The Battle of The Liars… Trump Versus Harris and The Folly of UniParty Economics
David Stockman's Contra Corner
October 19, 2024
The Dem candidate brags about 16 million new jobs on the Harris-Biden watch and Trump claims the Greatest Economy Ever—evidenced in part by low inflation that his successor purportedly blew sky high.
Both are lying. Both ignore crucial matters of context—such as stage of the business cycle, Fed policy actions, forces arising from the $105 trillion global economy in which US growth, jobs and inflation are inextricably rooted and the fact of lag times in transmission of Washington policy into economic outcomes.
Among other things, these factors mean that comparing administrations based on the calendar happenstance of four or eight year presidential terms is inherently dubious. There are too many intervening and cross-cutting forces that usually far overpower the meager impact of White House policy pronouncements and implemented actions.
For instance, the Harris-Biden administration brags that they have created 16.6 million jobs since December 2020, but we are hard pressed to understand how Sleepy Joe had anything to do with the reported BLS numbers. Fully 9.8 million or 59% of these “new” jobs were not that at all; they were “born-again” jobs, reflecting the on-going spring-back of the US economy from from the Lockdown-induced 22 million jobs plunge 0f April 2020.
So if you go back to the February 2020 high water mark’s 152.309 million jobs, the gain under Harris-Biden through the 159.105 million figure reported for September 2024 amounts to just 151,000 net new jobs per month. As it happened, the US economy gained 261,000 per month of net new jobs during Obama’s second term and 181,000 per month during the Donald’s term through February 2020.
So Kamala has absolutely nothing to brag about: 40-year high inflation and the weakest rate of net job growth in decades. That’s made even more dramatic when you look at the monthly jobs gains relative to a continually expanding economy.
Annualized Growth of Net New Nonfarm Jobs:
- Obama’s Second Term: 2.36%.
- Trump Thru Feb 2020: 1.49%.
- Harris-Biden to date:1.27%
Harris-Biden Nonfarm Employment Growth—-Three Fifths Were Born-Again Jobs Owing to the Rebound From The Lockdown Plunge
Likewise, when it comes to the fundamental matter of overall economic growth, Trump has absolutely nothing to boast about, either. The growth rate of real final sales of domestic product, which is the best proxy for economic growth because it excludes volatile short-term inventory swings, posted at just 1.5% per annum during his 48 months in the Oval Office. That’s the second lowest of all presidents since Eisenhower and barely half the average economic growth rate between 1954 and 2016.
Indeed, the Donald has never been a stickler for even remote factual accuracy, but surely it does take some chutzpah to claim you ranked at the top of your class, when you actually scrapped the bottom, bested only by Bush the Younger and then by just a hair for last place.
Average Real Growth Per Annum:
- Kennedy-Johnson: 5.0%.
- Clinton: 3.8%.
- Reagan: 3.4%.
- Carter: 3.4%.
- Eisenhower: 2.9%.
- Nixon-Ford: 2.7%.
- Bush the Elder: 2.2%.
- Obama: 1.7%.
- Trump: 1.5%.
- Bush the Younger: 1.1%.
- All presidents, 1954 to 2016: 3.0%.
The above should constitute the proverbial, nuff said!
But the Donald’s partisans whine “because Covid”. And besides, inflation was running at 1.9% when the Donald left office.
Well, take the COVID-impacted quarters out of the calculation and you still get an average of just 2.2% per annum economic growth—right near the bottom.
As a matter of fact, however, Covid didn’t cause the plunge in employment and GDP during Q2 2020. The Lockdowns did, which the Donald ordered. And the contraction was aggravated mightily by Dr. Fauci and the Virus Patrol’s daily scary story briefings that kept Americans hunkered-down in their homes—a destructive messaging campaign that was conducted from the White House bully pulpit with the Donald’s full endorsement and frequent participation.
Indeed, the whole Lockdown/pandemic dislocation amounted to a grotesque violation of the constitutional rights of speech, assembly, worship and property. So the Donald actually gets a very heavy black mark for their implementation on his watch because these gross constitutional violations never would have happened if he had been opposed them and sent Fauci et. al. packing. And most certainly the Donald doesn’t get a hall pass for the immense economic losses and contractions the Lockdowns caused.
Still, facts such as these are of minor moment in Trumpland. Besides, the claim of a great economy retains some resonance with the public owing to its remembrance that inflation was better behaved back then before the indexes hit 40 year highs in 2021-2022.
Yet here is the path of our trusty 16% trimmed mean CPI from 1992 to the present. For the period up to the pandemic disruptions after February 2020, you truly do need a magnifying glass to detect any differences among the administrations in power during those years.
And that goes for the Donald’s 38 months in the Oval Office up until February 2020, as well. The 2.24% inflation rate per annum during that interval was right in the middle of the pack. There was nothing Greatest Ever about it.
Per Annum Change In the 16% Trimmed Mean CPI:
- Clinton: 2.50%.
- Bush the Younger: 2.41%.
- Obama: 1.75%.
- Trump thru 2/2020: 2.24%
Again, when you take the whole term right through the pandemic quarters, the story is the same. Inflation averaged 2.12% per annum on the Donald’s 48-month watch.
Moreover, Trump’s thoroughly in-line rate of purchasing power loss meant that the saver’s and wage earner’s dollar of January 1993 continued to depreciate, reaching just 45 cents by January 2021. And the Donald did exactly nothing to stop this horrific confiscation of purchasing power and wealth.
In fact, he labored mightily and loudly while in the Oval Office to quash any incipient attempt at the Fed to shut-down the printing presses and aggressively drain the inflationary excess liquidity that had been pumped into the economy year-after-year in response to the so-called Great Financial Crisis. The resulting UniParty policy consensus thus essentially amounted to cheap interest rates and swelling financial asset prices, the better to pleasure its paymasters on Wall Street and to fund the exploding public debt.
