Whose Econ­omy Is It?


“The econ­omy is soooo good,” Pres­i­dent Trump claims. So why are his rat­ings in the toi­let?


The stock mar­ket is boom­ing, un­em­ploy­ment is at its low­est since 1969, and con­sumer con­fi­dence is high. Pres­i­dent Trump claims. So why are his ap­proval rat­ings in the toi­let? Here’s what lies be­neath the num­bers

Paul grilli remembers the im­plo­sion clearly. It was April 28, 1982, and the Youngstown, Ohio, na­tive stood across from U.S. Steel’s Ohio Works, one of the last mas­sive plants in the city. His father was an un­em­ployed steel­worker. The fam­ily watched as four blast fur­naces col­lapsed, brought down by dy­na­mite a few years af­ter the fa­cil­ity had been shut­tered.

It was the sym­bolic end of an era. A huge U.S. com­pany had been dev­as­tated by Ja­panese com­pe­ti­tion. The steel, alu­minum and auto in­dus­tries seemed to be dy­ing. “My father, my uncle, my grand­fa­ther, they had all lost jobs. They didn’t know what was go­ing to hap­pen,” re­calls Grilli.

To­day, Youngstown is a very dif­fer­ent place— down­sized, less in­dus­trial but not postin­dus­trial. Grilli now de­liv­ers alu­minum in­gots to in­dus­trial cus­tomers through­out the Mid­west, and he has friends who work for a thriv­ing com­pany called Youngstown Tool & Die, the type of Rust Belt firm that, like U.S. Steel, thrived long ago, when the Amer­i­can econ­omy was flush and its man­u­fac­tur­ing sec­tor was un­chal­lenged by for­eign com­pe­ti­tion.

But Youngstown Tool & Die, which sup­plies equip­ment to alu­minum pro­duc­ers to trans­form metal into a wide va­ri­ety of prod­ucts, was also more nim­ble. It not only sur­vives to this day but—right now, in the midst of a boom­ing econ­omy—is flour­ish­ing. This past sum­mer, the com­pany an­nounced it would spend $13 mil­lion to build a new plant and in the process would add 57 em­ploy­ees, a 20 per­cent in­crease. The ex­pan­sion plan, says its gen­eral man­ager, Dave Mrd­jen­ovic, is a func­tion of the “very strong econ­omy,” the ben­e­fits the com­pany re­ceived from the cor­po­rate tax cut the Trump ad­min­is­tra­tion passed, and a “sta­ble’’ reg­u­la­tory environment. The com­pany now hopes to ex­pand its sales na­tion­ally and be­gin ex­port­ing to Canada and Mex­ico.

In that sense, Youngstown Tool & Die is a poster child of “Trump-onomics.” Amid the crazi­ness of the Trump era—the whis­pers about the 25th Amend­ment be­ing used to oust the pres­i­dent, the on­go­ing Mueller probe into al­leged Rus­sian col­lu­sion, the in­ten­si­fy­ing trade war with China, the in­ces­sant tweets, the im­pul­sive de­ci­sion-mak­ing—the one thing that ad­min­is­tra­tion of­fi­cials be­lieve they can say un­equiv­o­cally is that they own the econ­omy.

“I will be the great­est ‘jobs pres­i­dent’ that God ever cre­ated,” Trump pledged dur­ing the 2016 cam­paign. Pres­i­dents al­ways ex­ag­ger­ate what they can do to fix an econ­omy and claim more credit than they de­serve when times are good. Other pow­er­ful forces—mone­tary pol­icy, global growth rates, geopo­lit­i­cal shocks—shape the na­tion’s fi­nan­cial health. None­the­less, Trump aides say, by many mea­sures, this pres­i­dent is de­liv­er­ing on his prom­ises.

