Let’s be clear about something: Donald Trump’s MAGA mantra is inherently and purposefully amorphous.
There is no way to quantify “great” and the only reference point we’ve been given (“again”) has nefarious undertones. Here’s some classic commentary on this from Notes From Disgraceland’s Bjarne Knausgaard:
There is nothing problematic about the desire to make a country great. However, nobody can promise greatness without automatically overextending and discrediting himself. Honoring such a promise would require perfect foresight and control of the future. Greatness is a long-term project, which in its initial stage requires sacrifices, sometimes of entire generations. Adding the word again changes the meaning completely. To make Germany (or America, or any other country)great again, is very different from making it great for the first time.
Again is a highly troubling word here. To begin, it implies that the country was great once, but not anymore — the romance with greatness had been sabotaged. Naturally, this begs two questions: why is the country no longer great, and who is responsible for that. In reality, the answer lies somewhere between “us” and “nobody”. Civilizations rise, evolve and disappear. Spontaneously. That is how things are. The Roman Empire was great once. It no longer exists. But, this is a hard sell – one cannot build a political platform based on these facts; this line of thinking has to be abandoned.
Again is the magic word here. It accomplishes three things in one stroke. The first effect is flattery, its purpose eminently seductive – we are the sons and daughters of great ancestors so we are entitled to greatness. Second, it establishes the emotion of self-pity – our greatness has been hijacked. And finally, it automatically provides legitimation for any and all means required to reclaim the lost greatness, and restore the natural order of things.
That latter bit has the potential to be extremely dangerous when it comes to foreign and domestic policy. When you legitimize “any and all means”, you green-light policies that would otherwise seem insane like, for instance, the construction of a 100-foot-tall concrete wall along a vast expanse of border territory.
But zooming in on the economic implications of the MAGA mantra, Trump has succeeded in convincing Republicans to go along with late-cycle, deficit-funded stimulus, effectively countenancing a move to mortgage the country’s future in the service of engineering what the President imagines will be an economic renaissance in sectors of the economy that were long ago left for dead.
The merits of reinvigorating American industry aside, the decision to pile deficit-funded stimulus atop an economy that was already on the verge of overheating is fraught with peril. Of the many potential pitfalls, one possibility is that consumers and small businesses effectively overdose on the narrative, setting the stage for a nauseating hangover when the high wears off.
Most economists will tell you the effects of Trump’s brand of fiscal stimulus are likely to prove transitory at best and fleeting at worst (transitory and fleeting are synonyms, but the latter has a slightly more negative connotation than the former).
Earlier this month, we suggested that the latest read on the NFIB’s small-business optimism index was probably an example of folks overdosing on “covfefe”. Here’s the chart:
That’s a 45-year high. More to the point, that’s the highest reading in series history, and it suggests that small business owners are now just as delusional as Trump when it comes to whether his economic “renaissance” is a real thing or a figment of the President’s imagination.
Well, fast forward a week and the latest read on the Bloomberg Consumer Comfort Index is equally absurd. Specifically, the weekly comfort index rose to 60.2, the highest since January of 2001:
That is ridiculous considering the domestic political backdrop and the fact that the geopolitical environment is fraught with so much uncertainty that it would be nearly impossible to make a list of all the powder kegs.
Trump’s rhetoric is clearly having its desired effect. Bloomberg’s index that tracks views of the economy also hit a fresh 17-year high this week. You’d be a fool not to think that reflects some voters’ propensity to actually believe Trump’s demonstrable lies or otherwise fall hook, line and sinker for his efforts to make things seem better than they in fact are.
Remember, the President held an actual press conference at the White House in July to celebrate a quarterly GDP print that would have been just the fifth best quarter of the Obama presidency.
Then, last week, the President claimed (on Twitter no less) that GDP was higher than the unemployment rate “for the first time in 100 years.” In reality, GDP has been higher than the unemployment rate more than 20% of the time dating back decades.
Despite the absurdity inherent in Trump’s (sometimes completely false) claims, some Americans are obviously buying it.
All the while, his pedal-to-the-metal approach to delivering on his MAGA mantra is ballooning the deficit and putting the U.S. on the most worrisome fiscal trajectory since World War II.
Long story short, Americans have overdosed on Trump’s “covfefe” and sooner or later, that’s going to entail one helluva hangover.
Oh, and finally, point me to the economic “miracle” in Trump’s economy versus Obama’s economy, because I for one can’t find it – and neither can David Rosenberg: