"This is exactly what I voted for" is the chant from the MAGAverse. "Donald Trump's Tariffs are working". "Just look at how much money has been collected due to tariffs". Tariffs are money that could have been used to employ more workers and increase productivity. That money is now going into government coffers instead of the economy and the Government is spending lots more money on building a paramilitary agency which will enforce Trump's fantasy of total control. We are paying Donald Trump to build himself a personal army of gunslingers who will do his bidding in a quest for power while we are poorer and have fewer jobs. And less security. "This is exactly what I voted for!" What could go wrong?
It strikes me that there is an ongoing slippage error in commentary (not per se this one) collapsing MAGA hard-core voters into all voters who voted Trump
Silver Bulletin decomposition on poll aggregation basis provides a useful benchmarking of what the component support and opposition is in his table "How strongly do Americans approve or disapprove of Donald Trump?" (https://www.natesilver.net/p/trump-approval-ratings-nate-silver-bulletin scoll down - doesn't seem to do paragraph links or I am just a primitive dummy...)
40odd% strong disapproval
27odd% (seems band is 25-30) strong approval
15-17% weak approval
9-10 weak disapproval
Of course national so maybe material sub-national geographic variation that we should all now understand is really important in electoral geography terms
Given this, given the trend lines one can generally draw that there's a hard-core 25-30% that are heavily cultural resentment motivated and probably unmoveable (equally the 40 odd percent strong oppo is probably unmoveable by MAGA). there's a 15-20% that's moveable. That;s the play
and given the trend lines on inflation, on econoomic state, probably there is leverage if the opposition doesn't insist on fighting on the one piece of territory where he's got only slight net negative - immigration....
(if... which for better or worse seems to not be within the Proggy Left cap to not take the bait, but hopefully wrong)
Trump may be "only" -5% (occasionally close to -10%) on immigration, but on issues like Garcia and ICE raids on US businesses and detention camps, polls show he's much worse.
The most important thing about these numbers is how vulnerable he is on his strongest issue. Every single time one of Trump's nastier immigration results hits the mainstream news, Trump's approval on immigration gets absolutely crushed. Take a look at the "immigration" line in the chart above. He's doing great -- then *wham* here comes Kilmar Abrego Garcia in April (I remember when Dems weren't sure if they should talk about Garcia, because "immigration was Trump's strong issue". Glad they weren't cowardly about that one.) Miraculously Trump starts to dig out of the hole in May, and *bam* his approval gets punched to hell in June. Something else happens to hurt it even more in July. It has never fully recovered. (I leave the causes of each event as an exercise in Googling.) We can see from the existing line that lower numbers than today's polling remain possible; It would be political malpractice to avoid talking about "immigration" if that means avoiding issues that hurt Trump this badly.
ETA: Also keep in mind that there are a lot of Latino votes at stake 2026 and 2028. I realize immigration was not the killer issue motivating these votes in 2024. That may be different now that we're seeing the real policies.
There is quite a lot of motivated reasoning to arrive at a conclusion that Trump is vulnerable on the immigration issue - absolutely crushed (what numeric value is ‘crushed’) does not show in aggregation in any particularly clear fashion. On economic he is clearly and very evidently weak and in an increasing fashion, notably inflation which was by the data was a core losing point for Biden relative to floating voters moving to Trump. The conflation of Hispanic voters aligning with illegal immigrants has been a Lefty rabbit hole now for years - it is rather political malpractice to continue to engage distract from the subjects which Trump is massively weak on and which drove votes in 24. This rather feels like an ongoing Lefty masturbatory self-servicing to the pre-sold who are already never voting Trump…. like the Democracy in Danger subject. True or not (and I haven't any positive sentiment towards Trump on this front), it is a communication distraction.
Further I rather would focus on what sub-national variation
Crushed means "going from +11% net approval in this issue to -5% or -7.5%". These are big swings on an issue that were major vote drivers in 2024. Moreover, these are issues that are salient *right now*, whereas the immediate negative economic effects of Trump's policies are more limited, and will mostly develop in the future.
The economic effects of Trump are going to hit voters in their pocketbook or they're not. The worst part of Trump's immigration agenda require news coverage. Democratic attention can help a lot there.
The biggest vibe I get from your comment is: everyone's always fighting the last election. In a world where "crack down on immigration" was theoretical and sounded like it might not hurt anyone who lives here, people weren't too motivated by it. But it's 2025 and everything's different, so let's not sit around fighting the last war. (Where I do agree with you is on the sub-national variation. We should be looking at that.)
The economic subjet swings to negative are already orders of magnitude worse, as particularly inflation subject, so again - motivated reasoning.
I am focused on what I see movement on - and where concerns generally are. Cost of living, economy stupid as that 90s phrase went. And a repeat season in season out - humans being what they are. It's rather bootstrapping assertion that somehow a Dem Left item is changing in their favor when it is the most modest negative turn and creeps back up again so long as Trump is not going to overtly neo-fascist.
It takes quite some extended assumptions then to arrive at the idea that somehow the area where Trump in general is best performing (of an overall negative) is the area where Democrats are going to do best, notably where Democrats also are quite distrusted and D discourse has been heavy and continues to be heavy on broadly unpopular outside of their own circles ideas
And I rather would say that unless one is clear where the negatives are flowing from - geographically clear - at merely 5-7% negative on national average, one is setting oneself up for quite some self-deception in electoral college and electoral geography terms.
Trump is threatening to send troops to my city next week, so Trump being neo-fascist is kinda baked into the cake. The truth is that you can do two things at once. Keeping the negative pressure on Trump’s core strengths is exactly how you win.
So far not much pain. Unless you're a manufacturer, caught between tariffs on imported inputs like steel; and retaliatory tariffs on your export sales.
But when the retail inventories of goods amassed in anticipation of the tariffs are exhausted; then Trump's import taxes are going to hit consumers hard. Will those stockpiles get us through Christmas? Hard to say.
But when the massive BBB cuts to Medicaid & Food Stamps kicks in next year, Red states like Iowa--with a 22% Medicaid enrollment rate--are going to be economically devastated. Dozens of rural hospitals--the economic hearts of most rural counties--will be closing. FOX News will undoubtedly be running back-to-back segments on how it's all the Fed's fault for not cutting rates sooner. It remains to be seen whether MAGA voters will buy it, and change their voting habits.
Depends on your definition of reckless. When the BBB knocks roughly 5% of Americans off of the health rolls next year, and they show up at the ER with a stroke or MI without insurance, guess who's going to fit the bill? That's right, you are.
Very generous of you, btw, to take care for the less fortunate out of your own pocket.
The GOP has ordained that the 95% will now carry the healthcare costs of the 5% soon-to-be uninsured.
Most of the Medicaid recipients who lost coverage in 2024's end of Covid unwinding, either re-enrolled in Medicaid, or found other ACA (Obamacare) plans. Mainly because the Biden Admin always put extra effort into ACA enrollment efforts.
Starting next November/December when BBB health funding mandates kick in, it will be largely up to individual states to implement the new paperwork requirements designed to cull the lists, with Red states likely to be more aggressive, sooner.
Red states like Iowa--with a 22% Medicaid enrollment rate--will likely be hit hard economically by the new bureaucratic BBB requirements for healthcare and Food Stamp eligibility.
TV talking heads =/= experts. Of course forecast that IF X sticks Y will happen are also dependent on X actually sticking. Which didn't fully.
But for precision - in the first "Liberation Day" [sic] wave, yes a lot of ships diverted. We had this coming up w clients in our logistics subinvestment.
Since then the on-off tariff pauses have certainly incentivized heavy efforts to stockpile and pull forward buying in one's supply chain. This is virtually broken window territory of economics since stockpiling is ineffecient use of capital (if one can avoid it) but it is mitigating.
Empty shelves probably was never a very good warning - too much in the drama and IF X (fully applied regime) is fully applied (no pauses, no carve outs) which was already taking Trump as too consistent with himself.
Higher inflation, higher prices, yes. That is coming.
Noah, Brad DeLong, Krugman all said back in February the tariff uncertainty alone will kill the economy by this summer. I would like Noah to revisit his posts from earlier this year and make an assessment / scoring of his views from that time. Note that this does not mean that things can and likely will get much worse than they currently are. I do want my center-left economists to be honest and self reflective.
I think we need to avoid either-or thinking, we can be generally certain that excepting a quite small part of the population with some actual economics under their belt, there was a kind of complex mix of Not Believing or benchmarking off what Trump 1 for expected results or experience and then plain not really understanding, taking his assertions / posturing / pitching at face value.