Un­em­ploy­ment is at 3.7 per­cent, the low­est rate since 1969. Con­sumer con­fi­dence is at an 18-year high. Small busi­ness en­thu­si­asm is greater than at any time on record. The stock mar­ket is boom­ing. And the econ­omy grew in the se­cond quar­ter by 4.2 per­cent and may well clock in for the year well above 3 per­cent. “The days of sec­u­lar stag­na­tion”—the Obama ad­min­is­tra­tion’s de­scrip­tion of a slow growth U.s.—“are over,” says Larry Kud­low, head of Trump’s Na­tional Eco­nomic Coun­cil. “This is sus­tain­able.”

In fact, Trump be­lieves the health of the econ­omy should be the defin­ing is­sue in the up­com­ing midterm elec­tions, the one thing that might fend off a Demo­cratic wave. “The econ­omy is soooo good,” the pres­i­dent tweeted in Septem­ber, “per­haps the best in our coun­try’s his­tory.” Vot­ers, how­ever, are split on that as­sess­ment, set­ting up a strange—and fore­bod­ing—dy­namic for Repub­li­cans in Novem­ber.

Ac­cord­ing to the Pew Re­search Cen­ter, about half of Amer­i­cans now rate the na­tional econ­omy as “ex­cel­lent or good,” among the high­est num­bers in nearly two decades. But views, as with every­thing else in the Trump era, are sharply par­ti­san: 73 per­cent of Repub­li­cans and Gop-lean­ing in­de­pen­dents feel pos­i­tive about the econ­omy while just 35 per­cent of Democrats and Demo­cratic lean­ers agree. And even as solid ma­jori­ties in both par­ties re­main op­ti­mistic

about their per­sonal fi­nan­cial fu­tures, Trump is not get­ting the full credit: His ap­proval rat­ings hover around 40 per­cent, de­spite the boom­ing econ­omy.

Some Repub­li­cans fear the pres­i­dent’s in­cen­di­ary rhetoric and pen­chant for stok­ing con­tro­ver­sies over­shad­ows the eco­nomic news, mak­ing it dif­fi­cult, if not im­pos­si­ble, for the GOP to run on the econ­omy; im­mi­gra­tion, Rus­sia and the bat­tle over the Supreme Court have dom­i­nated cam­paigns as polls show Democrats in a strong po­si­tion to re­claim the House. “The po­lit­i­cal side of this is as­tound­ing,” says Aus­tan Gools­bee, eco­nomic czar un­der Pres­i­dent Barack Obama. “There has never been an econ­omy hum­ming along as well as ours has been for so many years in which so few peo­ple give credit to the ad­min­is­tra­tion.”

Democrats ar­gue that “Trump-onomics” have done lit­tle for mid­dle-class Amer­i­cans. Wage growth, a key prom­ise of the ad­min­is­tra­tion, has only re­cently shown signs of pick­ing up; for most of Trump’s time in of­fice, workers’ pay has re­mained largely stag­nant. And the num­ber of peo­ple who have stopped look­ing for work, though de­clin­ing for sev­eral years now, is not com­ing down as quickly as Trump’s eco­nomic ad­vis­ers ex­pected. (These “dis­cour­aged workers” are not counted in of­fi­cial un­em­ploy­ment.) In Au­gust, a Quin­nip­iac Univer­sity poll found that 58 per­cent of vot­ers feel the ad­min­is­tra­tion isn’t do­ing enough to help the mid­dle class.

So if the midterms are a referendum on Trump, what have his poli­cies ac­tu­ally done to the econ­omy? Have they re­ally jump-started the slow but steady growth of the Obama era in the same way Pres­i­dent Ron­ald Rea­gan’s poli­cies in the early 1980s helped turn “stagfla­tion” into a 20-year boom? Or are we in the midst of a sugar high—an econ­omy boosted by sig­nif­i­cant stim­u­lus, a deficit-rais­ing tax cut—that will wear off quickly, drop­ping the U.S. back into the Obama era? Are the num­bers “re­sults to cel­e­brate, not re­sist,” as em­bat­tled Repub­li­can Rep­re­sen­ta­tive Bar­bara Com­stock re­cently put it in a de­bate? Or do they pa­per over an econ­omy built for the wealthy few?