Of course, “low interest man” Trump was 100% onboard.
Index Of Consumer Dollar’s Purchasing Power Since January 1993
And this gets us to the inflation acceleration that happened after the economy began to recover from the Q2 2020 crash, which saw real GDP plunge at a 32% annualized rate and nearly 22 million workers put on the streets.
Thereafter, the Y/Y trimmed mean CPI began marching stoutly uphill per the chart below, rising from 1.99% on a Y/Y basis in the Donald last month in office to a peak of 7.22% Y/Y in September 2022.
This 40-year high acceleration, however, did not happen by the economic equivalent of immaculate conception, nor was it owing to some flaw in capitalism that had laid dormant over previous decades. And most certainly it was not due to the policies of Harris-Bidden alone—since measured inflation was soaring long before they had made any real impact on the main street economy.
To the contrary, the Washington UniParty caused this inflationary lift-off owing to a burst of fiscal and monetary excess like had never before been recorded or even imagined. And that double whammy was launched and largely executed on the Donald’s watch, not Biden’s. It is only owing to the lag in policy transmission through the main street economy and into lagging government statistics that Biden has taken the wrap for the disaster shown below.
Y/Y Change In 16% Trimmed Mean CPI, February 2020 to August 2024
The booby prize for the inflation surge should be shared, of course. For want of doubt, here is the Washington spending bacchanalia that triggered the inflationary tsunami shown above. For the quarters before Q2 2020, government spending had been growing steadily at a $400 billion annualized rate.
Then the Donald ordered the Lockdowns in mid-March 2020, and soon was at the White House Bully Pulpit assuring tens of millions of families suddenly locked out of work and quarantined at home that cash help from Uncle Sam was on the way.
It surely was. Government spending in Q2 2020 increased by $3.54 trillion at an annualized rate. That was nearly nine times the Q4 2019 rate of growth.
The Great Deformation:... Best Price: $4.26 Buy New $8.99 (as of 05:50 UTC - Details)
Needless to say, this amounted to the Mother of All Demand Shocks. And worse still, it came at a time when much of the services sector was shut down, also upon the Donald’s orders. So this flood of demand figuratively flowed into the Amazon delivery vans, causing all working inventories in the domestic distribution system to be quickly depleted and foreign supply chains to be sucked dry shortly thereafter. Prices of merchandise goods consequently soared.
Nor was the $2.3 trillion CARES act which hit in Q2 2020 the end of it. The Y/Y spending growth rate in Q3 2020 was $2.42 trillion, or six times the pre-pandemic trend, and in Q4 the $1.07 trillion rate of government spending gain was still more than double the prior trend.
Moreover, during the 2020 election period, the Donald showed that he was not willing to leave well enough alone by advocating a second $2000 stimmy payment to 90% of US households. Subsequently, this got funded partially in the pre-Christmas Covid relief bill that Trump signed and the balance came in the American Rescue Act signed by Biden in early March 2021.
As it happened, however, both the second Trump bill and the Biden pile-on hit the spending stream in Q1 2021, causing government spending growth to soar once more, to a $3.64 trillion rate of Y/Y gain. Again, that was nine-times the pre-pandemic trend.
Needless to say, the four tall bars in the graph below tell you all you need to know. This crazy eruption of government funded demand at the very time that the Virus Patrol was sharply curtailing the supply of services is the true incubator in which the subsequent burst of 40-year high inflation was fostered. And the Donald’s statutory signatures are scribbled all over the result.
Annualized Rate Of Government Spending Change, Q1 2017 to Q4 2021
To be sure, had the Fed not accommodated the resulting massive US Treasury borrowing, interest rates would have soared to double digit levels and the economy would have shut down forthwith. But again, Trump was right in there midwifing the monetary transmission of the inflationary impulse from the unprecedented eruption of fiscal stimmies. He virtually green-flagged the Fed’s madcap print-a-thon.
To wit, between August 2019 and the April 2022 inflation peak, the Fed’s balance sheet grew by a staggering $5.18 trillion. But again, $3.60 trillion or 70% of that burst of inflationary money-printing occurred on the Donald’s watch.
Nor should the true significance of these “big numbers” be gainsaid. During the Donald’s last 16 months in office, the Fed printed more money than it had during the first 100 years of its existence!
In short, Trump was most evidently the principal policy author of the inflationary wave that has racked main street since 2020 and has become the #1 issue of the current campaign. And the irony is that Trump may ride back into office on the thoroughly spurious claim that Harris-Biden did it, instead.
In fact, the UniParty did it, yet their failed policies are all that is on offer in the abysmal presidential election now under way.
Eruption of the Fed’s Balance Sheet, August 2019 to April 2022
To be sure, the only candidate more clueless than the Donald about where the inflationary surge came from is Kamala Harris. Her claim that all will be well once she implements anti-gouging policies against the grocery store chains and food companies is so infantile as to be hardly worthy of refutation.
But for want of doubt, here is the change in food prices at the farm gate, wholesale/manufacturing level and retail grocery stores since February 2020. Self-evidently, if any gouging was done it was at the farm gate level, where prices are up by 25.9%. That’s just slightly less than the 27.8% gain in wholesale food prices and actually a tad more than the 25.3% gain at retail.
Needless to say, good luck with making a gouging case out of that data. But then again, if Harris is looking for a scape-goat rather than a solution she might as well blame the farmers. The farm states are already hopelessly red.
In any event, the real culprits are the spenders and money-printers. And not surprisingly, both candidates want more of both.
Index of Food Prices At Farm Gate, Wholesale And Retail Since February 2020.
Reprinted with permission from David Stockman’s Contra Corner.
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