Well... yes although it's a bit of hair-splitting, the importing party I was meaning was not the logistics handler, but actual user (although payer to gov can be indeed the logistics handler).
But it is not really a tax on import substitutes (a cost driver certainly since those substitutes mfg / providers invariably jack up their prices but that's not per se necesarily going to Gov coffers). I think it causes confusion to reference it that way.
But Trump promised prices would come down very quickly. Trump didn't understand the impact tariffs would have on prices and he certainly didn't educate his voters about the impact they would have.
I imagine Trump did understand, I also imagine he thought he would have more bully power to try to rein those increases in (by calling Amazon, Walmart, etc as he tried).
But your point is taken, he promised many things, even if they were conflicting with each other.
Actually if one looks at his operating company track record, one's default should be that Trump did not actually listen to or spend any time understanding effects and he sold himself on his own bluster the foreigners would pay 100%.
He's always been brilliant at self-deception. Makes him a great PT Barnum & marketing (of a certain type) business master, but also makes him a complete catastrophe in operating businesses (i.e. businesses with complex ongoing operations, e.g. industry, or say airlines -see Eastern Shuttle)
Settle? Unfortunately popular capacity at excuse making and self-deception via motivated reasoning will keep this alive until humans no longer exist, until the sun goes red giant...
Hopefully though both on immigration and on tarifs the facile following of no-trade offs superficiality will take a good beating to open up a door for about 10yrs (never more than that) for more rational policy. Maybe immigration reform for enabling some rationalized organized labor-market not refugee-loophole driven policy for example.
I mean sure but Brexit was 5 years ago and the current lack of growth has been since 2010. So you could add in: austerity, aging population, low productivity and energy crisis.
Well vote is 2016 and while full effects only slide in on finalization, certainly from 2016 on there's an effect pretty similar to Trump's on-and-offism freezing investment - really multiple feed in effects.
Pre 2016 certainly have a odd toxic mix to my reading of anti-market Left and "genteel" anti-growth Conservatives paralyzing UK outside of London weighted services dynamism where the global platform w tie into EU market provided growth.
low productivity, lack of infrastructure modernization and reinvestment on real national scale.
Ok so since 2020 UK and France have grown roughly the same amount, Germany is in the pits. Usa has outstripped both of them. So UK growth is in line with Europe whereas USa was outstripping it.
The big issues in the UK are productivity growth, an elderly population and high energy costs. Add on top austerity.
Sure growth would be higher without Brexit but probably not as high as the UK.
All of Trump's crises are based on emotion and cultural strife. There are no issues, there is no policy, there is no solution to his non-problems. Trump didn't have an enemy so he invented one. The enemy within. Now we are all enemies, which is the overarching plan. You can't trust anyone because anyone could be your enemy. Existing in such a society is a miserable prospect.
Yep, you are right on with that observation. It serves to highlight that Trump has successfully divorced economics from culture. And yet, one of the MAGA objections to immigration is stealing jobs from true Americans. Odd, the disconnect.
It’s both. Allowing people to cross over the border is based on cultural values. There are people like me who oppose it based on a belief in enforcing laws. Others feel that breaking laws is fine as long as there’s a good reason. There are also people like MAGA who are fine with their own breaking the law but oppose illegal immigration because they’re racists.
noting really odd about that, this is true globally. Now and historically.
It is clearly a deep human reaction to rapid visual "group change" - our chimp cousins genetic past didn't go away with modern society.
So policy makers really have to be careful on threading a needle - it is pretty clear from European comparator for example that at some level of immigrant flow, native born population backlash kicks in.
A reality that can't be wished away to needs to be mitigated.
Who said anything about race, but "lack of cultural fit" That's bullshit, pure bullshit.
It's about visible and perceptible group change. The Italians and the Irish when they started coming to US in huge numbers were written about in precisely the same ways as now people write about Latinos or Muslims or whatever. Never adopt, bringing foreign habits blah blah blah.
Dressed up bullshit.
Its human tribalism - simple as that - chimpanzee band primative reaction.
Primative and atavistic but it is what it is and pretending otherwise and trying to deny it only creates nasty backlash.
You said VISUAL group change, what else could that be but race?
And yes, there have been plenty of racist people in the past. But that doesn't say anything about what's going on now.
It's quite clear that some cultures easily fit in. Somebody immigrating from UK, Australia, or Canada will fit in REALLY easily. Even though they are the same tribe.
They share the same western values not to mention the same language.
And actually people from Latin America tend to fit in pretty easily as well, granted not as easily as somebody from another English speaking Western Culture might.
If a million ultra conservative Muslim engineers immigrate to the US that may be good for the economy but bad for the type of person who likes to read Noah's writing. Remember Muslim Hamtramck banning pride flags from City Hall after LGBT-Muslim "allyship"?
If a million Russian Neo Nazis or nostalgic for apartheid Afrikaners immigrate to the US would you think that's a positive cultural change?
If a million Hindu IT programmers who are also super casteist immigrate to the US is that a positive cultural change? I don't think so.
While this is of course an illustration of the kind of underlying rationalization that kicks in, the observed reaction across countries, US, EU, UK is that there is some threshold of visible percentage of Not Us where Not-Us = what's coded as "native / the tribe" - visible foreigner there's a reaction.
this qutie leaves aside pretty unrealistic actual cultural change effects.
It looks and feels something reasonably analogous to Brexit which the Brexiters (e.g.Farage, the smarmy twat) bluffed for several years on but has had the predicted economic effects - except humans being basically suped up Chimpanzees are not very good in general at this kind of reflection.
As it takes time for negatives on trade loss to feed through and of course delays and uncertainty along with of course mitigating effects like stockpiling.
Nevertheless the sustained aggressiveness (out of it would appear sheer dumbness) of Trumpies seems to be piling in on effects.
On my agri-logistics side of biz (me personally being more on energy) - we are hearing US side agri-export groups scaling back actions as market losses are kicking in while at the same time new market development has been knee-capped by idiocies like the DOGEers ending up firing something like half of staff needed to get phytosanitary docs so one's stuff can get in overseas. Transversal and broad bungling.
Back in old days in Manhattan (in investment circles) mocked Trump back in the day as he was so flagrantly a PTBarnum bad at actual operational business, his multiple operating business bankruptcies being the illustration. Master marketer to a certain segment, Reality TV PT Barnum - mastery, but operations he's an utter idiot and always has been. And yet doesn't realize that.
In fact I think he literally actually believes every bad turn, every negative development is not in fact his own bungling but people being unfair and mean to him. Really genuinely believes that himself.
I can't say I have always so believed but came to conclusion after some time that one can't be blank slatist - and there's a pot pourri of variable behvior and not-so-variable deep roots that can't just be ignored. thinking up civilisation over 3k yrs didn't abolish 2mln years of evolution in the end, modified certainly but not abolished.
Democrat voters want something for nothing, more social benefits without paying higher taxes. Republican voters want something for nothing, tax reductions while preserving social benefits.
Politicians induge these voters' fantasies to be reelected. Here is the rub:
Intelligent Politicians know that eventually the manure will come in contact with the air moving device, a Minsky Moment. A grand bargain will be necessary. Each party wants to be as well positioned as possible when it becomes essential. The Democrats want to increase spending as much as possible before then. The Republicans want taxes as low as possible before then. Each party wants the best bargaining position. Neither party wants to ward off the eventual crises. Compromise has become a dirty word.
There was a time when Democrats cared very much about a balanced budget, and actually did things about it. Then they got tossed out despite their efforts, and the budget got destroyed by borrowing-based tax cuts. Repeatedly. So they stopped burning political capital on stuff that the GOP would just set on fire.
I see it somewhat differently. Yes, Clinton raised taxes to help balance the budget when he had a trifecta government. The last six years of his presidency, the Republicans restrained spending, the Democrats desire to increase spending, which resulted in a balanced budget.
The Democrats always want to increase spending, no matter the fiscal circumstances.
I mean, we can see everything we want. And I also want to live in a world where a harmonious bipartisan consensus keeps us spending within our means. But an easy way to judge the Clinton and Bush II partisan priorities is to look at the beginning of each new Presidency, which is a good idea because (1) usually the incoming President has an agenda, (2) their party has a majority in at least one house of Congress to enact it.
Using that frame it's pretty easy to understand partisan preferences at that time, since both administrations proposed legislation and then passed it largely on partisan lines:
1993 (Clinton's first term): OBRA-93 cuts spending by $255bn over five years and raises taxes. Every Republican voted against this bill, it was passed with Democratic votes only.
2001 (Bush's first term): Bush's budget increases both entitlement and discretionary spending by over $100bn/year, and included $1.2tn of tax cuts over ten years. The original bill included another $400bn in tax cuts, which was shaved down mainly through Democratic opposition. This passes with majority Republican votes, but some Democratic votes as well.