The ‘New Nor­mal’

the trump ad­min­is­tra­tion’s case is straight­for­ward: a cor­po­rate tax-slash­ing bill, cou­pled with a broad push for dereg­u­la­tion, has su­per­charged the econ­omy and changed cor­po­rate be­hav­ior, en­cour­ag­ing busi­nesses to make in­vest­ments they oth­er­wise wouldn’t have and—in the best-case sce­nario—hire more workers.

But the re­al­ity is more complicated, which is why some of Trump’s aides cringed ear­lier this year when the pres­i­dent cheered nearly ev­ery time a com­pany an­nounced it was dol­ing out spe­cial bonuses to em­ploy­ees with some of its new­found cash. AT&T, for ex­am­ple, gave a $1,000 bonus to 200,000 em­ploy­ees af­ter Trump signed the tax bill. Sure, those bonuses boost in­di­vid­ual workers, but they are also a one­off and will have lit­tle over­all ef­fect on the econ­omy. Some econ­o­mists ar­gue the pay­ments in­di­cate that in­vest­ment op­por­tu­ni­ties for com­pa­nies might be rel­a­tively scarce—oth­er­wise, the funds would go into those op­por­tu­ni­ties.

Trump would be smarter, po­lit­i­cally speak­ing, to

point to a small com­pany like Youngstown Tool & Die, whose GM partly cred­its the tax bill for his $13 mil­lion ex­pan­sion plan. “The tax changes were cer­tainly part of our cal­cu­la­tion,” says Mrd­jen­ovic.

In­vest­ments like that, from com­pa­nies of ev­ery size, will de­ter­mine whether the Trump tax cut was wise pol­icy or not. Why? Be­cause in­vest­ment tends to drive em­ploy­ment, in­crease pro­duc­tiv­ity and raise wages. Pro­duc­tiv­ity growth en­ables com­pa­nies to pay workers more with­out rais­ing prices or cut­ting prof­its—it’s the magic elixir for sus­tained eco­nomic growth, lack­ing in the U.S. for over a decade.

There are early signs that might be chang­ing. Cap­i­tal in­vest­ment is grow­ing in 2018 at a re­spectable rate—5 per­cent year on year—and has ac­cel­er­ated in the last two quar­ters. But it’s not yet the boom Trump ad­vis­ers thought was com­ing thanks to the cor­po­rate tax cut. More promis­ingly, a 2.9 per­cent in­crease in hourly wages in the se­cond quar­ter—the big­gest quar­terly in­crease since 2009—was ac­com­pa­nied by a sim­i­larly brisk in­crease in pro­duc­tiv­ity. If, over time, that con­tin­ues, it’s plau­si­ble that Trump’s pol­icy changes will have done as ad­ver­tised: jolted the econ­omy to faster, sus­tain­able growth.

But one quar­ter’s data do not make a trend. The key phrase is over time. Thus far, the Trump econ­omy has not cre­ated a rapid surge in new jobs, as the pres­i­dent claims; the monthly num­bers in Trump’s first two years are not sig­nif­i­cantly dif­fer­ent from Obama’s last two. (The Washington Post’s “Fact Checker” has noted that the econ­omy did bet­ter un­der Ulysses S. Grant, Dwight D. Eisen­hower, Lyn­don B. John­son and Bill Clin­ton.) What’s sur­pris­ing is that hir­ing con­tin­ues to be strong this late into an eco­nomic ex­pan­sion that be­gan nearly a decade ago, af­ter the Great Re­ces­sion ended in 2009. It’s also un­usual that growth seems to be ac­cel­er­at­ing, at least for now.

