanism, though, is when the
esteemed economist explains away his bad predictions by claiming that the
economy’s successes are really just driven by instances of his own political
preferences playing out — “Impeaching Trump Is Good for the Economy,” “The
Economics of Donald J. Keynes,” and so on.)
At some point, of course, doomsayers such as Krugman are
going to be right. In the past 60 years the United States has been hit with
recessions in 1960–61, 1969–70, 1973–75, 1980, 1981–82, 1990–91, 2001, and
2007–09. History says we’re probably due for another one soon. When it hits,
Krugman will blame tax cuts, unfettered capitalist greed, a dearth of
regulations — and maybe climate change, or whatever hobbyhorse he’s riding at
the time. MSNBC hosts will hail him as a seer.
Much like most economists, I have no clue what the future
holds. But I do know that Barack Obama, who oversaw the slowest recovery in
American history, was constantly being given credit for averting disaster by
adopting smart policies (read: spending). Years
after the bailouts — which is to say years of D.C. gridlock in which the former
president, by his own admission, couldn’t enact any of his preferred economic
policies — Democrats were still claiming that short-term first-year spending
fixes were the impetus for growth.
There’s a more rational explanation: Washington stopped
helping.
Voters vastly overestimate the role that presidents play
in economic growth, to be sure. But Trump-era job creation was a far tougher
task, since he was operating with less room for job growth than his
predecessor. And considering the (self-inflicted) trade wars, political
turmoil, and foreign-policy concerns that have dominated much of his first
term, conventional wisdom tells us we should be struggling. Yet it’s clear that
we’ve had a pretty resilient economy.
What has Trump done? The two things Paul Krugman hates
most: Regulatory rollbacks and tax cuts. And yet here we are.
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