2003: (Also Bush's first term, and still with a Senate majority). The earlier tax cuts were significantly expanded over unified Democratic opposition, via a 50/51 partisan Senate vote sent through the reconciliation process to avoid a Democratic filibuster. The estimate is an additional $350 billion over 10 years. The Republicans also passed additional spending to pay for the Iraq war, and Bush's proposed Medicare prescription benefits.
So again, looking at the actual evidence before me I cannot concur with the conclusion that "The Democrats always want to increase spending, no matter the fiscal circumstances” or the idea that the Bush/Clinton era Republican Party was in any way concerned with the budget deficit. This stuff all happened years ago and we can look it up on the Internet, so I'm not sure how one goes around carrying such an inaccurate view of history.
Please examine the "Build Back Better" bill that the Democrats attempted to ram through congress with reconciliation. Two courageous Democrat Senators saved us from this spending spree. All other Democrats had no problem voting yes for $6,000,000,000,000 in new spending. Pretending the Democrats are even slightly concerned about fiscal responsibility is laughable.
The Biden BBB was estimated to add $2.4 billion in spending, but a good chunk of it was one-time and short-term spending on infrastructure. Trump's OBBBA adds $2.4 billion of spending, but more of it structural because (unlike infrastructure spending) it's not about an investment, and everyone knows that the GOP will try to lock tax cuts in forever, like they always do.
And to reiterate your point in a more pointed way, "courageous Democrats" exist and "courageous Republicans" no longer do. So nobody opposed the ridiculous nation-destroying deficits caused by OBBBA.
I'm not sure what point you're trying to make. If anything these examples just highlight how *utterly terrible* the GOP has been (and has become) on deficit spending. Why even focus attention here?
I guess they're just hoping that OBBA will magically usher in factories for everything so that the negative supply shock is neutralized. Unclear how you do this without immigrant labor (especially heavy in the construction trades) or with tariffed inputs but this admin is basically in Yolo mode.
I think the most fascinating thing here is the execution - yes the policy proposals are often bad - but the execution even on the policies they want seems subpar. There's literally a minimum of thought and planning that goes into these decisions and they don't understand how anything is implemented or enforced so we get EOs and soon I assume Pocket Recissions every day to make up for that.
Seems pretty bad but I guess the GOP no longer cares about governing or retaining congressional power/checks and balances.
As with his first term the one thing Trump has is the current relative strength of the US economy. It's a bit of a bummer that this will drag out as slowly as it does - something more acute would focus minds sooner and potentially avert a slow erosion. As it stands - it looks like we trudge along (And with deficits this huge I don't know how we get into a recession as NBER defines it).
Exactly on execution as I say in a comment here, in my side of business on agrilogistics, there are now emerging all kinds of bubbling complaints and ratcheting back on market-dev efforts as bungling by DOGE saw firing, e.g. of large swath of needed people for phytosanitary certs to gain market access etc. Self-knee-capping.
I think the tag line here is a little misleading. Few Trump voters understand economic principles (the same would hold true for Harris voters). When the White House proclaims tariff revenues of $8t (on an annual import market of ~$3.5t) they celebrate that Trump's making America rich again by soaking countries that have been getting rich off of us for generations. It appears that these beliefs cannot be challenged by data; when they appear to be it's only a sign that the data is being manipulated by malevolent actors, as Trump tells them. (I presume all Trump voters finished elementary school, but he knows that when he reports he's brought drug prices down 1500% arithmetic will curve like space-time around a black hole.)
Most Trump voters voted for huge tariff revenues and draining the deep state swamp, and the information they're receiving from their trusted sources confirm that's the economy they're getting. Only in that sense, I think, are they getting the economy they voted for. And they're delighted.
The vote on Bidenomics was harsh. The malaise that cost Biden and then Harris approval ratings hasn’t gone away. My economic life didn’t get better with Trump’s election.
The OBBB legislation that passed will not affect most Americans.
The tax brackets didn’t change; small businesses will get to deduct business purchases, but if your supply chain is harming your sales outlook, it won’t matter much.
Tips? A frighteningly small number of people. Frankly, how many waiters and bartenders and barbers were actually reporting their cash tips?
There is little in OBBB for your average worker to get excited about. That won’t be helpful to Trump. Affordability is the issue. Lower rates might help mortgage rates and spur some housing sales. That usually means appliances, furniture, and flooring. But 25% tariffs on cars are going to keep the new car market soft. In short, people are not feeling better; there is nothing coming that will make them feel better. If the trend continues, I expect more malaise.
Democrats can blame tariffs, but they’ll have to give up their love of them. Affordability is an issue, but there is little they can do about it. We’ve experienced a 30% increase in costs since 2021, which is the average I've calculated. I'm thinking about insurance of all sorts, repairs, and parts. I own a home in the North East, and the maintenance of it has ruined my retirement. I blame Biden and now I am blaming Trump. Those prices and costs are not coming down.
I generally agree with Noah. That said, almost any economic policy is better than Biden's sugar high, followed by nearly double digit inflation. And luckily his "Build Back Better" six trillion dollar spending spree wasn't enacted, thanks to only two courageous Democrat Senators. Every other Democrat Senator voted for this unfunded spending orgy.
The worldwide inflation? Which every nation on the planet experienced? And the US had the lowest rate of, compared to any other nation? Damn, Biden is craaazy powerful to have been such a bad president that every other country experienced his Bidenflation.
At most you could maybe attribute a few percentage points of that inflation to pandemic-era fiscal policy, which also includes the stimulus passed in Trump's last year btw. The rest might've had something to do with oh idk the once-in-a-hundred-year pandemic. I agree with the other commenter: this was very clownish of you to say
Biden's fiscal policies poured fuel on the fire, and attempted to pour more fuel on the fire. You don't solve a problem by doubling down, adding to the problem.
Well - Biden Admin jumped on an anticipated unemployment problem that clearly was
(A) mis-understood as Noah has said as a demand issue when there were actually much more supply issues
(B) overweigthed concern (politically speaking at minimum but I think also economically) to trying for full employment while underweighting the negatives of inflation (politically but also to a lesser extent economically).
People hate inflation. Hate it. Structurally politically a bit of unemployment passes better than inflation.
It remains questionable that the Biden Admin keeping thinking for too long they needed a 2008 response to a completely different issue solved 'effectively' the challenge.
Given the unusual and not-in-recent-memory paramters of a pandemic with shutdowns I don't per se blame them heavily on that, but it wasn't either smashing success either.
Our business closed a foundry, which used to employ 100 people with good wages. We were willing to accept financial losses. But we could not hire employees who were paid $1000 per week to sit at home. (regular unemployment compensation plus $600 per week from Biden's giveaway economic policies)
You mean the enhanced unemployment benefit trump introduced and Biden ended. Honestly your memory is bad ... trump introduced all of these policies and spent trillions of dollars on covid spending (more than Biden) and even his Non-covid spending was far higher. Yes democrats also spent on infrastructure and also on covid stuff for a limited time but don't fool yourself into thinking Trump's policies didn't lead to the closing of the foundry (if what you said about the reasons was accurate).
I honestly don't know who started this madness. I do know that Biden kept extending it. We then were forced to close the foundry. We held out as long as we could.
Democrats want to "buy insurance" to "prevent" every possible detrimental outcome, by spending taxpayers' hard earned incomes, or by running up deficits and sovereign debt. Sometimes the costs of this "insurance" is far too high.
I personally know people who never had it so good, never in their lives, for accomplishing nothing during Biden's spending spree. "Free money" is not free.
These are choices. Democrats went for everyone taking higher inflation while keeping their jobs. Trump has gone for a recession where more people will lose their jobs. Inflation will probably stay sticky because unfunded tax cuts and tariffs. Both parties need to get the deficit and debt under wraps and neither party is handling the unfunded portion of economics well.
This is wildly exageratted - and I am not a fan of Biden's actually executed economic policy.
Clearly not "almost anything" would be better as some parts of Biden's work was fine - mostly the industrial inwards investment tax incentives mobilizing private capital.
A lot was ridiculously self-handicapped by wokey everything bagelism.
9%ish hit by both EU and US ... not good but as global clearly not per se Biden as Biden (that said the overshoot in US given a not-so-open-on-traded goods market clearly was heavily influenced by).
A Biden program enacted by B. Clinton could have turned out quite a bit better.
Trump program (to extent it is a program) is obviously mega worse.