Trump’s bullish ad­vis­ers be­lieve, as econ­o­mist Steve Moore says, “that this is the new nor­mal.” Kud­low claims ac­cel­er­a­tion in growth re­flects the “be­gin­ning of the ef­fects of the tax cut”—which, ac­cord­ing to the Con­gres­sional Bud­get Of­fice, adds $1.5 tril­lion to the deficit over a decade—“but not only the tax cut.” The ad­min­is­tra­tion says its com­mit­ment to dereg­u­late broad swathes of the econ­omy is also driv­ing growth higher. “We are in an eco­nomic boom,” says Kud­low.

Dereg­u­la­tion Na­tion

that a lighter gov­ern­ment touch across the econ­omy—and in par­tic­u­lar in fi­nance, man­u­fac­tur­ing and en­ergy pro­duc­tion—can ben­e­fit growth is not in dis­pute among main­stream econ­o­mists.

And there is some anec­do­tal ev­i­dence to sup­port the ad­min­is­tra­tion’s claim that dereg­u­la­tion is boost­ing busi­ness. John Sim­mons, who runs a lum­ber mill out­side Lin­coln, Ne­braska, says he ex­pects lower en­ergy bills be­cause of Trump’s re­vi­sions to the Obama-era Clean Power Plan, which in­tended to phase out coal-fired elec­tric plants. For him, that means more money to go to in­vest­ment and wages.

Youngstown Tool & Die is ex­pend­ing less ef­fort on pa­per­work for health and safety reg­u­la­tions. That saves time and money, and if repli­cated by busi­nesses through­out the econ­omy, it can help boost growth.

But there’s lit­tle data to sup­port broad con­clu­sions. Some econ­o­mists, and many busi­ness­peo­ple in­ter­viewed for this story, be­lieve the mere prom­ise of dereg­u­la­tion has stirred what John May­nard Keynes fa­mously called “an­i­mal spir­its”: the be­lief that reg­u­la­tory re­lief helps cre­ate a surge in busi­ness op­ti­mism, which in turn trig­gers more in­vest­ment, more hir­ing and more growth. There is, of course, no way to mea­sure an­i­mal spir­its, though econ­o­mists point to in­di­ca­tors such as soar­ing small busi­ness con­fi­dence as a re­flec­tion of eco­nomic op­ti­mism.

Asked late this sum­mer how much in reg­u­la­tory costs had been saved by the Trump ad­min­is­tra­tion’s poli­cies, Neomi Rao, who runs the Of­fice of In­for­ma­tion and Reg­u­la­tory Af­fairs, re­sponded: “So far about $8 bil­lion.” That may sound like a lot, but it isn’t. The U.S. is a $4 tril­lion econ­omy. The rel­a­tively small

amount in sav­ings thus far speaks to an im­por­tant re­al­ity: It takes a long time to cut reg­u­la­tion—most changes from the ex­ec­u­tive branch re­quire a re­view pe­riod. More­over, much reg­u­la­tion is statu­tory; that is, it’s reg­u­la­tion re­quired by con­gres­sional action, mean­ing it can only be un­done via new leg­is­la­tion.

That’s why, for all the talk about rolling back reg­u­la­tion, the dirty lit­tle se­cret is this: The Trump ad­min­is­tra­tion has merely slowed the im­po­si­tion of new rules. In the man­u­fac­tur­ing sec­tor, for ex­am­ple, Trump has is­sued 34 ma­jor new reg­u­la­tions (rules that have an eco­nomic im­pact of $100 mil­lion or more in a sin­gle year), com­pared with 79 un­der Obama and 54 un­der George W. Bush. From busi­nesses’ stand­point, that’s con­sid­ered progress. But as Keith Bel­ton, the di­rec­tor of the Man­u­fac­tur­ing Pol­icy Ini­tia­tive at In­di­ana Univer­sity, says, the net cost of fed­eral reg­u­la­tion is still climb­ing, “but the rate of in­crease is much less un­der this pres­i­dent than un­der pre­vi­ous ad­min­is­tra­tions.”

