Economy

The economy gives Trump a chance to shift from weakness to strength – CNN

Published

5 years ago

February 4, 2020

The President’s weakness — his insistence on crossing behavioral and ethical, if not legal, lines — landed him in the Senate impeachment trial scheduled to conclude Wednesday. It has made Trump the only modern President never to reach 50% job approval among the American public.

But economic performance on his watch justifies boasting on the biggest stage American presidents command. No wonder Trump ahead of the Super Bowl previewed Tuesday night’s remarks as “very, very positive.”

Growth has slowed lately after the short-term acceleration in 2018, stimulated by tax cuts and spending increases. It remains vulnerable to external shocks, such as the coronavirus crisis that’s frightening investors, and the self-inflicted wound of trade conflict, which dampened business confidence before Trump called a truce with China last month.

Yet nine months before Election Day, history places the Trump economy squarely in territory consistent with winning another term.

Of his six most recent predecessors, each one who avoided an economic downturn in the last half of his first term won reelection. Only Bill Clinton and Trump, so far, avoided any brush with recession at all.

Unpresidential behavior notwithstanding, Trump has overseen a three-year extension of the expansion he inherited from Barack Obama. The expansion has broken previous records to become the longest in US history.

It has driven unemployment to its lowest rate in a half-century and boosted wages for average workers. The Dow Jones Industrial Average has risen 43% since his inauguration.

What Trump has and hasn’t done

All Presidents have limited ability to shift the trajectory of America’s $20 trillion economy. That hasn’t stopped Trump from characteristically wild exaggerations, which television viewers can expect to hear again Tuesday night as he touts “The Great American Comeback.”

He has not created “the greatest economy in the history of our country.” The late-1990s boom under Clinton produced far more robust growth.

He has not ended an economic “nightmare” by replacing the North American Free Trade Agreement with the US-Mexico-Canada deal he signed last week. It actually represents a modest revision of NAFTA, much of it negotiated by the Obama administration for the larger Trans-Pacific Partnership that Trump junked.

He has not delivered job gains “nobody would’ve believed” before his presidency. The 8 million jobs created during Obama’s last three years in office outnumbers those created in Trump’s first three.

In fact, Trump has largely surfed growth and employment trends that began in the Obama-era recovery from the Great Recession. The 2% annual growth economists now forecast over the next decade matches forecasts from before he took office.

“The potential of the US economy to produce goods and services has not fundamentally changed,” observes Michael Strain, who directs economic policy studies at the conservative American Enterprise Institute.

Yet Strain sees an opening for Trump to brighten a national economic debate that has emphasized shrinking opportunities for middle- and working-class Americans. His forthcoming book, “The American Dream Is Not Dead,” argues that both parties have overlooked improving conditions while playing to voter anxieties.

Trump vs. Democrats on the economy

Trump’s eventual Democratic opponent — Bernie Sanders, Joe Biden or anyone else — will make those anxieties a central theme this fall. Organizational bungling in the Iowa caucuses temporarily delayed the first round of competition.

But presidential incumbents, as Ronald Reagan showed with his 1984 “Morning in America” campaign, usually strike upbeat themes as they argue for another term.

Holes in Trump’s record complicate his case. He has not delivered better health care coverage to vulnerable Americans, instead threatening benefits they gained under Obamacare.

He has not upgraded American infrastructure or revived a coal industry still beset by economic and environmental pressures that drive down demand. Manufacturing — the object of his pledge to end the “carnage” afflicting blue-collar workers — has fallen into recession.

Despite his promises to the contrary, the 2017 tax cut has ballooned the federal budget deficit, delivered its greatest rewards to wealthy Americans and failed to sustain growth of 3% or more. Business investment lags even after the top corporate tax rate dropped from 35% to 21%.

Spending by consumers has sustained Trump-era growth. And economists see their confidence as fragile.

“Consumers say they feel good, but have proven they’ve grown more susceptible to a negative news shock,” notes Diane Swonk, chief economist for the business consulting firm Grant Thornton.

Coronavirus fears

That raises the stakes for Trump’s handling of the coronavirus, which threatens to damage global economic activity. His administration has not earned a reputation for competent governance.

The coronavirus wild card could yet trigger a 2020 recession, which Mark Zandi of Moody’s Analytics calls a 35% possibility. So could setbacks on trade policy.

Fear of economic fallout led White House advisers to dissuade Trump from new tariffs on imports from China late last year. But an unpredictable president governed by impulse often bucks attempts to control him — on the economy, national security and everything else.

The nature of 21st century polarization makes culture at least as important as the economy in driving election outcomes. No one doubts Trump could return to truculent populism if he deems it necessary to motivate core supporters, whatever economic advisers say.

“He’s not going to listen to them,” says Douglas Holtz-Eakin, once a top economic aide to President George W. Bush. “Who knows what he’ll do?”

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Economy

B.C.’s debt and deficit forecast to rise as the provincial election nears

Published

2 days ago

September 10, 2024

Anne Joseph

VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

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Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

Published

2 days ago

September 10, 2024

Anne Joseph

NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

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Economy

Nova Scotia bill would kick-start offshore wind industry without approval from Ottawa

Published

2 days ago

September 10, 2024

Anne Joseph

HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.

Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.

The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.

Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”

Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.

Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.

This report by The Canadian Press was first published Sept. 10, 2024.

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