Trump's Mission to Turn Back Time; Lower Recession Risk

I argue that Trump's atavism says less than you might think about America and its politics, and that slower growth is definitely better than recession but carries its own problems.

On the weekends, I often find time to delve further into the newspapers—I’m talking the broadsheets, kids—now get off my lawn! So, I’m going to try to add a Monday feature up in here where I react to articles that tweaked me one way or the other over the weekend.

I’ll start with this NYT piece from the always interesting Peter Baker, on Trump’s atavism, and then get back in my econ lane with this report from the WSJ on their economic consensus of the moment.

Trump Wants to Take the Country Back 50 Years: What Does That Say About America?

Baker’s penned a convincing, compelling argument, with extensive examples, that President Trump wants to repeal all the 21st and much of the 20th century. Cutting through a lot of nuance, Trump wants to go back to an America wherein old rich white guys didn’t have to worry about progress leaving them behind. I’ll quickly review the argument, but my point here is that, while this is an interesting reflection on our…um…unusual president, I don’t think it says much new about our politics (to be clear, that’s not Baker’s claim; I just think it’s the interesting question herein).

The influential writer William F. Buckley Jr. once defined a conservative as someone standing athwart history and yelling, “Stop!” Mr. Trump seems to be standing athwart history yelling, “Go back!”

…

He has made clear that he wants to return to an era when “Cats” was the big hit on Broadway, not “Hamilton”; when military facilities were named after Confederate generals, not gay rights leaders; when coal was king and there were no windmills; when straws were plastic, not paper; when toilets flushed more powerfully; when there weren’t so many immigrants; when police officers weren’t discouraged from being rough on suspects; when diversity was not a goal in hiring or college admissions or much of anything else.

He even wants to change the title of the Secretary of Defense back to the Secretary of War (“a title retired in 1947”) and the Washington Commanders back to the Redskins.

Baker amply shows how such longing for the good old days ignores a lot of bad things that have markedly improved, while underscoring that shutting down gov’t functions, like FEMA, that didn’t exist when Trump was a boy, is a really bad idea.

But there’s one minor thread in the piece that seemed a bit off to me: the idea that any significant or growing group of Americans shares this desire to rewind history; that the president is “tapping into a sense of unease among many Americans that the country had gone too far and too fast in some areas.”

No doubt, that always describes some non-trivial share of nostalgic voters, but I wonder how deep it goes, and how far a more normal candidate running in a more normal election would get with such a backward-looking vision. My question is just another version of the larger question of how much of Trumpism is Trump and how much is a profoundly shifting electorate.

My prior is that Trump won in ‘24 because D’s had far too much baggage, from the unauthorized migrant surge in ‘21 and ‘22, to prices, to the incumbency curse (the same one that took down Trump himself), Biden’s disastrous debate, Harris’ truncated campaign. Add to that the Ds structural problem that traditional base voters have been drifting away from them for numerous election cycles. Add further that there’s no one better than Trump at tapping into the anger of a lot of people who’ve felt left behind, ignored, and talked-down-to by “elites.”

Those all proved to be unsurmountable headwinds, but they don’t mean voters are happy about what they got instead. The fact is that Trump is about as unpopular as ever; tariffs, which used to poll well, are now disliked by majorities; the big budget bill was always underwater, and even the cruel Trump/Miller immigration policies are increasing intensely disliked.

Trump’s lifelong political problem is that he promises but doesn’t deliver. Like I said, there’s no one better at positioning himself as “your retribution,” but that only works if you help people. In fact, he’s daily betraying the working class with price-raising tariffs, diminished health coverage, higher costs of higher ed, and so on.

At this point, someone correctly points out that if the media just touts the admin’s lies about all the above, people won’t know why they’re getting worse off. True, but the polling data show that a lot of people are, once again, recognizing the betrayal.

That is, I see no evidence that any sizable block of voters shares those longings for plastic straws and flushier toilets. I instead see a lot of evidence that large blocks want to hear how their kids can still get good jobs in the AI era; how they and their children can afford housing, child care, health care, college; how they can claim their fair slice of the economic pie they’re helping to bake; how they can breath clean air and drink clean water and how someone in gov’t is thinking about how to protect them from pandemics and extreme weather.

What Baker describes is the isolated, false-reality-inhabiting President Haversham I wrote about months ago:

He’s increasingly inhabiting an alternate reality by himself (along with those who are paid to join him there), not unlike the Dicken’s character Miss Havisham, who Google describes as “a wealthy, eccentric, and embittered woman who lives in a decaying mansion, forever stuck in the past.”

WSJ: “Recession Risk Seen Cooling Even Amid Turmoil on Tariffs: Forecasters nudge up growth, trim inflation estimates as tariffs prove lower, less costly than expected in April.”

Since this—the impact of Trump’s economic policies on near- and long-term growth—is a central focus of this column, I’m obliged to address these claims. To be clear, the piece is well-balanced, with ample caveats re these sunny predictions, but I want to capture some overview points, especially about slower growth v. recessions.

First, it’s true, as I’ve written, that tariff passthrough to consumer prices has been a) less evident at this point than in Trump’s last trade war, which, in 2018-19 raised tariffs much less than this round, b) not shown up in topline inflation indices. That’s legit good news and a reason for a more optimistic outlook.

But not only can one see cracks in that benign passthrough assessment—here’s CEA’s former Chief Econ (and guest on tomorrow’s Let’s Do Lunch!) Ernie Tedeschi:

Economists caution that tariffs have only been in place for a short time, and more noticeable price increases could be on their way in the coming months. Mr. Tedeschi said it was “wrong” to say there was no evidence of negative economic effects, pointing to a significant rise in recent prices for appliances, electronics, furniture, used cars and auto parts, categories of goods for which prices typically fall year-to-year overall, he said.

…but the reason I’m sticking with my prediction that passthrough accelerates in coming months is because I believe a number of factors that have dampened passthrough thus far can only hold out for so long, including pre-trade-war stocked inventories and lower profit margins.

And, of course, if Trump goes through with the higher tariffs he’s currently threatening, my prediction becomes more likely.

But my main point is that I share what I read to be the growth consensus for this year of around 1%, down from 3.2% in ‘23 and 2.5% last year (yr/yr growth rates). Those rates were above-trend growth—trend is closer to 2%—due in part to increased immigration, which is, of course, actively in reverse. I’m less on board with the 1.9% consensus for next year; I hope that’s right, but I see too many headwinds taking shape from tariffs, deportations, and other assorted chaos.

The basic hydraulics of macroeconomies is that if growth slips and stays below its 2% trend, unemployment will rise. Here’s a quick pic using the full-time series—1949-2024—of annual changes in real GDP plotted against the change in the unemployment rate, aka, “Okun’s Law.” These days, if growth slows to around 1%, I’d expect the jobless rate to tick up, maybe half-a-percentage point, which in today’s labor market is over 800K people.

IOW, I don’t foresee a recession this year either, which would be an amazing testament to the resiliency of the U.S. economy, which, at least so far, has shown us it can take a lickin’ and keep on tickin.’ But I do foresee slower growth, higher prices, and higher interest rates than would otherwise be the case if we had a president who was actually working for the people who need the gov’t to work for them versus one who’s railing against progress and desperately trying to turn back time.