‘Trump Boom’ or Bust?

some econ­o­mists scoff at the no­tion that we’re now ex­pe­ri­enc­ing a “Trump boom.” Un­em­ploy­ment was al­ready fall­ing un­der Obama, even with slower gross do­mes­tic prod­uct growth. Trump likes to brag that job­less­ness among African-amer­i­cans and Lati­nos has also plunged, but that trend be­gan un­der the pre­vi­ous ad­min­is­tra­tion too. “When you hear how great the econ­omy’s do­ing right now, let’s just re­mem­ber when this re­cov­ery started,” Obama told a crowd at the Univer­sity of Illi­nois in Septem­ber.

Trump, of course, had cam­paigned on fix­ing what has been per­haps the sin­gle big­gest eco­nomic co­nun­drum of the 21st cen­tury: stag­nant wages. “We’ll get your salaries and your wages up, up, up,” he said at a Florida rally in 2016. And his ad­min­is­tra­tion dou­bled down on the prom­ise, vow­ing that the GOP tax bill would bump wages by $4,000 to $9,000. That hasn’t happened. Aver­age hourly wages are up frac­tion­ally year over year, ac­cord­ing to the La­bor Depart­ment’s lat­est es­ti­mate, barely keep­ing pace with an in­creas­ing in­fla­tion rate, though the lat­est jobs re­port showed weekly pay ris­ing by a health­ier 3.4 per­cent.

Busi­ness­men such as Sim­mons say they’ve handed out just mod­est raises in re­cent years, pri­mar­ily be­cause com­pe­ti­tion in their in­dus­tries is bru­tal. “You’ve still got to keep a tight rein on costs,” he says. Ac­cord­ing to Bloomberg News, an in­ter­nal poll com­mis­sioned by the Repub­li­can Na­tional Com­mit­tee in Septem­ber found that more than 60 per­cent of vot­ers now see the tax bill as ben­e­fit­ting “large cor­po­ra­tions and rich Amer­i­cans” over “mid­dle-class fam­i­lies.”

“I think peo­ple are pretty wise. On the tax cut, they are look­ing at who got the money and say­ing, ‘Wait, I didn’t see any­thing,’” Gools­bee says. “The aver­age ob­server is not wrong to think that this was a boon to cor­po­ra­tions but not workers.”

An­other con­cern: The strong econ­omy isn’t driv­ing “dis­cour­aged” workers back into the la­bor force as quickly as White House pol­i­cy­mak­ers ex­pected. (In the Obama era, as the num­ber of those who had stopped look­ing for work rose in the wake of the

Great Re­ces­sion, the stan­dard Repub­li­can joke was that the of­fi­cial un­em­ploy­ment rate would go to zero be­cause ev­ery job seeker would opt out of the work­force.) The most re­cent data, through Septem­ber, show that year over year there was no de­cline in the num­ber of dis­cour­aged workers, which sug­gests the econ­omy may not yet be strong enough to pull more peo­ple back into the work­force. That’s im­por­tant, be­cause dis­cour­aged workers, plus part-timers who wish to work full time (called “un­der­em­ployed”), can de­press wages.

The prob­lem, says Dart­mouth econ­o­mist David Blanch­flower, is that there are still “lots of part-timers” who say they want to work more hours. Those peo­ple will work part time for less money. That over­hang of dis­cour­aged and un­der­em­ployed workers means the la­bor mar­ket may be tight, but not as tight as a 3.7 per­cent un­em­ploy­ment rate would sug­gest.

To which Kevin Has­sett, the chair­man of Trump’s coun­cil of eco­nomic ad­vis­ers, says, “Give it time.”

It’s Not the Econ­omy, Stupid

in 1992, james carville, a demo­cratic strate­gist for Bill Clin­ton, coined an ax­iom for cam­paign workers: “It’s the econ­omy, stupid.” Clin­ton, of course, went on to beat Pres­i­dent George H.W. Bush, whose bid for a se­cond term was done in partly by a re­ces­sion. Ever since, the motto has served as a po­lit­i­cal rule for both Repub­li­cans and Democrats. Not this year. As Trump boasts about jobs num­bers, the econ­omy has been vir­tu­ally ab­sent in GOP cam­paigns.