Inflation was high because Powell allowed it to be high (rates should've started rising a year earlier), but Biden's stimulus efforts beyond the initial ones certainly didn't help. It's a good thing the student loans gift was shot down too.
The wisdom at the time was that deficits weren't going to cause inflation. It was true until it wasn't. If we want to rewrite history then please include Trump's higher than bidens covid related spending and even his non covid spending on oh tax breaks. It's even worse that trump is doing it again in his second term.
The wisdom on the Proggy Left and adjacents. and some w poltical blidners on at the moment like the historically rather better Krugman & his team transitory blinders
Plenty of centrist economists and financial specialists were flagging that such wisdom was based on assumptions that were not well-founded
Of course certainly Trump I was not innocent but on other hand the 2020 actions at 2020 were more well founded (as in given data at the time) than continuing beyond say Q2 21 if not Q1.
Trump is a walking mess but Biden Admin pushes through 21 / 22 on spending were quite real and quite big errors well beyond the point where it should have been prudently said, "hold on."
Personally I'm someone who would pay down the deficit so I'm always going to be against these policies. Trump has always been a deficit spender. The country was stupid to elect a republican trifecta.
Both policies can be bad. Chances of long term damage from Trump’s policies can be higher because we’re also getting into fights with allies and not just China.
I mostly agree. We need allies in geopolitical affairs. Yet, still, at a fundamental level; sovereign nations have interests, which overshadow friendships.
One needs market scale - we are no longer in the world of the 1950s-1960s where USA was such a large (and undamaged) market that it was the only thing in the world in industrial scale.
USA alone no longer is a sufficient condition for industrial scaling.
I personally was climbing the walls under just Biden Admin for their autistic way of doing the energy policy - rather than grabbing chance for market scale with trade and investment arrangements with our upper-income allies - for industrial scaling that otherwise only China is getting cause they are not 1960s Maoist China but a mega huge real internal market (as Noah frequently points out).
This requires of course Grow the Pie mentality rather than Fight over Crumbs mentality - and a believe in positives of economic growth (which of course the Proggressive Left whatever some small pretenses in fact is de-growth and anti-market).
Tariffs are not advancing those interests because they’re retarded policies that have been tried before and failed. There may be strategic reasons to do so if there are national security implications but there’s always a cost associated with tariffs.
Yes, true. And there are long term costs by hollowing out American manufacturing. We can't forever be a prosperous nation by taking in each other's laundry.
US does very well in manufacturing. It has 4% of the world’s population and 16-17% of the manufacturing output. What you mean is manufacturing jobs, which are mostly lost to automation because manufacturers have moved to higher margin products. This idiotic nonsense that US needs to do things that poor countries do and still remain a rich country, is a fantasy and needs to stop.
It's reasonable to say US hasn't done well in certain segments but my own experience is the US firms that are the equivelent of the German Mittlestand mid-sized industrials tend to be less innovative, much less global market aware. And often have really primitive outdated ideas on developing exports, on trade financing, it's like a timewarp to 1975 sometimes. (okay slight exaggeration)
Perhaps inevitable Big Economy effect that one becomes inward looking and unaware, too self-satisfied with own market
But there could be a legit area of action for US on policy to focus more on upskilling industrial clusters not just in innovtion (and not taking innovation to mean goddamn ITC) but also on international market dev, tools etc.
US manufacturing hasn't been hollowed out - and not by imports. Noah has some good work on this.
What has been hollowed out is 1950s-1960s type labor intensive mfg at low efficiencies.
Automation and capital for labor replacement
and US on small-medium sized biz level is pretty shit at being aware of global markets, its fairly pathetic, too inwards looking autistic.
Upscaling and having a model like the German Mittlestand in industry is badly needed but also US small-mid operators need to get their heads out of their US asses. I operate both US and international, and American mfgs are amongst the least reactive, the least aware of even using trade tools (1960s era thinking) so that they can sell well - in fact much of the time I think US is stuck in a dream that we can rewind the world to 1950-60s
This an on average obvioiusly there are good exceptions.
Of course domestic side things like how fucking painful it is to get new build permitting, the whole accumulated bureacratic cruft since the 1970s is a major drag as is the Warrenites strangling of commercial banking focused on their power agenda and focused on supposed banking abuses of consumers, ignoring small and mid sized business and the kind of long-term funding that industiral asset heavy companies need
False assertion - it the data are showing Trump approval on economic steadily going down, with inflation concern going up notably in the Independent (i.e. not-hard-partisan IDing) category.
And inflation itself has only just started to tick back up, buffered by the stockpiling, so the wider popular effect of re-acceleration hasn't even yet really kicked in.
It is not all cultural, that is evident. Working class broadly hit by ~2 yrs of elevated their-core consumation / cost basket inflation got mad. As they did in Europe etc. Nothing strange there, nothing faked, not per se cultural (other than the evident human mental model that consistently unconsiously more heavily weights near-term loss in pain and impact versus weighting of gain - profound mental bias in humans*).
"People" = some fraction of MAGA yes, but excessive extrapolation from a hard core minority to People is an analytical error and self-deception.
(*: which on an evolutionary basis rationally makes sense if you're evolving one meal away from starvation for millions of years)
The anger may not yet be serious where you live, but on this side of the Canada-US border, it is already quite different. We all know that as Captain Foghorn Leghorn steers the Titanic into the iceberg, deliberately this time, that this is not going to end well. Economics is an imperfect science, but a science it is, and clearly, your Col. Bonespurs prefers alchemy. Our two economies are joined at the hip, and so when you go under, so will we. Unfortunately, because of relative size, we go first.
The raid on the Hyundai/LG battery plant is really curious and I hope it's based on some real criminal wrongdoing and isn't just part of some weird bullying by the administration.
The operation/allegations have striking parallels to a raid on a BYD plant in Brazil earlier this year. In that case, there were charges of Chinese plant owners holding worker passports to prevent free movement and keeping workers in abusive/slave like conditions at the plant. Similar to the Hyundai/LG battery plant, the BYD plant was under construction and not yet operational. The fact that this was a long investigation coupled with claims of coming criminal charges makes me wonder if this is as much about working condition/treatment of workers as it is about immigration. Time will tell.
I really hope this isn't just about messing with South Korea and setting an example to other companies that they're not welcome, which will thwart efforts to import advanced technologies so we can copy (steal) them.
"But there’s a reason why [rate cuts from the Fed] won’t fix everything that’s wrong with the macroeconomy. Rate cuts work by boosting aggregate demand."
That IS the way they work, but the problem is that there has to be enough "aggregated" demand to stimulate sectoral and product level demand where sticky prices threaten to create unemployment of resources. They work by generating more inflation. Maybe that's a tradeoff we want to make, but it is a cost of having fewer immigrants working and the supply shocks from the deportations and tariffs.
"This is exactly what I voted for" is the chant from the MAGAverse. "Donald Trump's Tariffs are working". "Just look at how much money has been collected due to tariffs". Tariffs are money that could have been used to employ more workers and increase productivity. That money is now going into government coffers instead of the economy and the Government is spending lots more money on building a paramilitary agency which will enforce Trump's fantasy of total control. We are paying Donald Trump to build himself a personal army of gunslingers who will do his bidding in a quest for power while we are poorer and have fewer jobs. And less security. "This is exactly what I voted for!" What could go wrong?
It strikes me that there is an ongoing slippage error in commentary (not per se this one) collapsing MAGA hard-core voters into all voters who voted Trump
Silver Bulletin decomposition on poll aggregation basis provides a useful benchmarking of what the component support and opposition is in his table "How strongly do Americans approve or disapprove of Donald Trump?" (https://www.natesilver.net/p/trump-approval-ratings-nate-silver-bulletin scoll down - doesn't seem to do paragraph links or I am just a primitive dummy...)
40odd% strong disapproval
27odd% (seems band is 25-30) strong approval
15-17% weak approval
9-10 weak disapproval
Of course national so maybe material sub-national geographic variation that we should all now understand is really important in electoral geography terms
Given this, given the trend lines one can generally draw that there's a hard-core 25-30% that are heavily cultural resentment motivated and probably unmoveable (equally the 40 odd percent strong oppo is probably unmoveable by MAGA). there's a 15-20% that's moveable. That;s the play
and given the trend lines on inflation, on econoomic state, probably there is leverage if the opposition doesn't insist on fighting on the one piece of territory where he's got only slight net negative - immigration....
(if... which for better or worse seems to not be within the Proggy Left cap to not take the bait, but hopefully wrong)
Trump may be "only" -5% (occasionally close to -10%) on immigration, but on issues like Garcia and ICE raids on US businesses and detention camps, polls show he's much worse.
