When Donald Trump ran for president in 2016, he told voters a relatively simple story about the economy: Though the recovery after the Great Recession seemed to be proceeding steadily, in fact everything was terrible. First, the government was probably falsifying unemployment data: “Don’t believe those phony numbers when you hear 4.9 and 5 percent unemployment,” he said. “As high as 35 — as in fact, I heard recently, 42 percent.”

More fundamentally, the United States was an economic basket case because shrewd foreigners, particularly the Chinese, had taken advantage of us for decades, especially through trade. “They’re laughing at us!” he would declare again and again, displaying what appeared to be an almost pathological obsession with the idea of being laughed at.

At an even higher level of abstraction, Trump insisted the whole system — economic, political, all of it — was “rigged” by elites against the interests of ordinary people.

Part of his success came from the fact that, within the latter two claims, there was some truth (though the bit about unemployment numbers was complete fiction). China’s emergence as a manufacturing powerhouse really did hurt manufacturing employment in the United States. The system really is rigged by the wealthy and powerful, even if Trump would come to Washington and proceed to rig it even further.

But it turned out that managing the economy, to the extent that a president is capable of doing so, has been quite a bit harder than Trump thought. Though unemployment has continued to fall on the same trajectory that began when Barack Obama was president (in fact, jobs were created at a faster pace during the last 2½ years of Obama’s term than in the first 2½ years of Trump’s), there are some worrying signs for both the short and long term.

Let’s take a quick look around at some recent economic news:

  • Yesterday, the administration announced it was delaying a planned round of tariffs on Chinese goods until after shelves are stocked for the holiday season in order to avoid price spikes in consumer goods that might make people angry. This was a tacit acknowledgment Trump has been lying in his repeated insistence that China pays the tariffs, when in fact they’re paid by American importers, who usually pass the cost increase on to consumers.
  • American taxpayers are spending tens of billions of dollars to support U.S. farmers whose access to the Chinese market has been shut off by the trade war.
  • Economists are increasingly worried that the trade war could set off a recession. Meanwhile, although some Chinese manufacturers have been hurt by U.S. tariffs, rather than bringing jobs to the United States, they’re looking to relocate to other low-wage countries such as Vietnam.
  • The stock market tumbled today on fears that the “inverted yield curve” is signaling a coming recession: “For the first time since 2007, the yields on short-term U.S. bonds eclipsed those of long-term bonds. This phenomenon, which suggests investors’ faith in the economy is faltering, has preceded every recession in the past 50 years. It isn’t a sure thing, but it’s one of the more reliable signs that something is amiss in the economy. Recessions typically come within 18 to 24 months after the yield curve inverts, according to research from Credit Suisse.”
  • A new report from the Economic Policy Institute shows that over the past 40 years, inflation-adjusted compensation for CEOs has increased by 940 percent, while compensation for the typical worker has increased only 12 percent.

So what does all this tell us? Most obviously, Trump could not have been more wrong than when he insisted in 2018 that “trade wars are good, and easy to win.” His trade war is somewhere between a failure and a disaster, precisely because he thought it would be easy to win. “We’re learning that maybe China has a higher pain threshold than we thought here,” said Trump economic adviser Stephen Moore. You mean they wouldn’t just knuckle under and give us back all our jobs? Who could have predicted such a thing?

That’s our short-term problem, but the long-term problem suggested by the study of CEO pay is that the economy has been and continues to be organized primarily for the benefit of those at the top. And if we do find ourselves in a recession, it may cause people to step back and realize that not only did Trump have no idea what he was talking about when it came to our immediate challenges, everything he has done will make inequality worse.

One thing we can say for sure is that whatever happens over the next year or two, economic policy turned out to be quite a bit more complicated than Trump thought. Of course, you could say that about almost any policy.

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