Ac­cord­ing to surveys by the Wesleyan Me­dia Project, which an­a­lyzes po­lit­i­cal ads across the na­tion, only 10 per­cent of GOP spots men­tioned jobs, com­pared with 13 per­cent of the Democrats’. The same sur­vey found that for GOP house races, “jobs” ranked fourth, be­hind taxes, im­mi­gra­tion and health care. Repub­li­cans are scram­bling to mo­ti­vate their base to turn out amid fore­casts that pre­dict them los­ing con­trol of the House, if not the Se­nate. “Tout­ing low un­em­ploy­ment is not likely an is­sue that makes Repub­li­cans an­gry enough or anx­ious enough to get to the polls,” says Mike Franz, the project’s co-di­rec­tor.

Oth­ers blame the pres­i­dent him­self for sour­ing what should be a de­ci­sive ad­van­tage. “We’d be much more re­laxed if the pres­i­dent didn’t keep step­ping in it,” says the chief of staff to a Repub­li­can in­cum­bent in a tight House race, who spoke only on con­di­tion of anonymity. “If we had a nor­mal pres­i­dent with this econ­omy, I think we’d keep con­trol of the House. As it is now? I don’t know.”

Trump’s lack of dis­ci­pline when talking up the econ­omy ex­ac­er­bates pub­lic views that he’s un­trust­wor­thy. Last month, he falsely claimed in a tweet that the rate of GDP growth was higher than the un­em­ploy­ment rate for the first time in “100 years.” Has­sett had to clar­ify, say­ing some­one had prob­a­bly added a zero when re­lay­ing the news: It’s the first time in 10 years that GDP out­paced un­em­ploy­ment.

If the midterms were turn­ing on the econ­omy, the GOP would have a strong case. Growth has picked up, and as Jerome Pow­ell, chair­man of the Fed­eral Re­serve, put it in a talk in Bos­ton in early Oc­to­ber, the econ­omy is “not too good to be true.” The fis­cal stim­u­lus from the tax cut, he said, “pro­vides real sup­port this year, and for the next cou­ple of years,” pre­dict­ing less than 4 per­cent un­em­ploy­ment through 2020. He also said there’s the pos­si­bil­ity

that the “sup­ply-side ef­fects’’ that Trump’s ad­vis­ers love to talk about could emerge: lower taxes lead­ing to higher prof­its and more cap­i­tal spend­ing, which even­tu­ally drives up wages and pro­duc­tiv­ity growth, re­sult­ing in a long, low-in­fla­tion boom.

What could go wrong? If busi­ness in­vest­ments don’t con­tinue to in­crease briskly, growth will wane, wages will re­main stag­nant, and the U.S. deficit will be much higher. That would limit the gov­ern­ment’s abil­ity to cush­ion the ef­fects of the next re­ces­sion.

The low un­em­ploy­ment fig­ures are also rais­ing con­cerns that the econ­omy is now “over­heat­ing”—a con­di­tion when un­usu­ally low job­less­ness can trig­ger spikes in in­fla­tion and desta­bi­lize fi­nan­cial mar­kets. In the first week of Oc­to­ber, bond traders re­acted to the lat­est jobs re­port by driv­ing the bench­mark 10-year Trea­sury bond to its high­est level since 2011. Banks and other lenders base their own in­ter­est rates on Trea­sury yields, and crit­i­cal in­ter­est­sen­si­tive sec­tors of the econ­omy such as hous­ing have al­ready be­gun to slow. Pow­ell said re­cently that the Fed in­tends to raise its key rate at the end of this year and per­haps sev­eral times next year. In­creas­ingly, in­vestors are wor­ried that higher rates may choke off the on­go­ing ex­pan­sion.

