Trump does not have the magic recipe for the economy

Trump does not have the magic recipe for the economy

According to a recent study by Moody's Analytics, the economic argument in favor of Donald Trump and the Republicans does not hold water.

There are still supporters of Donald Trump who are ready to tolerate his erratic and childish behavior, his narcissism, his lies, his corruption, his authoritarian inclinations, the resounding failure of his handling of the pandemic, and the unprecedented wrongs he has suffered. he talks to the United States around the world because they believe the US economy would be better off under his leadership than if Joe Biden and the Democrats won. It is far from being a certainty. The opposite could even be more credible.

Indeed, perhaps because of the belief that persists in public opinion that a businessman who gives the impression of having succeeded in accumulating billions of dollars must know the magic recipe for prosperity, he There are still a few more Americans who trust him more than Joe Biden in the management of the economy. (Trump's advantage over the economy is slim, however, and some pollsters believe him doomed to disappear.)

A recent analysis by Moody's Analytics, an independent private firm that is certainly not a nest of leftists, contradicts this perception. Based on the agendas of the two main presidential candidates and their respective governance experiences, Moody's believes instead that the best possible scenario for the US economy would be a Biden presidency with a Congress entirely controlled by Democratic majorities in the House. representatives and in the Senate.

As the two charts below show, the study projects that a Biden presidency with a double majority in Congress would offer the best prospects for GDP and employment growth within 10 years. Four scenarios are considered. Best to worst, it's a Biden presidency with a Democratic Congress, a Biden presidency with a divided Congress, the continuation of the current situation, and a Republican sweep.

Chart 1. Projected growth of the economy and employment according to four policy scenarios

The key, according to the study's authors, would be the ability of a Biden administration flanked by a Democratic Congress to mount a stimulus package focused on increased federal state participation in the economy. A key element of this program would be a massive influx of public funds to upgrade the country's failing infrastructure. It should be noted that the Trump administration had promised major advances in this area that never really took off, even when the economy was doing relatively well, before the outbreak of the pandemic.

What is surprising, reading this analysis, is the shift in macroeconomists' perceptions of the federal government's ability to sustain a large deficit, to the extent that new public spending could both stimulate growth. growth in the short term and lay the foundations for longer term sustainable growth.

Obviously, Donald Trump will continue, by November 3, to promise mountains and wonders on the economic front, but it is not at all clear that his claims of having the magic recipe to revive the American economy after the crisis of the coronavirus are supported by a serious analysis of its record and its program.

Share Button