U.S. President Donald Trump is heralding what he calls a “blue-collar boom.”
With his impeachment trial in the Senate nearly behind, Trump took the opportunity during last night’s state of the union address to describe what he calls “the great American comeback.”
He touted how he moved quickly when he took office to revive the U.S. economy by “slashing a number of job killing-regulations, enacting historic and record-setting tax cuts, and fighting for fair and reciprocal trade agreements.”
“America’s fortunes are on the rise. America’s future is blazing bright,” he said. “The years of economic decay are over.”
It’s true, the U.S. economy continues to grow, stock markets are soaring and unemployment is at historic lows. But not everyone has benefited from Trump’s economy.
“Like a lot of things in the Trump administration, there’s the rhetoric and there’s the fact,” said Brett House, Scotiabank’s deputy chief economist.
In the case of blue-collar workers and lower-income earners, in particular, the facts and the rhetoric don’t always quite match, he said.
Among those “who are meant to be the real focus of revival in making America great again, in fact, things haven’t been going really well for them,” said House.
Stock markets have been soaring, but most Americans don’t own stocks. So the benefits of record highs on Wall Street aren’t enjoyed by all. (Richard Drew/The Associated Press)
He points to slowing median wage gains, as well as the struggles of certain sectors that tend to employ lower- and middle-income earners.
Trump has a well-documented tendency for hyperbole. However, it’s important to say, the economy is doing well. It’s just that the benefits of that growth are not being felt everywhere.
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Yes, the stock market is soaring. But the vast majority of stocks are held by the wealthiest Americans.
Yes, jobs are being added, but the growth rate has begun to slow.
Yes, GDP is still growing at a respectable pace, but it’s down from the high points under Barack Obama and earlier under Trump.
In 2016, Trump’s campaign tapped into deep economic anxiety in regions that felt left behind during the recovery from the 2008 financial crisis. Part of that was the American economy transitioning from traditional manufacturing to a more services-based economy — a painful shift that had begun many years earlier.
A global manufacturing downturn has meant many people who live in those regions are worse off today than they were when Trump took office. While many sectors have added jobs these past few years, manufacturing has actually been laying people off. Factory activity contracted for five consecutive months to close out 2019. January of this year finally showed some positive numbers on that front.
“A number of [Trump’s] real swing states that came into supporting him have actually taken more damage than other parts of the American economy,” said Karl Schamotta, chief market strategist with Cambridge Global Payments, a Toronto-based provider of cross-border payment services and currency management solutions.
The new NAFTA removes some, but not nearly all, the uncertainty that has plagued trade-sensitive industries across the U.S. (Sean Kilpatrick/The Canadian Press)
Coal-mining regions in states like Kentucky were promised Trump would revive their industry. But the coal comeback never emerged.
Meanwhile, farmers who supported Trump in the Midwest have been targeted by punitive tariffs in Trump’s trade war with China.
But none of that may matter.
“Although Trump may not be master of the facts, he is a master of the narrative,” said Schamotta. “He’s very good at telling a story about the American economy that a large chunk of the population chooses to believe.”
Trump is very successful at communicating his message to his supporters. (Leah Millis/Reuters)
Looming over the whole economic debate is the vast increase in government spending that has occurred since Trump took office. The federal budget deficit surpassed $1 trillion last year. Trump promised he would start paying down the national debt, but his tax cuts and sweeping spending plans have seen the deficit soar to record highs.
Schamotta says spending that much while the economy is doing well runs counter to generations of Republican thinking — and he questions how well it’s working. In 2018, the U.S. economy grew by 2.9 per cent. In 2019, Trump’s enormous spending and tax cuts kicked in and yet the economy grew by just 2.3 per cent.
“So, it’s actually decelerating despite all this money pouring in,” he said.
Growing deficits during good times
Even those who feel Trump’s economic record should stand on its own are worried about the impact of all that new spending.
“If there is a concern, it’s that we’ve run up the deficit during good times,” said Avery Shenfeld, chief economist of CIBC Capital Markets. “Should a recession hit, there’s a fear that Congress might hesitate about amplifying that deficit, which would be a necessary step to fight the next recession.”
Nonetheless, Shenfeld said, Trump’s economic record is a good one. Based on the three years of data, the president has a reasonable claim that the average American family is better off, he said.
“If it wasn’t for all the whiff of scandal and controversy around this president, he’d be sailing into re-election — if it was just a battle over the economic numbers.”
To a degree, every election is about the economy. People look around and ask whether they’re better off now than they were four years earlier.
The answer under Trump depends on where you live and where you fall on the income range. It’s easy to point to job numbers or the stock markets and say everyone’s better off. It’s also easy to point out the regions that are being left behind by a changing economy and blame the president. The truth almost always falls somewhere in between.
Nuance makes for lousy talking points. But during an election year, nuance should be more important than ever.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
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.
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.