Brian Wes­bury, chief econ­o­mist at First Trust Port­fo­lios, an Illi­nois in­vest­ment firm, and other fi­nan­cial ex­perts say the only way to keep growth go­ing is to ex­er­cise some spend­ing re­straint—the kind Pres­i­dent Clin­ton and House Speaker Newt Gin­grich agreed upon af­ter the GOP seized con­trol of the House in 1994. Not spend­ing cuts nec­es­sar­ily, but a reduction in spend­ing growth. The think­ing: If the growth of tax rev­enue brought in by a stronger econ­omy is higher than that of spend­ing growth, the deficit would be­gin to come down.

The catch? There is vir­tu­ally no con­stituency for spend­ing re­straint in Washington, thanks prin­ci­pally to Trump him­self, head of the party that used to make fis­cal re­spon­si­bil­ity its call­ing card. With­out it, Wes­bury says, the econ­omy will slow in a cou­ple of years, back to what he calls the “plow horse” days of the Obama ad­min­is­tra­tion.

There is, fi­nally, one other sig­nif­i­cant risk: a trade war. Trump’s use of tar­iffs against U.S. trad­ing part­ners has so far barely dented a strong econ­omy. He man­aged to avoid rip­ping apart NAFTA, which would have un­nerved in­vestors and dis­rupted sup­ply chains in key in­dus­tries. But a much big­ger show­down looms with China, the world’s se­cond largest econ­omy.

The U.S. eq­uity mar­ket, near all-time highs, has con­vinced it­self that Trump will ul­ti­mately do a deal with Bei­jing, and, for his part, the pres­i­dent be­lieves he is “win­ning” the trade skir­mish be­cause the U.S. econ­omy is health­ier than China’s. China, he rea­sons, has far more to lose be­cause it ex­ports so much more to the U.S. than vice versa.

That, ac­cord­ing to busi­ness ex­ec­u­tives in China and pol­icy an­a­lysts in Washington, may fun­da­men­tally mis­read Bei­jing, who will not be seen back­ing down and los­ing face at home. Though the U.S. ex­ports only $130.4 bil­lion to China (com­pared with im­ports of $505 bil­lion in 2017), U.s.-based com­pa­nies do a huge amount of busi­ness within China, mak­ing them very vul­ner­a­ble to a gov­ern­ment seek­ing eco­nomic re­venge. “This thing is go­ing to get a lot darker be­fore it gets brighter,” says Scott Kennedy, deputy di­rec­tor of the Free­man Chair in China Stud­ies at the Cen­ter for Strate­gic and International Stud­ies, a Washington, D.C., think tank.

In other words, this year’s surge in growth could get de­railed be­fore much money ever shows up in work­ing-class wal­lets, thanks to trade and a Congress ap­par­ently un­will­ing to even con­sider a reduction in the growth of gov­ern­ment spend­ing. That, lead­ing into the election Don­ald Trump re­ally cares about—his own, in 2020—could leave the U.S. with a huge fis­cal hang­over and a trade war whose po­ten­tial eco­nomic dam­age might be dev­as­tat­ing.

Un­der those cir­cum­stances, the “plow horse” econ­omy of the Obama years will never have looked so good.

Il­lus­tra­tion by Gluekit

BOOM, SWAG­GER, BOOM The ad­min­is­tra­tion says the coun­try is feel­ing a “Trump boom,” thanks to GOP tax cuts and dereg­u­la­tion. From top: Traders at the New York Stock Ex­change; a scrap­yard in Youngstown, on the site of a for­mer steel mill; Trump in the Oyal Ofɿce.

MAR­KET WATCH Fed Chair Pow­ell says the econ­omy is “not too good to be true.” But a trade war with China and higher in­ter­est rates could curb growth. From top: Trump at an Illi­nois steel mill; the port of Long Beach; a “help wanted” sign in New York.

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