It turns out, then, that populism really doesn’t pay.
Now, to paraphrase economist Robert Solow, we can see a Trump effect everywhere but in the macroeconomic statistics. Indeed, Born’s research team couldn’t find any difference between the U.S. economy’s performance before and after Trump’s election when they compared it with a statistical model that used data from 30 other rich countries to try to estimate what ours “should” be. Which is to say that our economy has grown almost exactly as much as you would have predicted it would have back on Nov. 7, 2016, a day before Trump’s unexpected victory. And even if you don’t find these dark arts of econometric analysis convincing, a simple reality test tells us that this is true: The economy has added slightly fewer jobs in both the 17 months since Trump took office and the 19 months since he won than it did in the equivalent periods beforehand.
There’s been no Trump bump.
Not that there was ever any reason to expect one. Trump has barely done anything to improve the economy’s prospects. The “trillion-dollar infrastructure plan” his former adviser Stephen K. Bannon liked to talk about so much — “it will be as exciting as the 1930s,” he said — was just a much less critically acclaimed version of “Waiting for Godot,” if it was about public works instead of the human condition. It was a plan to have a plan that they kept saying would come soon, but never actually did because of a mix of incompetence, indifference and Trump’s inability to avoid changing the subject. Meanwhile, the $1.5 trillion corporate tax cut that was supposed to spur an investment boom that Trump said would create an “economic miracle” has thus far done no such thing. Instead, as its critics predicted, it has mostly diverted money to wealthy shareholders. Trump’s deregulatory agenda hasn’t been much more consequential. While it certainly has long-term costs — things such as riskier banks and dirtier air and water — its short-term benefits, according to Goldman Sachs, have been de minimis. And even Trump’s trade war is at too embryonic a stage to have made much difference yet.
The truth is that, if you ignore all the tweets, Trump has largely been a status quo figure when it comes to the economy. Nowhere is that clearer than in whom he’s picked to lead the Federal Reserve. Trump, you see, didn’t opt for someone who dissented from the Fed’s past policy of very measured rate hikes, but, much to his chagrin now, promoted President Barack Obama appointee Jerome H. Powell to keep the central bank on that path. This, more than anything else, is why the economy hasn’t behaved any differently the past two years than it did before.
Brexit, on the other hand, is as un-status-quo as policies get. In the best case, it means Britain will rip up at least part of its free-trade agreement with its largest trading partner, and, in the worst case, it will get rid of it entirely along with its customs union with it. In extremis, that could lead to a situation where Britain’s supermarkets and hospitals would quickly run short of food and medicine because it would take those things such a long time to pass through the lines at the country’s new customs checkpoints.
So it’s no wonder that the mere possibility of these kind of adverse scenarios has scared businesses so much that, according to Born’s team, Britain’s economy has grown almost 2 percent less the past two years than you would have thought it would before the Brexit vote. After all, why put money into new factories or office buildings when you don’t know if British-made goods and companies will still have the easy access to Europe’s markets that they’d need for those investments to pay off? You wouldn’t. And British businesses haven’t, preferring to wait and see what will happen before committing their money to an economy that might not be worth staying in anymore.
The result hasn’t been a 2008-style crash, but rather a long, slow decline that threatens to leave the country permanently poorer. It can be easy to miss, though, because it’s a story about things that aren’t happening.
It’s a reminder that even if Trump is just an economic footnote so far, populists are plenty capable of leaving their mark — which is almost always bad news.