The most important thing about these numbers is how vulnerable he is on his strongest issue. Every single time one of Trump's nastier immigration results hits the mainstream news, Trump's approval on immigration gets absolutely crushed. Take a look at the "immigration" line in the chart above. He's doing great -- then *wham* here comes Kilmar Abrego Garcia in April (I remember when Dems weren't sure if they should talk about Garcia, because "immigration was Trump's strong issue". Glad they weren't cowardly about that one.) Miraculously Trump starts to dig out of the hole in May, and *bam* his approval gets punched to hell in June. Something else happens to hurt it even more in July. It has never fully recovered. (I leave the causes of each event as an exercise in Googling.) We can see from the existing line that lower numbers than today's polling remain possible; It would be political malpractice to avoid talking about "immigration" if that means avoiding issues that hurt Trump this badly.
ETA: Also keep in mind that there are a lot of Latino votes at stake 2026 and 2028. I realize immigration was not the killer issue motivating these votes in 2024. That may be different now that we're seeing the real policies.
There is quite a lot of motivated reasoning to arrive at a conclusion that Trump is vulnerable on the immigration issue - absolutely crushed (what numeric value is ‘crushed’) does not show in aggregation in any particularly clear fashion. On economic he is clearly and very evidently weak and in an increasing fashion, notably inflation which was by the data was a core losing point for Biden relative to floating voters moving to Trump. The conflation of Hispanic voters aligning with illegal immigrants has been a Lefty rabbit hole now for years - it is rather political malpractice to continue to engage distract from the subjects which Trump is massively weak on and which drove votes in 24. This rather feels like an ongoing Lefty masturbatory self-servicing to the pre-sold who are already never voting Trump…. like the Democracy in Danger subject. True or not (and I haven't any positive sentiment towards Trump on this front), it is a communication distraction.
Further I rather would focus on what sub-national variation
Crushed means "going from +11% net approval in this issue to -5% or -7.5%". These are big swings on an issue that were major vote drivers in 2024. Moreover, these are issues that are salient *right now*, whereas the immediate negative economic effects of Trump's policies are more limited, and will mostly develop in the future.
The economic effects of Trump are going to hit voters in their pocketbook or they're not. The worst part of Trump's immigration agenda require news coverage. Democratic attention can help a lot there.
The biggest vibe I get from your comment is: everyone's always fighting the last election. In a world where "crack down on immigration" was theoretical and sounded like it might not hurt anyone who lives here, people weren't too motivated by it. But it's 2025 and everything's different, so let's not sit around fighting the last war. (Where I do agree with you is on the sub-national variation. We should be looking at that.)
The economic subjet swings to negative are already orders of magnitude worse, as particularly inflation subject, so again - motivated reasoning.
I am focused on what I see movement on - and where concerns generally are. Cost of living, economy stupid as that 90s phrase went. And a repeat season in season out - humans being what they are. It's rather bootstrapping assertion that somehow a Dem Left item is changing in their favor when it is the most modest negative turn and creeps back up again so long as Trump is not going to overtly neo-fascist.
It takes quite some extended assumptions then to arrive at the idea that somehow the area where Trump in general is best performing (of an overall negative) is the area where Democrats are going to do best, notably where Democrats also are quite distrusted and D discourse has been heavy and continues to be heavy on broadly unpopular outside of their own circles ideas
And I rather would say that unless one is clear where the negatives are flowing from - geographically clear - at merely 5-7% negative on national average, one is setting oneself up for quite some self-deception in electoral college and electoral geography terms.
Trump is threatening to send troops to my city next week, so Trump being neo-fascist is kinda baked into the cake. The truth is that you can do two things at once. Keeping the negative pressure on Trump’s core strengths is exactly how you win.
But Trump's voters are not getting the economy he promised them.
It was only after the election that Trump revealed that there was going to be pain before the Golden Age began.
So far not much pain. Unless you're a manufacturer, caught between tariffs on imported inputs like steel; and retaliatory tariffs on your export sales.
But when the retail inventories of goods amassed in anticipation of the tariffs are exhausted; then Trump's import taxes are going to hit consumers hard. Will those stockpiles get us through Christmas? Hard to say.
But when the massive BBB cuts to Medicaid & Food Stamps kicks in next year, Red states like Iowa--with a 22% Medicaid enrollment rate--are going to be economically devastated. Dozens of rural hospitals--the economic hearts of most rural counties--will be closing. FOX News will undoubtedly be running back-to-back segments on how it's all the Fed's fault for not cutting rates sooner. It remains to be seen whether MAGA voters will buy it, and change their voting habits.
But Trump already told us that kids only need two dolls, not 30! And subsidies for Obamacare premiums are going to disappear on January 1.
Good. We should be reverting to 2019 policy wherever possible. Covid is long over and we can’t afford reckless handouts
Depends on your definition of reckless. When the BBB knocks roughly 5% of Americans off of the health rolls next year, and they show up at the ER with a stroke or MI without insurance, guess who's going to fit the bill? That's right, you are.
Very generous of you, btw, to take care for the less fortunate out of your own pocket.
The GOP has ordained that the 95% will now carry the healthcare costs of the 5% soon-to-be uninsured.
Almost all the changes from the BBB take effect in 2027-2028. Next year is not very relevant.
Also, when under Biden in ‘23 they stopped automatic renewal, the rolls did fall by 14.5 million from ‘23 into ‘24.
But you are right, if hospitals don’t get compensated then costs go up for the other people.
Most of the Medicaid recipients who lost coverage in 2024's end of Covid unwinding, either re-enrolled in Medicaid, or found other ACA (Obamacare) plans. Mainly because the Biden Admin always put extra effort into ACA enrollment efforts.
Starting next November/December when BBB health funding mandates kick in, it will be largely up to individual states to implement the new paperwork requirements designed to cull the lists, with Red states likely to be more aggressive, sooner.
Red states like Iowa--with a 22% Medicaid enrollment rate--will likely be hit hard economically by the new bureaucratic BBB requirements for healthcare and Food Stamp eligibility.
The experts also told us we were getting empty shelves in June because the boats from China had already stopped coming.
TV talking heads =/= experts. Of course forecast that IF X sticks Y will happen are also dependent on X actually sticking. Which didn't fully.
But for precision - in the first "Liberation Day" [sic] wave, yes a lot of ships diverted. We had this coming up w clients in our logistics subinvestment.
Since then the on-off tariff pauses have certainly incentivized heavy efforts to stockpile and pull forward buying in one's supply chain. This is virtually broken window territory of economics since stockpiling is ineffecient use of capital (if one can avoid it) but it is mitigating.
Empty shelves probably was never a very good warning - too much in the drama and IF X (fully applied regime) is fully applied (no pauses, no carve outs) which was already taking Trump as too consistent with himself.
Higher inflation, higher prices, yes. That is coming.
Noah, Brad DeLong, Krugman all said back in February the tariff uncertainty alone will kill the economy by this summer. I would like Noah to revisit his posts from earlier this year and make an assessment / scoring of his views from that time. Note that this does not mean that things can and likely will get much worse than they currently are. I do want my center-left economists to be honest and self reflective.
Trump was pretty open about his tariff plan, it's just that the voters didn't believe him or agreed with him. And here we are.
I think there's a third option: The voters accepted what Trump said about tariffs because they, like he, didn't understand tariffs.
I think we need to avoid either-or thinking, we can be generally certain that excepting a quite small part of the population with some actual economics under their belt, there was a kind of complex mix of Not Believing or benchmarking off what Trump 1 for expected results or experience and then plain not really understanding, taking his assertions / posturing / pitching at face value.
Fair enough, although a tax on good will pretty intuitively increase the prices of those goods. But maybe people didn't think about it too hard.
Maybe?
Absolutely.
The percent of the population that actually understands Tariff = Tax on the Importer is miniscule.
most people are economic illiterates.
Not a tax on the importer, a tax on the user of imported goods, their close substitutes, and exports.
Well... yes although it's a bit of hair-splitting, the importing party I was meaning was not the logistics handler, but actual user (although payer to gov can be indeed the logistics handler).
But it is not really a tax on import substitutes (a cost driver certainly since those substitutes mfg / providers invariably jack up their prices but that's not per se necesarily going to Gov coffers). I think it causes confusion to reference it that way.
Some people, the President among them, think foreigners pay tariffs.
But Trump promised prices would come down very quickly. Trump didn't understand the impact tariffs would have on prices and he certainly didn't educate his voters about the impact they would have.
I imagine Trump did understand, I also imagine he thought he would have more bully power to try to rein those increases in (by calling Amazon, Walmart, etc as he tried).
But your point is taken, he promised many things, even if they were conflicting with each other.
