Presidential Election a Sign Economy Is in a Mess
Economists say election uncertainty is subduing economic growth. But it seems more likely the horrible economy is driving this strange election cycle.
For months, Peter Schiff has been saying if the US isn’t already in recession, it will be in one soon. Former Reagan Office of Management and Budget Director David Stockman recently told Neil Cavuto on Fox Business that the next president will inherit a recession. Last Month, Mike Maloney said the data screams a recession is already here.
For the most part, Peter and others are still voices calling in the wilderness. The mainstream keeps towing the line and pushing the idea that the economy is fundamentally sound and improving. But Americans know better, as the unrest and turmoil evident in this presidential election cycle makes clear.
And even when it comes to the mainstream, we are starting to see cracks in the “everything is fine” narrative.
Earlier this week, the Associated Press ran a story reporting economists are becoming more pessimistic in their outlook about economic growth this year:
The median estimate from economists surveyed by the National Association for Business Economics calls for gross domestic product growth of only 1.8%, down from the 2.2% forecast in March. The outlook for next year calls for 2.3% growth. The survey released Monday also shows the forecast for growth in corporate profits swinging from a 2% gain in March, to negative 2% in June.”
The AP story points out that the shockingly bad May job report deepened doubts about the economy. The only seemingly good employment news was the official unemployment rate dropped below 5%. But this was only because so many people simply stopped looking for work and dropped out of the job market completely. Nearly a half-million jobless Americans stopped hunting for a job.
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Meanwhile, the brief April bounce in US Services economy died. PMI slipped back to 51.3. As Markit put it, “The service sector reported one of the weakest expansions since the recession.” US auto sales also took a nosedive in May. And construction spending dropped 1.8%, marking the weakest April since 2011.
It’s always interesting to look at how the mainstream frames things. According to the AP report, uncertainty about the upcoming presidential election is a big factor in economists downgrading economic growth expectations this year. It makes it out as if it’s just a little temporary blip on the radar. It seems like a stretch to blame awful jobs numbers, a crashing services economy, plunging auto sales, and a drop in construction spending on the upcoming election. Which came first?
Buried in the AP story, we stumble across something that gets closer to the truth, a point relating to the election Peter has made several times:
Americans especially worried about the economy have been more likely to support outsider candidates like Donald Trump and Sen. Bernie Sanders.”
Think about it; that’s an awful lot of Americans “worried about the economy.” Peter made this point back in March during an interview on Fox Business:
Talking about the elections – why do you think Donald Trump is getting so many votes. All the exit polls show that the number one concern facing voters is the economy. Yet Janet Yellen said that consumers are confident. No they’re not. Those consumers are voters, and they’re voting for Trump because they’re not confident…These are lousy jobs. These are low-paying jobs. These are Trump voters. These are Sanders voters. That’s why they’re there – because they have a part-time job and it’s lousy, and the pay is lousy.”
In other words, average Americans understand what the policymakers and mainstream media pundits don’t seem to want to admit – the US economy is a mess.
It’s not that the election is driving economic uncertainty. Economic uncertainty is driving the election.
Photo by Donkey Hotey via Flickr.
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