The voters have spoken.
United States mid-term elections are a tried and true referendum on the performance of the President.
A part, just a part of that results, is due to the economy in the United States. Not just #MeToo and everything he does against migrants, although they certainly had an effect. This isn’t the post that will do the usual blood-letting about whether the Democrats weren’t “left” enough.
Back in the day, President Obama pushed his electorate as far as he could with Obamacare, and the electorate made a very strong judgement right back.
With President Trump, it was all supposed to be an economic disaster, and his massive interventions into international trade and tearing up old diplomatic orders would leave the U.S. economy reeling. If you read the activist left too much, he should have lost both Senate and House.
And yet with many of the headline economic fundamentals very strong in the U.S., the voter reaction this time is different.
Despite second quarter U.S. GDP growth of 4.2% and historically low unemployment, Trump’s approval rating does not follow those economic indicators at all.
Trump’s team has done well because the economy has done well. They voted on the performance more than the person.
But some of that result is not as strong as his rhetoric because the economy is not as strong as those headline numbers suggest.
There’s a similar weirdness to the business confidence surveys in New Zealand versus the actual performance of the economy and the popularity of our government. In the United States it reflects a kitchen-table reality of economic life in fuel costs, healthcare costs, housing costs, and electricity, with wages just not keeping up with those rises. New Zealand is now at 3.9% unemployed, but remains one of the most unequal societies in the OECD, with pitiful wage growth. So people go backwards.
There are also oppositional effects. Great news the U.S .stockmarket has gone up! Again! Good for our super-funds! But that can also be a symptom that income continues to be redistributed from workers to capital, so the stockmarket goes up. Stockmarket up bad!
Tax cuts good! Except, Trump’s huge tax cut to corporations is an effectively targeted sugar-rush hit with a good chance of a fast come-down. The only question is whether commercial diabetes hits before or after election 2020. The tax bill, simply did not reward the citizens who brought him to the dance. And a lot of them voted their message back on that. Boo tax cuts!
Wage growth good recently! Yay! Except, average U.S. inflation-adjusted wages are at roughly the same level as they were 40 years ago. Median wages for those who have no degree have been falling for 15 years. And there’s little evidence that the big tax package has benefitted the middle class. He hasn’t delivered back to the rust-belt workers who voted him in, other than to keep declaiming that “clean coal is good” in West Virginia (didn’t work). The social welfare system that the two Bush and the Clinton administrations gutted, has not been strengthened. The Earned Income Tax Credits and wage supports are very weak. Unless you are in upper management, your lower wage or salary has not been rewarded. You would kinda hope that an economy that is even fuller than our own at 3.5% headline unemployment would have some wage growth. Bad wage growth!
A really perplexing element is the Trump administration’s focus on deregulation at this point of the U.S. economy. Deregulation at the end of a long recovery cycle is exactly what you don’t want. Because right now a lot of businesses and investment institutions are looking for yield. You have growing concentration of power. You have monopoly issues that dampen the economy. That’s not the time to deregulate. And in terms of labour and environmental regulation, you want stuff happening that doesn’t actually kill people and animals and the earth. He has no framework for regulation other than get rid of regulation. That is not a sustainable pattern of economic leadership for the United States.
Trump is not safe. He has no economic plan beyond his re-election, which through a Republican lens is fair enough.
So in some part, the collective wisdom of this democracy-expression turned out to be more than two wolves and a lamb discussing what to have for dinner.
More like, the remaining sheep got Tech-9‘s and started circling the wolves.