Actually if one looks at his operating company track record, one's default should be that Trump did not actually listen to or spend any time understanding effects and he sold himself on his own bluster the foreigners would pay 100%.
He's always been brilliant at self-deception. Makes him a great PT Barnum & marketing (of a certain type) business master, but also makes him a complete catastrophe in operating businesses (i.e. businesses with complex ongoing operations, e.g. industry, or say airlines -see Eastern Shuttle)
The only good thing about trumps tariffs is the corresponding damage will hopefully settle the debate on whether tariffs are beneficial
Settle? Unfortunately popular capacity at excuse making and self-deception via motivated reasoning will keep this alive until humans no longer exist, until the sun goes red giant...
Hopefully though both on immigration and on tarifs the facile following of no-trade offs superficiality will take a good beating to open up a door for about 10yrs (never more than that) for more rational policy. Maybe immigration reform for enabling some rationalized organized labor-market not refugee-loophole driven policy for example.
Maybe 40% chance there...
Indicators lag and I think we're already in what will be a recession
Yes... but well - probably not quite as yet, but there's no sign of anything changing the ship's course so by end of year, probably.
But yeah, See Brexit
UK growth is effectively zero for the last fifteen years.
Hello Brexit! Sunny uplands! Swashbuckling!
I mean sure but Brexit was 5 years ago and the current lack of growth has been since 2010. So you could add in: austerity, aging population, low productivity and energy crisis.
Well vote is 2016 and while full effects only slide in on finalization, certainly from 2016 on there's an effect pretty similar to Trump's on-and-offism freezing investment - really multiple feed in effects.
Pre 2016 certainly have a odd toxic mix to my reading of anti-market Left and "genteel" anti-growth Conservatives paralyzing UK outside of London weighted services dynamism where the global platform w tie into EU market provided growth.
low productivity, lack of infrastructure modernization and reinvestment on real national scale.
Plus without conservative austerity Brexit would not have happened.
Growth got punched pretty hard by the GFC most places in the world. So slow growth pre-Brexit isn't that surprising. Slow growth after is the anomaly.
Ok so since 2020 UK and France have grown roughly the same amount, Germany is in the pits. Usa has outstripped both of them. So UK growth is in line with Europe whereas USa was outstripping it.
The big issues in the UK are productivity growth, an elderly population and high energy costs. Add on top austerity.
Sure growth would be higher without Brexit but probably not as high as the UK.
Odd that immigration is a cultural issue, not an economic issue.
All of Trump's crises are based on emotion and cultural strife. There are no issues, there is no policy, there is no solution to his non-problems. Trump didn't have an enemy so he invented one. The enemy within. Now we are all enemies, which is the overarching plan. You can't trust anyone because anyone could be your enemy. Existing in such a society is a miserable prospect.
Trump’s enemy is within him
Yep, you are right on with that observation. It serves to highlight that Trump has successfully divorced economics from culture. And yet, one of the MAGA objections to immigration is stealing jobs from true Americans. Odd, the disconnect.
It’s both. Allowing people to cross over the border is based on cultural values. There are people like me who oppose it based on a belief in enforcing laws. Others feel that breaking laws is fine as long as there’s a good reason. There are also people like MAGA who are fine with their own breaking the law but oppose illegal immigration because they’re racists.
noting really odd about that, this is true globally. Now and historically.
It is clearly a deep human reaction to rapid visual "group change" - our chimp cousins genetic past didn't go away with modern society.
So policy makers really have to be careful on threading a needle - it is pretty clear from European comparator for example that at some level of immigrant flow, native born population backlash kicks in.
A reality that can't be wished away to needs to be mitigated.
It's not just about race though It's also about culture.
Lack of cultural fit is a big problem
Who said anything about race, but "lack of cultural fit" That's bullshit, pure bullshit.
It's about visible and perceptible group change. The Italians and the Irish when they started coming to US in huge numbers were written about in precisely the same ways as now people write about Latinos or Muslims or whatever. Never adopt, bringing foreign habits blah blah blah.
Dressed up bullshit.
Its human tribalism - simple as that - chimpanzee band primative reaction.
Primative and atavistic but it is what it is and pretending otherwise and trying to deny it only creates nasty backlash.
You said VISUAL group change, what else could that be but race?
And yes, there have been plenty of racist people in the past. But that doesn't say anything about what's going on now.
It's quite clear that some cultures easily fit in. Somebody immigrating from UK, Australia, or Canada will fit in REALLY easily. Even though they are the same tribe.
They share the same western values not to mention the same language.
And actually people from Latin America tend to fit in pretty easily as well, granted not as easily as somebody from another English speaking Western Culture might.
What else: many things. different clothes, different faces.
Italians immigrating in 19th -20th c - not a different race in those archaic 19th-20th century race schemes but visually standing out.
ETC
Racist people is not the subject - human tribalism is.
If it was just human tribalism, then Australian's or Canadians wouldn't be acceptable right?
Why is it weird?
If a million ultra conservative Muslim engineers immigrate to the US that may be good for the economy but bad for the type of person who likes to read Noah's writing. Remember Muslim Hamtramck banning pride flags from City Hall after LGBT-Muslim "allyship"?
If a million Russian Neo Nazis or nostalgic for apartheid Afrikaners immigrate to the US would you think that's a positive cultural change?
If a million Hindu IT programmers who are also super casteist immigrate to the US is that a positive cultural change? I don't think so.
While this is of course an illustration of the kind of underlying rationalization that kicks in, the observed reaction across countries, US, EU, UK is that there is some threshold of visible percentage of Not Us where Not-Us = what's coded as "native / the tribe" - visible foreigner there's a reaction.
this qutie leaves aside pretty unrealistic actual cultural change effects.
It looks and feels something reasonably analogous to Brexit which the Brexiters (e.g.Farage, the smarmy twat) bluffed for several years on but has had the predicted economic effects - except humans being basically suped up Chimpanzees are not very good in general at this kind of reflection.
As it takes time for negatives on trade loss to feed through and of course delays and uncertainty along with of course mitigating effects like stockpiling.
Nevertheless the sustained aggressiveness (out of it would appear sheer dumbness) of Trumpies seems to be piling in on effects.
On my agri-logistics side of biz (me personally being more on energy) - we are hearing US side agri-export groups scaling back actions as market losses are kicking in while at the same time new market development has been knee-capped by idiocies like the DOGEers ending up firing something like half of staff needed to get phytosanitary docs so one's stuff can get in overseas. Transversal and broad bungling.
Back in old days in Manhattan (in investment circles) mocked Trump back in the day as he was so flagrantly a PTBarnum bad at actual operational business, his multiple operating business bankruptcies being the illustration. Master marketer to a certain segment, Reality TV PT Barnum - mastery, but operations he's an utter idiot and always has been. And yet doesn't realize that.
That's his super power - having no idea how rubbish he is at so many things.
… yes… yes indeed….
In fact I think he literally actually believes every bad turn, every negative development is not in fact his own bungling but people being unfair and mean to him. Really genuinely believes that himself.
Farage = 'smarmy twat' - triple thumbs up icon
shamelessly copied from someone somewhere - Alphaville maybe? don't remember.
I've always believed that humans are basically overclocked apes. I'm glad I'm not the only one lol.
I can't say I have always so believed but came to conclusion after some time that one can't be blank slatist - and there's a pot pourri of variable behvior and not-so-variable deep roots that can't just be ignored. thinking up civilisation over 3k yrs didn't abolish 2mln years of evolution in the end, modified certainly but not abolished.
Democrat voters want something for nothing, more social benefits without paying higher taxes. Republican voters want something for nothing, tax reductions while preserving social benefits.
Politicians induge these voters' fantasies to be reelected. Here is the rub:
Intelligent Politicians know that eventually the manure will come in contact with the air moving device, a Minsky Moment. A grand bargain will be necessary. Each party wants to be as well positioned as possible when it becomes essential. The Democrats want to increase spending as much as possible before then. The Republicans want taxes as low as possible before then. Each party wants the best bargaining position. Neither party wants to ward off the eventual crises. Compromise has become a dirty word.
There was a time when Democrats cared very much about a balanced budget, and actually did things about it. Then they got tossed out despite their efforts, and the budget got destroyed by borrowing-based tax cuts. Repeatedly. So they stopped burning political capital on stuff that the GOP would just set on fire.
I see it somewhat differently. Yes, Clinton raised taxes to help balance the budget when he had a trifecta government. The last six years of his presidency, the Republicans restrained spending, the Democrats desire to increase spending, which resulted in a balanced budget.
The Democrats always want to increase spending, no matter the fiscal circumstances.
