When the memory-holing of Joe Biden’s successes gets too stupid, I consult the October 19, 2024, issue of The Economist. That’s the cover that declared Biden’s post-pandemic economic turnaround “the envy of the world.” The American economy, the richly-detailed article went on, was “bigger and better than ever”—ever—and “has left the rest of the rich world in the dust.”
That was a cool eighteen months ago. But then came this innocent question: “Will politics bring it back to Earth?” America’s pervy politics did not disappoint. Back to earth the economy plummeted—and then lower still, into the current Trumpian basement. As of late April, Americans feel worse off economically than we have in the last 25 years.
Remember when 16 Nobel Prize-winning economists, including Joseph Stiglitz, signed a letter warning that Donald Trump would fire up inflation? “Americans are concerned about inflation, which has come down remarkably fast,” they wrote. “Donald Trump will reignite this inflation, with his fiscally irresponsible budgets.” They were right. But that was the summer that God was stumping for freshly felonious Trump. Screw the brainiacs. JD Vance waved away their predictions in his vice-presidential debate with Tim Walz. Economists, Vance said, “have Ph.D.s, but they don’t have common sense and they don’t have wisdom.”
Vibes, then. Hunches. Vance added, “We’re going to get back to that common-sense wisdom so that you can afford to live the American Dream again.”
And so, just weeks after both The Economist report and Vance’s dismissal of all of economics, American voters put Trump back in the White House, where in short order he crashed the American economy like a SpaceX rocket.
From his tariff jamborees to his daft warmongering, Trump’s caprices have now thoroughly degraded daily life in these United States, bringing us high inflation, rising gas prices, and sluggish economic growth. It further turns out that siccing a masked and armed police force on expats, foreign nationals, and immigrants demoralizes a nation and squeezes the labor supply.
Consumer confidence is at an all-time low. A
new CNN poll found that 77
percent of Americans, including a majority of Republicans, say Trump’s policies
have spiked the cost of living in their communities. According to the recent University of Michigan Surveys of
Consumers,
some 69 percent of Americans disapprove of Trump’s handling of inflation and
prices. Now wonder Trump’s approval rating stands at 30 percent on the
economy as a whole, a career low.
Consumers and investors can lose confidence in an economy for a number of reasons, and our faith in the future is often independent of actual inflation numbers. But crises of confidence can be self-fulfilling. As we squirrel away money against inflation, real or imagined, the economy stagnates.
John Maynard Keynes called consumer confidence “animal spirits.” Confidence and animal spirits are not just about shopping sprees; they’re the public’s life force. Keynes noted that animal spirits in a population can be fickle and unpredictable, bipolar. When high, people are courageous and forward-looking; we’re inspired to take action, improve our lives, leave home, make changes. Other times we’re scared and bedrotting. The future seems expensive and bleak, not worth the bother.
That’s where we are now, down with the blues. Infuriatingly, this mood comes a year and a half after the American economy was going great and self-sabotaging voters decided to do it in. Unlike in 2024, this time the facts have joined up with the prevailing mood. Nobel economists are in sync with common sense, and the numbers are in sync with the vibes. Trump insisted, over and over, that Biden’s economy was “failing” in 2024, when it was in fact the envy of the world. Then he came into office and showed everybody what failing really is.
