Leftist Economists Doing Their Best to Conjure up a Recession
Woke leftists understand that a major component of their 2024 red wave loss was due to the economy issue. Simply put: the economy under Donald Trump was substantially better for average Americans than the economy under Joe Biden.
This lesson will not be lost on party zealots as they eye the midterms and the 2028 presidential election. Would Democrats purposely sabotage the economy to regain power?
Of course they would. What impediment have they ever left standing in their unquenchable thirst for authoritarian rule?
They tried to overturn the filibuster, pack the Supreme Court, rendered the Supremacy Clause moot, jailed the opposition and rigged elections. You honestly think they would hesitate to send people into breadlines if it ensured a victory in 2026 and 2028?
Trump Inherits a Ticking Time Bomb
The economy that President Trump is inheriting is in far worse shape than the one he handed over to Joe Biden in 2021. In fact, under Trump, inflation was cumulatively 7.7% over four years, and 1.4% during his last year in office. By contrast, inflation over Biden’s term so far is 20.2%, and full-year 2024 is likely to reach 3.3%. On average, Americans have lost about 3% of the purchasing power they had in 2020 due to the imbalance between inflation and wage increases.
So, while Trump tries to figure out a way to restore an economy of prosperity for average Americans, he faces a number of systemic issues that have no easy solutions.
* The Deficit: The U.S. deficit for fiscal 2024 that ended September 30th is $1.833 trillion, which is the highest debt level outside the Covid pandemic years. The deficit is up 8% over 2023 levels. Interest on the national debt now exceeds $1 trillion, and the 2024 deficit registered at 6.4% of GDP, up from 6.2% the previous year. Interest on the debt now exceeds the defense budget and Medicare and trails only Social Security and Medicaid as the largest annual budget expenditures.
Throughout modern American history, many politicians have sounded the warning about deficit spending, but they have been largely ignored because the impact of huge deficits hasn’t translated to main street. In truth, many Americans, especially core Democrat constituencies, don’t care about deficit spending if they are benefitting from it personally.
However, the impact of the debt and continuing deficits may soon become impossible to ignore. The Federal Reserve cut the federal funds rate 75 basis points so far in 2024. Since interest rates in general are linked to the Fed’s policy decisions, markets were expected to adjust accordingly. Almost immediately, CD, credit card and money market interest rates came down, but interestingly, mortgage rates and the yields on treasury bonds actually rose after the Fed cut.
So, what gives?
While some analysts believe the Fed has turned its attention to a softening jobs market and will tolerate a higher level of inflation as a result, there is a growing school of thought that centers on the idea that owning U.S. debt is no longer attractive to the global investment community. The feeling is that savvy international investors and central banks are quietly beginning to question the long-term solvency of the U.S. government. Increasingly weak bond auctions signal a canary in the coal mine scenario. Rising treasury interest rates could result in a debt death spiral where the higher cost of financing the debt continues to add to it, resulting in a hyper-inflation cycle and the collapse of the dollar as the global currency.
* Consumer Debt Bomb: In the four years of the Biden administration, total consumer debt has risen from $14.56 trillion to $17.94 trillion as of Q3 2024. Delinquency rates on consumer loans, which plummeted during the pandemic free money giveaways, have risen from 1.52% in 2021 to 2.74% in Q2 2024.
Credit card, mortgage debt and consumer loan balances are rising at alarming rates, and the number of loans in default are accelerating in tandem.
Considering those vulnerabilities, it wouldn’t take much to push a fragile economy off the cliff.
Leftist Publications Signal Coming Economic Doom
Remember when virtually every mainstream publication touted the robustness of Joe Biden’s economy? Bidenomics they proudly called it. The collective narrative was that ordinary Americans were just too ignorant to understand how great they had it.
Well, no more. Nearly every recent article from leftist publications warns of economic doom and a stock market crash in Trump’s second term.
Just take a look at the analysis by a few “experts” on the economy.
Last month, the Peterson Institute for International Economics predicted that Trump’s policies — the deportations, import taxes and efforts to erode the Fed’s independence — would drive consumer prices sharply higher two years into his second term. Peterson’s analysis concluded that inflation, which would otherwise register 1.9% in 2026, would instead jump to between 6% and 9.3% if Trump’s economic proposals were adopted.
“He portrays himself as this businessman and the savior of business,” said Gabe Horwitz, senior vice-president of Third Way’s economic program and a co-author of the report. “What he is proposing would absolutely decimate the US economy and really hurt businesses.”
Sixteen Nobel prize-winning economists signed a letter on Tuesday warning that the U.S. and world economy will suffer if Republican presidential candidate Donald Trump wins the U.S. presidential election in November.
According to a 2016 report by the Center for American Progress, deporting 7 million workers would “reduce national employment by an amount similar to that experienced during the Great Recession.” GDP would immediately contract by 1.4 percent, and, eventually, by 2.6 percent. In 20 years, the US economy would shrink nearly 6 percent—or $1.6 trillion. Trump’s plan would lead to a dire shortage of low-wage workers, which would “bring on a recession while reigniting inflation,” predicts Robert J. Shapiro, a former undersecretary of commerce in the Clinton administration.
Leftist Economists Create Fear and Uncertainty
The majority of average Americans may not understand how the irresponsible and self-serving policies of the Biden administration eroded our nation’s financial pillars, but rest assured, the people who caused it absolutely understand what they did. They got away with spending nearly $8 trillion above pre pandemic levels to give America an economic sugar high just in time for the election, all the while knowing they wouldn’t have to face the consequences because Biden couldn’t run again.
These same people are now gathering a group of “respected” woke economic analysts to warn us of a coming calamity. Knowing the fragile underpinnings of the economy, they are hoping their dire warnings become a self-fulfilling prophecy. The more they preach about the coming economic destruction from Trump’s policies, the more people will become defensive in their spending habits in anticipation of the worst. It becomes a negative feedback loop.
The first time there is one weak economic report, even if it has nothing to do with Trump’s policies, they’ll ratcheted up the fear mongering to deafening levels. And if their rhetoric ultimately accelerates a recession and people suffer, so what? For the hard core woke leftists, there is nothing off the table if it means bringing the leftist cabal closer to regaining power.
