Market and economics writer Jonathan Levin says the Trump economy is not in flames, but it is limping along when it should be doing much better.
“A lazy interpretation is that critics were simply wrong about the Trump agenda, and that his unorthodox style of governing has somehow been vindicated. But just because calamity has been avoided doesn't mean praise is warranted,” said Levin.
“The reality is that America's economy is … expanding just enough to keep the recession fears at bay yet far from its performance the last couple of years when it was widely regarded as ‘the envy of the world,’” said Levin. “Consider it a downshift from ‘American exceptionalism’ to ‘American mediocrity.’”
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Levin points out that the benchmark S&P 500 Index is up 9.6 percent for the year on a total return basis, which looks like a fine performance — but the MSCI World Index Excluding the United States has surged 23.4 percent thanks to global financial, industrial and communication services companies.
“At this pace, American stocks would deliver their worst relative performance since 1993,” Levin said.
Personal consumption expenditures “have been essentially treading water this year, and growth in payrolls has basically stalled,” he adds, and while tariff rates might not ultimately end up as high as Trump threatened on "Liberation Day" in April, they’re “still poised to land at the highest in a century.” This is thwarting corporate planning, with a record 40 percent of chief financial officers in one survey saying trade and tariff policy is their biggest concern.
“With employers seemingly paralyzed, it's no wonder that consumer confidence is depressed,” said Levin.
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It’s clear why the International Monetary Fund now expects the U.S. economy to grow around 1.9 percent this year, he said, even as the global economy was expected to expand about 3 percent.
“Despite extraordinary structural advantages and exciting technological advances, the U.S. economy and financial markets are mostly just muddling through 2025,” said Levin. “Be careful not to confuse that with vindication for bad policies.”
Read the report at this Kansas City Star link.