Home > Uncategorized > “It doesn’t feel like a boom yet”

“It doesn’t feel like a boom yet”

from David Ruccio

Trump

Across American universities, corporations, and financial institutions, researchers are honing computer models designed to predict the winner in the November 2020 presidential election in which Donald Trump will face a Democratic candidate still to be determined.

One such set of models, developed by Moody’s Analytics, which focuses on the electoral college (and not the national popular vote), predicts a convincing victory for Trump. Moody’s based its projections on how consumers feel about their own financial situation (the so-called pocketbook model), the gains the stock market has achieved during Trump’s time in office (the stock-market model), and the prospects for unemployment (the unemployment model).*

As I see it, there are two fundamental problems with models like those used by Moody’s Analytics. First, they are based on the presumption that economic outcomes determine individual voting behavior (what is otherwise known as economic determinism). Such models exclude many other possible motivations or concerns for voters, including class notions of fairness and justice.** Second, the outcomes are predicated on a rosy picture of the U.S. economy, as measured by personal finances, the stock market, and the unemployment rate.

Things look quite different if we focus on an alternative narrative of the U.S. economy, which in turn can lead voters to think and act based on a sense of unfairness or injustice (alongside and combined with all their other reactions to the different political campaigns and candidates).

stocks-wages

Consider, for example, what’s happened to stocks and wages—both under Trump and in a longer time horizon. Since the beginning of 2017, workers’ wages (as measured by the average hourly earnings of production and nonsupervisory employees, the blue line in the chart above) have risen by only 8.4 percent while the stock market (illustrated by the S&P 500 index, the orange line) has increased in value by more than 30 percent.*** Clearly, in recent years American workers have been falling further and further behind the small group of wealthy individuals and large corporations at the top of the U.S. economic pyramid. Going back to 2010, the difference is even greater: hourly wages are up a total of 23 percent while stocks have soared by 140 percent. These differences represent an indictment of the fundamentally uneven recovery from the Second Great Depression under both Barack Obama and Trump.

Output-wages

A similar picture emerges if we factor out inflation and compare workers’ real wages and the real output they produce. Since Trump took office, there’s been a growing gap between real Gross Domestic Output (the green line in the chart above, which has increased by 6.5 percent) and weekly wages (the purple line, which are up only 2.5 percent). Again, the gap is even more dramatic if we go back to early 2010: wage increases amount to less than one fifth the growth in output. It is evident that, in both cases, the U.S. economy has been growing at the expense of the nation’s workers—to the benefit of large corporations and wealthy individuals.

According to this class narrative of the U.S. economy, American workers have been losing out relative to their corporate employers and a small group of individuals who are sharing in the spoils of a decidedly unfair and unjust set of economic policies and institutions. That’s been the case while Trump has been in office as well as for many years before that. The Fed can continue cutting interest rates (as it did last week, for the third time this year) but it won’t change the grotesquely uneven class dynamic of the U.S. economy.

That’s why Carolyn Valli, executive director of the Central Berkshire Habitat for Humanity, found it necessary to declare at a recent Fed Cleveland event that “It doesn’t feel like a boom yet.” Not under Trump nor with his predecessor.

The Moody’s Analytics models may predict a victory for Trump over a generic Democratic candidate but the class narrative I’ve outlined here leads to a very different scenario—a rejection of business as usual both within the Democratic Party, with the choice of a more left-wing economic populist presidential candidate, and in the general election, when the actual class content of Trump’s administration can be unmasked and ultimately defeated.

 

*The three models show Trump getting at least 289 electoral votes, assuming average voter turnout. His chances, of course, decrease with increased turnout on the Democratic side.

If turnout next year were historically high, Moody’s said, the Democratic candidate could win Wisconsin, Michigan and Pennsylvania – states that narrowly voted for Trump in 2016 and which are currently experiencing a manufacturing slowdown. In that scenario, the Democratic candidate would win with 279 electoral votes to Trump’s 259, Moody’s said.

**This approach to forecasting reminds me of John Howard Hermann (played by Max Baker) in the Coen brothers’ 2016 comedy Hail, Caesar!: 

See, if you understand economics, you can actually write down what will happen in the future, with as much confidence as you write down the history of the past. Because it’s science. It’s not make believe.

***As Neil Irwin recently explained, more people may be working “but employers are not having to increase compensation much to recruit and retain people.” This trend challenges mainstream economic models and policy, according to which the relatively low unemployment rate should mean that workers are scarce and employers should need to start paying them more. And that’s not what’s happening. In fact, the opposite is occurring: employment is growing but the rate of increase of workers’ wages is actually declining.

