For a guy whose main claim on a life accomplishment is being “really, really rich,” Donald Trump didn’t get high marks from the folks who are paid to analyze economic risk. In fact, The Washington Post called the effects of Trumponomics “catastrophic.”
Moody’s Analytics attempted to analyze Trump’s economic policies. I say “attempted” because there’s massive assumptions baked in when you can’t nail down the candidate on any particular issue on which he claims both sides: The minimum wage, for instance.
But Moody’s tried, using several scenarios: Taking Trump “at face value,” “Trump lite,” and “Mr. Trump goes to Washington.” Each scenario assumes different levels of cooperation (or non-cooperation) from Congress in implementing the Orange Throne’s edicts.
Assuming all of Trump’s plans are implemented, in just under a decade, Americans can expect bread lines and soup kitchens.
By 2020, we’d see a 2.4 percent drop in real GDP over leaving things alone. That’s an enormous hit to the economy.
Even allowing for some variability in the accuracy of the economic modeling and underlying assumptions that drive the analysis, four basic conclusions regarding the impact of Mr. Trump’s economic proposals can be reached:
1) they will result in a less global U.S. economy; 2) they will lead to larger government deficits and more debt; 3) they will largely benefit very high-income households; and 4) they will result in a weaker U.S. economy, with fewer jobs and higher unemployment.
So much for the middle class.
Trump’s tax proposals will generate $9.5 trillion in new government debt over the next 10 years.
Tax revenues as a percent of GDP will fall to their lowest point on a sustained basis since World War II.
The result will be “an unusually lengthy recession—even longer than the Great Recession—although the severity of the decline in economic activity would be more consistent with a typical recession suffered since World War II.” So maybe we won’t have actual bread lines and soup kitchens. But we’ll wish for them.
As Trump wishes ill for the rest of the world unless they pay tribute to the new “America First” empire, Americans may suffer a bit of envy when they don’t pay up.
For the typical American family, Mr. Trump’s policies will mean that their standard of living will effectively go nowhere, at least during his term in office. Real income per capita will be near $45,000 when he is sworn in, and it will be about the same when his term ends. Stock prices, which will get hammered early in his presidency given the weaker economy and higher interest rates, will make their way back and end his term about where they were when he took of ce. House prices will follow roughly the same path. It will be a difficult four years for the typical American family.
The only scenario in which complete disaster is averted is the one where Congress stubbornly fails to implement his plans. But even then, “[the] U.S. economy is able to avoid a recession in this scenario, but growth comes to a near standstill early in Mr. Trump’s term.”
Moody’s conclusion rates Trump’s plans below “junk bond.”
The upshot of Mr. Trump’s economic policy positions under almost any scenario is that the U.S. economy will be more isolated and diminished.
I think we can expect Trump’s reply to Moody’s any minute.