In 2016, all the experts predicted economic disaster if candidate Donald Trump was elected president. This article predicted his election would plunge the world into a recession:
The conventional wisdom is that, right off the bat, the stock market would fall precipitously. Simon Johnson, the Massachusetts Institute of Technology economist, posited that Mr. Trump’s presidency would “likely cause the stock market to crash and plunge the world into recession.” He predicted that Mr. Trump’s “anti-trade policies would cause a sharp slowdown, much like the British are experiencing” after their vote to exit the European Union.
In explaining his prediction, Professor Johnson wrote that Europe’s economy is so fragile that “Trump’s trade-led recession would tip Europe back into full-blown recession, which would likely precipitate a serious banking crisis.” After that, he continued: “If this risk were not contained — and the probability of a European banking debacle is already disconcertingly high — there would be a further negative spiral. Either way, the effects on emerging markets and all lower-income countries would be dramatic.”
Then there was Nobel laureate Paul Krugman’s prediction of “economic doom” in an opinion piece the day after the election.
The economic fallout of a Donald Trump presidency will probably be severe and widespread enough to plunge the world into recession, New York Times columnist Paul Krugman warned in a New York Times opinion piece.
Calling Trump the “mother of all adverse effects,” the Nobel Prize-winning economist predicted that the GOP nominee’s administration could quickly undo the progress that the markets around the world have made in the eight years since the financial crisis.
And that guy has a Nobel prize in economics? Shaking my head…
Of course, none of these people have acknowledged that they were wrong. To the contrary, they have been naysaying US economic growth for three years now and predicting a recession at every turn, but the state of the US economy is such that they have effectively been at least silenced if not shamed. President Trump’s economic accomplishments are unparalleled:
- Lowest average unemployment rate in over 50 years:
- 7 million new jobs (three times the predictions of the “experts”)
- Dow Jones Industrial Average over 29,000. Note the flat growth in Obama’s final years and the soaring growth after President Trump was elected in this graph:
There is much more in these excerpts from President Trump’s Davos speech:
- Unemployment rates among African Americans, Hispanic Americans, and Asian Americans have all reached record lows. African American youth unemployment has reached the lowest it’s ever been in the history of our country. African American poverty has plummeted to the lowest rate ever recorded. The unemployment rate for women reached the lowest level since 1953. And women now comprise a majority of the American workforce; that’s for the first time.
- The unemployment rate for veterans has dropped to a record low. The unemployment rate for disabled Americans has reached an all-time record low. Workers without a high school diploma have achieved the lowest unemployment rate recorded in U.S. history. Wages are rising across the board. And those at the bottom of the income ladder are enjoying the percentage, by far, largest gains.
- Workers’ wages are now growing faster than management wages. Earnings growth for the bottom 10 percent is outpacing the top 10 percent — something that has not happened.
- In the eight years before I took office, over 300,000 working-age people left the workforce. In just three years in my administration, 3.5 million people have joined the workforce. Ten million people have been lifted off welfare in less than three years. Celebrating the dignity of work is a fundamental pillar of our agenda.
- This is a blue-collar boom. Since my election, the net worth of the bottom half of wage earners has increased by plus-47 percent — three times faster than the increase for the top 1 percent. Real median household income is at the highest level ever recorded.
In short, not only were the doomsayers wrong; they were horribly wrong!
The experts predicted economic doom after passed their first Brexit referendum in 2016, too. Here is a good summary of European pesssimism at the time:
Europe’s press was awash with gloom and doom over Brexit, warning that it was a boon for nationalists while urging EU leaders to meet the challenge of their “rendezvous with history.”
A cartoon in the Dutch paper AD Haagsche Courant styled after Edvard Munch’s “The Scream” showed the German, Dutch and British leaders howling in horror, holding their hands to their faces.
“It’s not an exaggeration to call it a disaster,” Spain’s El Pais daily said in an editorial about Britons voting to leave the European Union in Thursday’s referendum.
It urged EU nations to offer their citizens “ideas, plans, real leadership,” adding only then could the EU “be saved from the dangerous abyss it has reached.”
The UK marked time, economically speaking, as they dilly-dallied until finally committing to a complete Brexit at the end of this month. Economists have apparently reversed their predictions of doom-and-gloom for the UK economy, as reported here:
Two studies have forecast that Britain’s economy will grow faster than major Eurozone rivals this year.
The International Monetary Fund predicts that, assuming there is an orderly Brexit and a steady transition to a new relationship with the bloc, growth would accelerate from 1.3% last year to 1.4% this year and 1.5% in 2021.
It believes that the eurozone will grow by 1.3% this year and 1.4% next. Germany, France, Italy and Japan will struggle to keep up and the only two G7 advanced economies to outpace Britain would be the United States and Canada.
PWC’s global CEO survey found that European chief executives regard Britain as a key market for growth and investment.
The accounting firm found that Britain was rated as the fourth most important territory for growth, after the United States, China and Germany, as the country’s “attractiveness” returns to levels last recorded in 2015.
Then there is this tip of the iceberg:
More than a thousand banks, asset managers, payments companies and insurers in the European Union plan to open offices in post-Brexit Britain so they can continue serving UK clients, regulatory consultancy Bovill said.
“These figures clearly show that many firms see the UK as Europe’s premier financial services hub,” said Michael Johnson, a consultant at Bovill.
What do you suppose the UK growth will be if/when a US-UK trade agreement is completed as is being discussed? While much of the attention has been on the signing of the China Phase I deal and USMCA lately, behind the scenes there has been orderly progress since 2017 toward that end by US Trade Representative Robert Lighthizer, as reported here.
Funny how unshackling economies from excessive regulations leads to economic growth, isn’t it? Getting out from under Brussels will be a boon to the Brits just as getting out from under Obama-era regulations worked wonders for the US economy. Capitalism works every time it is tried. It would appear that the “experts” are all Keynesian economists. It seems to me that they need to get right with the Austrian school of economics.