After the Biden boom comes the Trump tragedy

The latest statistics confirm the U.S. economy is entering the rapid deterioration phase, as Alan Austin reports.

AROUND MIDNIGHT some decades ago, a group of twenty-something lads were drinking and hooning on the Rye Pier on Victoria’s Mornington Peninsula. Suddenly, someone yelled and pointed to a body floating out from under the pier, face down and apparently lifeless. Swimmers immediately dragged the victim to the beach where an experienced lifesaver applied mouth-to-mouth resuscitation while others called an ambulance.

After several fraught minutes, the young guy coughed and spluttered, opened his eyes and tried to sit up. He assured us, smilingly, that he was fine and asked for another beer. The lifesaver sternly insisted he not move until help arrived. A few minutes after his apparent recovery, the victim collapsed and stopped breathing again. “Yeah, this often happens,” the lifesaver said as he resumed resuscitation attempts until the ambos took over.

This lucid interval, as this sudden revival before a fatal collapse is sometimes called, is now happening to the U.S. economy.

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Averting the worst of Trump’s devastation

When U.S. President Trump made his destructive tariff threats in January, many large American corporations knew he and his cabinet were stupid enough to implement them. So they ordered vast quantities of imports, which in both January and February soared above US$400 billion (AU$613 billion). The previous high for any month had been US$347.7 billion (AU$532.7 billion) in March 2022 during former President Joe Biden’s post-COVID recovery phase.

Then in March, imports climbed further to a thumping US$419.4 billion (AU$642.6 billion).

The same happened with exports. January’s total was an all-time monthly high of US$278.7 billion (AU$427.4 billion). That was exceeded in February and beaten again in March with a fresh all-time record US$290.6 billion (AU$445.2 billion).

The labour needed to manage such voluminous trade kept Americans employed in March at a relatively healthy 163.5 million and the jobless rate at 4.2%.

Despite this activity, gross domestic product declined through the March quarter, down an annualised rate of -0.5%.

Wheels now falling off

We can now see that the first quarter was a brief period of artificial activity which is rapidly grinding to a halt.

Exports fell in June to US$277.3 billion (AU$424.9 billion), despite most tariffs not having yet taken effect.

June imports tumbled to US$337.5 billion (AU$517.1 billion), the lowest value in 16 months.

Employed workers declined to 163.1 million in July, having lost 402,000 jobs. That’s the lowest in seven months.

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The current policies of the U.S. Government are undermining its comparative advantage in a range of industries.

Foreign direct investment fell to US$66.7 billion (AU$102.2 billion) in the March quarter, the lowest for any first quarter since 2021.

Other areas of conspicuous failure include interest rates, consumer spending, stock exchange values, tourism revenue, corporate losses and surging bankruptcies.

All this is overlaid with the criminal grift of Trump demanding personal payments for favourable government decisions. These include the slab of solid gold Apple CEO gave the corrupt President to ensure exemption from the 25% tariff on the tech company.

The bottom line: the surge in government debt

One critical measure of economic failure is the level of national debt, which, since Trump’s disastrous 2017 tax cuts, has ballooned every year.

When Trump won the 2016 Election, partly on a promise to eliminate federal debt entirely, gross borrowings were a disturbing US$19.8 trillion (AU$30.3 trillion). By the end of his first term, this had blown out to US$27.8 trillion (AU$42.6 trillion). The Biden Administration then failed to get Republican support to reverse those disastrous tax cuts, so the debt grew further under Biden to US$36.2 trillion (AU$55.5 trillion).

Already this year, Trump has added another US$789.6 billion (AU$1.2 trillion) to the national debt.

Most Americans have no clue how crippling the ever-increasing interest payments will be. They have no idea how long it will take future generations to reduce this quantum of needless borrowings should they wish to end the interest burden.

Imagine Trump’s extra debt was repaid at the rate of $100 per second, every second from now on. How long would it take to repay? How many weeks, months or years will it take to clear Trump’s debt at $100 repaid per second?

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The answer is more than 250 years. And that’s just the debt added this year. So far. Not including interest.

In his first term, Trump added US$7.81 trillion (AU$12 trillion), of which perhaps one trillion was justifiable in responding to the COVID downturn.

Hence the total attributable to Trump’s monumentally stupid tax cuts is now a staggering US$8.59 trillion (AU$13.1 trillion). Repaying that at $100 per second from now on would take 2,730 years.

That’s the scale of the economic disaster Trump is visiting upon his godforsaken country.

Who is to blame and will they fix it?

This is not Trump’s fault alone. He has proven throughout his life that he has no competence with finance or economics, or arithmetic.

He confirmed this last week when he told a Republican gathering that:

“We will have reduced drug prices by 1,000%, by 1,100, 1,200, 1,300, 1,400, 700, 600. Not 30 or 40 or 50%, but numbers the likes of which you’ve never even dreamed of before.”

The congressional Republicans who can remove this destructive criminal know this is gibberish, just as they know his rantings about tariffs and tax cuts for billionaires are patent nonsense. Yet these craven hypocrites keep him in place out of naked self-interest.

Hence, blame for the collapsing U.S. economy lies squarely with Republican lawmakers, among whom are astute people who do understand the scale of the debt and the dire consequences of Trump’s manifest evil.

When the ambulance drove away from the Rye foreshore all those years ago, sirens wailing, we had no idea whether the young dude would live or die. The same is true of the U.S. economy today.