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WE’RE ALREADY SEEING SIGNS THAT TRUMP IS TANKING THE ECONOMY  
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Timothy Noah
December 23, 2024
The New Republic
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_ Your stock portfolio may grow. But say goodbye to next year’s
raise—and maybe even your job. Donald Trump’s election provides a
useful occasion to examine the difference between what rich people
want and what constitutes a thriving economy. _

Trump Economy Begins in 2025, Image credit: Sachs Realty Podcast -
Real Estate, Economics and More

 

The stock market, which is where rich people live, has been climbing
since Election Day. On November 6, the day Trump was declared the
winner, the Dow rose 3.6 percent
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the S&P 500 scored its biggest gain in two years; and the world’s 10
richest people, nine of whom live in the United States, saw their
wealth increase by a combined $63.5 billion
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Over the month of November, the S&P 500 rose 5.7 percent
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Stocks fell in December after the Fed signaled it would ratchet back
rate cuts, but as of December 18, U.S. equities were still up 29
percent
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the year.

The_ _economy, on the other hand, is starting to falter. The Fed
ratcheted back future rate cuts because Trump keeps threatening to
slap tariffs on every conceivable import. On Friday, Trump boasted
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Truth Social: “I told the European Union that they must make up
their tremendous deficit with the United States by the large scale
purchase of our oil and gas. Otherwise, it is TARIFFS all the way!”
The United States is the largest exporter of oil to the EU already,
and the European Commission previously floated
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idea of buying more liquefied natural gas from the United States
(because it’s cheaper than Russian LNG). So it’s quite possible
Trump is merely trying to take credit for something that’s happening
anyway. But if Trump aims to push the EU further, he could start a
trade war.

Everybody knows that Trump is all about reviving American
manufacturing. But the National Association of Manufacturers, whose
president, Jay Timmons, praised Trump
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2017 as “a true champion for our industry,” forecast in
a postelection survey
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in 2025 capital investment would grow only 1.6 percent. “That’s
not particularly robust,” Timmons told
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Mark Niquette. In a December forecast
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another manufacturing trade group, the Institute for Supply
Management, predicted a more robust increase of 5.2 percent. But
that’s compared to an increase of 5.6 percent this calendar
year—when, Niquette pointed out, high interest rates inhibited
investment.

Vanguard is an investment management firm and therefore part of the
rich-people ecosystem, not the economy. But in addition to forecasting
market trends it forecasts bona fide economic trends, and late last
month it said
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domestic product growth, which has been 3 percent or higher
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supposedly ruinous economic policies of President Joe Biden, will fall
to 2.7 percent next year under Trump. And that’s assuming Trump is
mostly blowing smoke about tariffs and a mass roundup of immigrants.
If he _isn’t _blowing smoke, says Vanguard, then GDP growth will
be more like 2 percent.

Like the Fed, Vanguard is worried that Trump’s trade policies will
increase so-called “core” inflation, or inflation minus volatile
food and energy costs. On Friday the Commerce Department’s personal
consumption expenditures index, which the Fed and Vanguard both prefer
to the Labor Department’s consumer price index, showed
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inflation to be 2.8 percent in November, same as it was in October.
Trump promised
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July that if voters elected him “inflation will vanish
completely.” But Vanguard says that “inflation will remain above
2.5 percent for most of 2025.” Even Trump has stopped pretending
he’ll conquer inflation, telling
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Cortellessa in his _Time_ “Person of the Year” interview,
“It’s hard to bring things down once they’re up.”

In that same July speech, Trump said, “Incomes will skyrocket.”
But according [[link removed]] to
the website Trading Economics, which compiles statistics from official
sources, nominal wage growth will fall from its October level of 5.6
percent (and a projected 5.4 percent for the final quarter of 2024) to
4.7 percent, 3.5 percent, and 2.5 percent during the respective first,
second, and third quarters of 2025. If Vanguard is right that
inflation won’t fall below 2.5 percent next year, then real wages
will either stop growing next year or start falling. Under Biden, real
median and real average wages have been
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years.

Of course, these are all predictions; we can’t know precisely
what’s coming in 2025. But my own view is that these respectable
calculations err on the side of optimism. The pros predict that the
economy will fare somewhat worse. Freed of their imperative to give
every benefit of the doubt, I believe the economy will tank. Your
investments may appreciate in value, which is all the oligarchs really
care about. But this time next year, I doubt your boss will promise
you a raise for 2026. Instead, he may tell you to clean out your desk.

_[TIMOTHY NOAH is a New Republic staff writer and author of The Great
Divergence: America’s Growing Inequality Crisis and What We Can Do
About It
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* Donald Trump
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* Economy
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* stock market
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* inflation
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* MAGA
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* 2024 Elections
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* the 1%
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* stock portfolio
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* manufacturing
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* Tariffs
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* Oligarchs
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* Trade
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* job creation
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