by Mitch Kokai
Senior Political Analyst, John Locke Foundation
In his relentless attacks on Federal Reserve Chairman Jerome Powell, Trump is acting true to form. Rather than recognizing that his protectionist trade policy might be the main culprit for U.S. economic performance falling short of his campaign promises, Trump chooses to set up Federal Reserve Chairman Jerome Powell as the scapegoat for any U.S. economic setback in the run-up to the 2020 presidential election.
A key campaign promise candidate Trump made in 2016 was to put the U.S. economy on a higher growth path. By deregulating the economy and by enacting a major tax cut, he promised a major investment boom. That in turn would allow the U.S. economy to grow on a sustainable basis by 3 percent to 4 percent a year, or at a very much faster rate than it did during the Obama years.
To date, the reality has fallen well short of the hype. …
… Supporting the bond market’s gloomy economic view is not only the fact that the tax cut’s economic boost seems to have faded. It’s also that both the U.S. and global investment outlook will continue to be clouded by heightened uncertainty as a result of U.S. trade policy. It will do so at the same time that the global economy could soon receive a body blow from the United Kingdom crashing out of Europe on October 31, from a turn for the worse in the Hong Kong crisis, and from renewed political turbulence in the highly indebted Italian economy.
In its latest assessment of the world economy, the International Monetary Fund emphasizes the toll that President Trump’s America First trade policy has taken on the global economy.