  1. November 5, 2019 at 1:31 am

    What’s missing is the unintended consequences and the uncounted consequences in the models. GDP is only measured by what can be costed and that is very convenient for the dominant predatory capitalist mind. The forests get cut down, the lumber can be costed, but the forest used to make it rain, so do you factor in the droughts? These are real costs but get left out.
    I can see Trump winning but because the Democrats are self destructing, not because of Trump policies, which are woeful on their own, just without alternatives.

  2. November 5, 2019 at 1:40 am

    Interesting real wage trend US report https://fas.org/sgp/crs/misc/R45090.pdf

  3. Helge Nome
    November 5, 2019 at 2:24 am

    Yeah, the democrats can’t get their act together, barking at Trump and forgetting their base, as usual. In the meantime, Trump is working his base 24/7.
    As Trump would say : “Pathetic”

    • Rob
      November 6, 2019 at 12:21 am

      To characterize the ongoing impeachment process as “barking at Trump” is to truly not understand the gravity of (1) what Trump and his sycophant’s have done (violating the very Constitution in exactly the manner the Founders feared) and are now doing, and (2) the grave threat to the democratic institutions that such behavior and actions are to the very survival of American democracy, and finally, (3) if Trump gets away with this violation because of the moral and ethical cowardice of the GOP Senate refusing to convict him of the very Constitution then truly American democracy has devolved into an elective despotism and it isn’t worth voting for either a democrat or republican let alone defending anymore. Trump will have been allowed to set a precedent that will destroy American democracy regardless of the superficial trappings of voting him out of office.
      .
      So when I see comments like this I know I am witnessing (if this came from an America) someone who truly doesn’t understand the gravity of Trump’s actions or their long-term consequences for American democracy and our Constitutional Republic. It is not a matter of either-or, but rather a matter of both and the weightier matter being Trump’s violation of the U.S. Constitution claiming he is above the law. Addressing the real issues facing the people economically is important and should not be left undone, but if the majority of the American people are not intellectually intelligent enough to see the relative gravity of the issues and see that both must be done, then they are simply too stupid to maintain and democracy and deserve what they will eventually end up with as it is already fully evident in Trump’s behavior — an elective despotism.

    • Meta Capitalism
      November 6, 2019 at 2:14 am

      Those who think the impeachment hearings are “barking at Trump” do neither know their history or the gravity of the problem, let alone the long term consequences for American democracy. To wit:

      • Meta Capitalism
        November 7, 2019 at 8:44 am

        Robert Reich on history of Constitution and grounds for impeachment.

  4. Ken Zimmerman
    November 8, 2019 at 12:52 pm

    Rather, than relying on voting polls, let’s look at demographics. We estimate there are about 20,000,000 adult sociopaths in the nation. Otherwise known as Trump’s base. They will vote for Trump at any cost. Which is an historical change since many in the past did not vote at all.

    As of September 2019, Gallup polling found that 31% of Americans identified as Democrat, 29% identified as Republican, and 38% as Independent. Additionally, polling showed that 49% are either “Democrats or Democratic leaners” and 44% are either “Republicans or Republican leaners” when Independents are asked “do you lean more to the Democratic Party or the Republican Party? This translates to about 64 million Democrats and about 57 million Republicans. With Trump’s staggering unpopularity in the suburbs, many of that 57 million will not vote for Trump. If Democrats are smart and heal some the rifts with farmers, workers, and rural residents, that no Trump vote goes up. Considering this all, I estimate the popular vote will be near 71 million Democratic, 51 million Republican.

    To win in the electoral college, Democrats will need to win back such states as Pennsylvania, Wisconsin, Ohio, and Michigan; all looking likely right now. Voters in Texas and Florida are about evenly split. So, there it will come down to voter turnout and dirty tricks. And right now, Republicans are ahead on dirty tricks. Unfortunately, the rest of America is today a write off for Democrats. They are not white supremacist, xenophobic, or gun loving enough to win a majority in most of the other states. There are virtually no traditional Republican ideals states left. Even Arizona and Indiana are sliding into the abyss. It’s this abyss that frightens me. It’s deep and wide and scary as hell. Once America falls in, it likely will not have the strength to pull itself out. That is, not till several mass calamities have come and gone.

    Just my opinion, of course.

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