I mean, we can see everything we want. And I also want to live in a world where a harmonious bipartisan consensus keeps us spending within our means. But an easy way to judge the Clinton and Bush II partisan priorities is to look at the beginning of each new Presidency, which is a good idea because (1) usually the incoming President has an agenda, (2) their party has a majority in at least one house of Congress to enact it.
Using that frame it's pretty easy to understand partisan preferences at that time, since both administrations proposed legislation and then passed it largely on partisan lines:
1993 (Clinton's first term): OBRA-93 cuts spending by $255bn over five years and raises taxes. Every Republican voted against this bill, it was passed with Democratic votes only.
2001 (Bush's first term): Bush's budget increases both entitlement and discretionary spending by over $100bn/year, and included $1.2tn of tax cuts over ten years. The original bill included another $400bn in tax cuts, which was shaved down mainly through Democratic opposition. This passes with majority Republican votes, but some Democratic votes as well.
2003: (Also Bush's first term, and still with a Senate majority). The earlier tax cuts were significantly expanded over unified Democratic opposition, via a 50/51 partisan Senate vote sent through the reconciliation process to avoid a Democratic filibuster. The estimate is an additional $350 billion over 10 years. The Republicans also passed additional spending to pay for the Iraq war, and Bush's proposed Medicare prescription benefits.
So again, looking at the actual evidence before me I cannot concur with the conclusion that "The Democrats always want to increase spending, no matter the fiscal circumstances” or the idea that the Bush/Clinton era Republican Party was in any way concerned with the budget deficit. This stuff all happened years ago and we can look it up on the Internet, so I'm not sure how one goes around carrying such an inaccurate view of history.
Please examine the "Build Back Better" bill that the Democrats attempted to ram through congress with reconciliation. Two courageous Democrat Senators saved us from this spending spree. All other Democrats had no problem voting yes for $6,000,000,000,000 in new spending. Pretending the Democrats are even slightly concerned about fiscal responsibility is laughable.
The Biden BBB was estimated to add $2.4 billion in spending, but a good chunk of it was one-time and short-term spending on infrastructure. Trump's OBBBA adds $2.4 billion of spending, but more of it structural because (unlike infrastructure spending) it's not about an investment, and everyone knows that the GOP will try to lock tax cuts in forever, like they always do.
And to reiterate your point in a more pointed way, "courageous Democrats" exist and "courageous Republicans" no longer do. So nobody opposed the ridiculous nation-destroying deficits caused by OBBBA.
I'm not sure what point you're trying to make. If anything these examples just highlight how *utterly terrible* the GOP has been (and has become) on deficit spending. Why even focus attention here?
The AI Technotopia shall deliver us.
I guess they're just hoping that OBBA will magically usher in factories for everything so that the negative supply shock is neutralized. Unclear how you do this without immigrant labor (especially heavy in the construction trades) or with tariffed inputs but this admin is basically in Yolo mode.
I think the most fascinating thing here is the execution - yes the policy proposals are often bad - but the execution even on the policies they want seems subpar. There's literally a minimum of thought and planning that goes into these decisions and they don't understand how anything is implemented or enforced so we get EOs and soon I assume Pocket Recissions every day to make up for that.
Seems pretty bad but I guess the GOP no longer cares about governing or retaining congressional power/checks and balances.
As with his first term the one thing Trump has is the current relative strength of the US economy. It's a bit of a bummer that this will drag out as slowly as it does - something more acute would focus minds sooner and potentially avert a slow erosion. As it stands - it looks like we trudge along (And with deficits this huge I don't know how we get into a recession as NBER defines it).
Exactly on execution as I say in a comment here, in my side of business on agrilogistics, there are now emerging all kinds of bubbling complaints and ratcheting back on market-dev efforts as bungling by DOGE saw firing, e.g. of large swath of needed people for phytosanitary certs to gain market access etc. Self-knee-capping.
How many faces have to get eaten by leopards before people stop voting for the Leopards Eating People's Faces Party?
I think the tag line here is a little misleading. Few Trump voters understand economic principles (the same would hold true for Harris voters). When the White House proclaims tariff revenues of $8t (on an annual import market of ~$3.5t) they celebrate that Trump's making America rich again by soaking countries that have been getting rich off of us for generations. It appears that these beliefs cannot be challenged by data; when they appear to be it's only a sign that the data is being manipulated by malevolent actors, as Trump tells them. (I presume all Trump voters finished elementary school, but he knows that when he reports he's brought drug prices down 1500% arithmetic will curve like space-time around a black hole.)
Most Trump voters voted for huge tariff revenues and draining the deep state swamp, and the information they're receiving from their trusted sources confirm that's the economy they're getting. Only in that sense, I think, are they getting the economy they voted for. And they're delighted.
The vote on Bidenomics was harsh. The malaise that cost Biden and then Harris approval ratings hasn’t gone away. My economic life didn’t get better with Trump’s election.
The OBBB legislation that passed will not affect most Americans.
The tax brackets didn’t change; small businesses will get to deduct business purchases, but if your supply chain is harming your sales outlook, it won’t matter much.
Tips? A frighteningly small number of people. Frankly, how many waiters and bartenders and barbers were actually reporting their cash tips?
There is little in OBBB for your average worker to get excited about. That won’t be helpful to Trump. Affordability is the issue. Lower rates might help mortgage rates and spur some housing sales. That usually means appliances, furniture, and flooring. But 25% tariffs on cars are going to keep the new car market soft. In short, people are not feeling better; there is nothing coming that will make them feel better. If the trend continues, I expect more malaise.
Democrats can blame tariffs, but they’ll have to give up their love of them. Affordability is an issue, but there is little they can do about it. We’ve experienced a 30% increase in costs since 2021, which is the average I've calculated. I'm thinking about insurance of all sorts, repairs, and parts. I own a home in the North East, and the maintenance of it has ruined my retirement. I blame Biden and now I am blaming Trump. Those prices and costs are not coming down.
I generally agree with Noah. That said, almost any economic policy is better than Biden's sugar high, followed by nearly double digit inflation. And luckily his "Build Back Better" six trillion dollar spending spree wasn't enacted, thanks to only two courageous Democrat Senators. Every other Democrat Senator voted for this unfunded spending orgy.
The worldwide inflation? Which every nation on the planet experienced? And the US had the lowest rate of, compared to any other nation? Damn, Biden is craaazy powerful to have been such a bad president that every other country experienced his Bidenflation.
I'm sure that President Trump would be pleased that you are mimicking his method of communication.
An ad hominem insult, more revealing about you than me for certain.
I think it was a pretty substantive point that drewc made. Using irony to make a point does not make anything "ad hominem".
At most you could maybe attribute a few percentage points of that inflation to pandemic-era fiscal policy, which also includes the stimulus passed in Trump's last year btw. The rest might've had something to do with oh idk the once-in-a-hundred-year pandemic. I agree with the other commenter: this was very clownish of you to say
Biden's fiscal policies poured fuel on the fire, and attempted to pour more fuel on the fire. You don't solve a problem by doubling down, adding to the problem.
Right - Biden was trying to solve the unemployment problem that arose at the same time, which everyone forgets now because it was solved effectively.
Well - Biden Admin jumped on an anticipated unemployment problem that clearly was
(A) mis-understood as Noah has said as a demand issue when there were actually much more supply issues
(B) overweigthed concern (politically speaking at minimum but I think also economically) to trying for full employment while underweighting the negatives of inflation (politically but also to a lesser extent economically).
People hate inflation. Hate it. Structurally politically a bit of unemployment passes better than inflation.
It remains questionable that the Biden Admin keeping thinking for too long they needed a 2008 response to a completely different issue solved 'effectively' the challenge.
Given the unusual and not-in-recent-memory paramters of a pandemic with shutdowns I don't per se blame them heavily on that, but it wasn't either smashing success either.
Our business closed a foundry, which used to employ 100 people with good wages. We were willing to accept financial losses. But we could not hire employees who were paid $1000 per week to sit at home. (regular unemployment compensation plus $600 per week from Biden's giveaway economic policies)
You mean the enhanced unemployment benefit trump introduced and Biden ended. Honestly your memory is bad ... trump introduced all of these policies and spent trillions of dollars on covid spending (more than Biden) and even his Non-covid spending was far higher. Yes democrats also spent on infrastructure and also on covid stuff for a limited time but don't fool yourself into thinking Trump's policies didn't lead to the closing of the foundry (if what you said about the reasons was accurate).
I honestly don't know who started this madness. I do know that Biden kept extending it. We then were forced to close the foundry. We held out as long as we could.
