It was a long, slow climb from the depths of the Great Recession to the sunny meadows of prosperity, but in 2018, the U.S. economy reached it. A rare combination of strong growth, full employment, low inflation and rising wages combined to create a blissful sense of security and optimism.
"Sweet spot" is the term that fit the moment. Through the course of the year, consumer confidence was the highest it had been since 2000. Businesses were making money; the stock market was soaring; taxes were down; and workers were finally getting raises. "We are the hottest economy in the world right now," exulted chief White House economic adviser Larry Kudlow in October. "We are crushing it."
Today, it looks as though the administration is indeed crushing it — the economy, that is. Donald Trump could hardly have done more to derail the economy if he were trying to. Never has a president blessed with such favorable conditions gone to such lengths to wreck them.
Since reaching record-high closes in October, the Dow Jones industrial average and the S&P 500 have plunged. Trump's vilification of Federal Reserve Chairman Jerome Powell and reports that he was considering firing him have caused anxiety among investors. The Fed has been a steady, farsighted custodian of monetary policy, and hardly anyone thinks it would perform better under a Trump flunky.
Trump unwisely denounced the Fed for keeping interest rates low during the tepid recovery that occurred under Barack Obama. With growth strong this year, he has denounced the Fed for raising them. A policy of tight money during hard times and easy money during good times is an upside-down formula.
New doubts arose when Treasury Secretary Steven Mnuchin called the heads of major banks to make sure they had enough liquid assets and then publicly confirmed that they did. It was about as reassuring as hearing the White House physician stepping forth to announce that the tests to determine whether the president had suffered a stroke had come back negative. A worry that no one had was instantly planted in a lot of minds.
The government shutdown has caused needless disruption that will not only cost taxpayers money but could crimp economic growth by reducing consumer spending, stopping payments to government contractors and impeding businesses that require federal facilitation. Brookings Institution analyst David Wessel told NPR that "economists estimate that it'll shave about a tenth of a percentage point off of growth of GDP each week the government's closed — $2 billion a day."
Until recently, the productive sector had managed to overcome the many obstacles strewn by Trump. His imposition of tariffs on steel and aluminum have raised costs for companies that use the metals. Farmers are being plowed under in the president's trade fight with China, which responded to his tariffs by putting new duties on various American commodities. Previously the biggest buyer of U.S. soybeans, the Chinese cut their purchases by 62 percent in the first 10 months of 2018 — and bought zero in November.
The administration offered "trade mitigation payments" to affected farmers, but they fell short of full compensation. To compound the damage, the Department of Agriculture announced that if the shutdown continues, it will have to cut off the aid next week. Bankruptcies, already spreading among farmers, are likely to keep rising.
Trump imagines that he has the power to eliminate the trade deficit, bring back coal jobs, boost growth and generally shower prosperity on the land. In fact, the greater the number of actions and threats that emanate from his White House the more likely the economy is to stall. A recent poll of corporate chief financial officers found that nearly half expect a recession in 2019.
It's an old and sound truism that presidents have only modest power over the economy and get far more credit or blame for its performance than they deserve. Trump appears to be the exception — as he is to many other presidential rules. His economic policies have been bad enough. But his general approach to the presidency — which is to generate unceasing turmoil, confusion and acrimony — serves to heighten the feeling that our fate is in dangerous hands.
The easiest task for the person in the Oval Office is not messing up things that are going well. But the least you can ask of a president is more than this one can do.
Steve Chapman blogs at http://www.chicagotribune.com/news/opinion/chapman. Follow him on Twitter @SteveChapman13 or at https://www.facebook.com/stevechapman13. To find out more about Steve Chapman and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.