Democrats want to "buy insurance" to "prevent" every possible detrimental outcome, by spending taxpayers' hard earned incomes, or by running up deficits and sovereign debt. Sometimes the costs of this "insurance" is far too high.
I personally know people who never had it so good, never in their lives, for accomplishing nothing during Biden's spending spree. "Free money" is not free.
These are choices. Democrats went for everyone taking higher inflation while keeping their jobs. Trump has gone for a recession where more people will lose their jobs. Inflation will probably stay sticky because unfunded tax cuts and tariffs. Both parties need to get the deficit and debt under wraps and neither party is handling the unfunded portion of economics well.
This is wildly exageratted - and I am not a fan of Biden's actually executed economic policy.
Clearly not "almost anything" would be better as some parts of Biden's work was fine - mostly the industrial inwards investment tax incentives mobilizing private capital.
A lot was ridiculously self-handicapped by wokey everything bagelism.
9%ish hit by both EU and US ... not good but as global clearly not per se Biden as Biden (that said the overshoot in US given a not-so-open-on-traded goods market clearly was heavily influenced by).
A Biden program enacted by B. Clinton could have turned out quite a bit better.
Trump program (to extent it is a program) is obviously mega worse.
Inflation was high because Powell allowed it to be high (rates should've started rising a year earlier), but Biden's stimulus efforts beyond the initial ones certainly didn't help. It's a good thing the student loans gift was shot down too.
The wisdom at the time was that deficits weren't going to cause inflation. It was true until it wasn't. If we want to rewrite history then please include Trump's higher than bidens covid related spending and even his non covid spending on oh tax breaks. It's even worse that trump is doing it again in his second term.
The wisdom on the Proggy Left and adjacents. and some w poltical blidners on at the moment like the historically rather better Krugman & his team transitory blinders
Plenty of centrist economists and financial specialists were flagging that such wisdom was based on assumptions that were not well-founded
Of course certainly Trump I was not innocent but on other hand the 2020 actions at 2020 were more well founded (as in given data at the time) than continuing beyond say Q2 21 if not Q1.
Trump is a walking mess but Biden Admin pushes through 21 / 22 on spending were quite real and quite big errors well beyond the point where it should have been prudently said, "hold on."
Personally I'm someone who would pay down the deficit so I'm always going to be against these policies. Trump has always been a deficit spender. The country was stupid to elect a republican trifecta.
Oh yes - while not personally a reflexively against deficit spending, the US has blown way way way past what's prudent or sustainable.
You can inflate it away (Biden) or refinance it (Trump). Preferably wed stop spending.
Both policies can be bad. Chances of long term damage from Trump’s policies can be higher because we’re also getting into fights with allies and not just China.
I mostly agree. We need allies in geopolitical affairs. Yet, still, at a fundamental level; sovereign nations have interests, which overshadow friendships.
It is not only allies in political sense.
One needs market scale - we are no longer in the world of the 1950s-1960s where USA was such a large (and undamaged) market that it was the only thing in the world in industrial scale.
USA alone no longer is a sufficient condition for industrial scaling.
I personally was climbing the walls under just Biden Admin for their autistic way of doing the energy policy - rather than grabbing chance for market scale with trade and investment arrangements with our upper-income allies - for industrial scaling that otherwise only China is getting cause they are not 1960s Maoist China but a mega huge real internal market (as Noah frequently points out).
This requires of course Grow the Pie mentality rather than Fight over Crumbs mentality - and a believe in positives of economic growth (which of course the Proggressive Left whatever some small pretenses in fact is de-growth and anti-market).
Tariffs are not advancing those interests because they’re retarded policies that have been tried before and failed. There may be strategic reasons to do so if there are national security implications but there’s always a cost associated with tariffs.
Yes, true. And there are long term costs by hollowing out American manufacturing. We can't forever be a prosperous nation by taking in each other's laundry.
US does very well in manufacturing. It has 4% of the world’s population and 16-17% of the manufacturing output. What you mean is manufacturing jobs, which are mostly lost to automation because manufacturers have moved to higher margin products. This idiotic nonsense that US needs to do things that poor countries do and still remain a rich country, is a fantasy and needs to stop.
It's reasonable to say US hasn't done well in certain segments but my own experience is the US firms that are the equivelent of the German Mittlestand mid-sized industrials tend to be less innovative, much less global market aware. And often have really primitive outdated ideas on developing exports, on trade financing, it's like a timewarp to 1975 sometimes. (okay slight exaggeration)
Perhaps inevitable Big Economy effect that one becomes inward looking and unaware, too self-satisfied with own market
But there could be a legit area of action for US on policy to focus more on upskilling industrial clusters not just in innovtion (and not taking innovation to mean goddamn ITC) but also on international market dev, tools etc.
US manufacturing hasn't been hollowed out - and not by imports. Noah has some good work on this.
What has been hollowed out is 1950s-1960s type labor intensive mfg at low efficiencies.
Automation and capital for labor replacement
and US on small-medium sized biz level is pretty shit at being aware of global markets, its fairly pathetic, too inwards looking autistic.
Upscaling and having a model like the German Mittlestand in industry is badly needed but also US small-mid operators need to get their heads out of their US asses. I operate both US and international, and American mfgs are amongst the least reactive, the least aware of even using trade tools (1960s era thinking) so that they can sell well - in fact much of the time I think US is stuck in a dream that we can rewind the world to 1950-60s
This an on average obvioiusly there are good exceptions.
Of course domestic side things like how fucking painful it is to get new build permitting, the whole accumulated bureacratic cruft since the 1970s is a major drag as is the Warrenites strangling of commercial banking focused on their power agenda and focused on supposed banking abuses of consumers, ignoring small and mid sized business and the kind of long-term funding that industiral asset heavy companies need
So you were upset about inflation under Biden? Allegedly, a lot of voters were/say they were.
Yet, they are not upset about Trump’s inflation.
It’s all “cultural”. Immigration is “cultural”, eggs prices are cultural…
People just want to see the elites and their institutions burn. Like they don’t depend on said elites and institutions.
False assertion - it the data are showing Trump approval on economic steadily going down, with inflation concern going up notably in the Independent (i.e. not-hard-partisan IDing) category.
And inflation itself has only just started to tick back up, buffered by the stockpiling, so the wider popular effect of re-acceleration hasn't even yet really kicked in.
It is not all cultural, that is evident. Working class broadly hit by ~2 yrs of elevated their-core consumation / cost basket inflation got mad. As they did in Europe etc. Nothing strange there, nothing faked, not per se cultural (other than the evident human mental model that consistently unconsiously more heavily weights near-term loss in pain and impact versus weighting of gain - profound mental bias in humans*).
"People" = some fraction of MAGA yes, but excessive extrapolation from a hard core minority to People is an analytical error and self-deception.
(*: which on an evolutionary basis rationally makes sense if you're evolving one meal away from starvation for millions of years)
The anger may not yet be serious where you live, but on this side of the Canada-US border, it is already quite different. We all know that as Captain Foghorn Leghorn steers the Titanic into the iceberg, deliberately this time, that this is not going to end well. Economics is an imperfect science, but a science it is, and clearly, your Col. Bonespurs prefers alchemy. Our two economies are joined at the hip, and so when you go under, so will we. Unfortunately, because of relative size, we go first.
I haven’t seen you write much about the Trump administration taking a stake in Intel. Aren’t you pro-industrial policy?
Rates falling are an indication of a weak economy. They are a lagging not leading indicator.
The raid on the Hyundai/LG battery plant is really curious and I hope it's based on some real criminal wrongdoing and isn't just part of some weird bullying by the administration.
The operation/allegations have striking parallels to a raid on a BYD plant in Brazil earlier this year. In that case, there were charges of Chinese plant owners holding worker passports to prevent free movement and keeping workers in abusive/slave like conditions at the plant. Similar to the Hyundai/LG battery plant, the BYD plant was under construction and not yet operational. The fact that this was a long investigation coupled with claims of coming criminal charges makes me wonder if this is as much about working condition/treatment of workers as it is about immigration. Time will tell.
I really hope this isn't just about messing with South Korea and setting an example to other companies that they're not welcome, which will thwart efforts to import advanced technologies so we can copy (steal) them.
"But there’s a reason why [rate cuts from the Fed] won’t fix everything that’s wrong with the macroeconomy. Rate cuts work by boosting aggregate demand."
That IS the way they work, but the problem is that there has to be enough "aggregated" demand to stimulate sectoral and product level demand where sticky prices threaten to create unemployment of resources. They work by generating more inflation. Maybe that's a tradeoff we want to make, but it is a cost of having fewer immigrants working and the supply shocks from the deportations and tariffs.