- Prediction: Unemployment would rise above 4%, possibly with one quarter of job losses.
- Prediction: Stock prices would rise along with unemployment, potentially dramatically.
What Actually Happened?
- Unemployment did rise above 4%, reaching 4.2% in November, up from 3.7% at the start of the year.
- Jobs: Despite higher unemployment, there was no month—let alone a quarter—of net job losses. The lowest job growth came in August, with fewer than 100,000 jobs added, the weakest since 2020.
- Stock Market: The NASDAQ soared, finishing the year up over 28%, fulfilling the prediction of a dramatic rise.
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Forecast for 2025 and 2026:
The outlook depends entirely on whether the Republican-controlled Congress follows Trump’s policies of mass deportations and significant tariffs. If they do:
- Scenario: Deportations Exceeding 10 Million & Tariffs of 20–40%
1. Recession:
- The economy will contract for more than two quarters and shrink by over 2%, marking only the second recession since the Great Recession.
2. Inflation:
- Inflation will spike above 5%, driven by:
- Higher costs for goods due to tariffs.
- Domestic producers raising prices under tariff protection.
3. Stock Market:
- The market will decline by at least 5–10% as higher costs and retaliatory tariffs erode profits for U.S. companies facing supply chain disruptions and weaker sales.
4. Policy Response:
- Trump: Will remain oblivious to - but angry about - the economic consequences, offering no substantive explanation or course correction.
- Republicans in Congress: Some may recognize the damage and attempt to reverse these policies, though resistance within the party is likely.
- MAGA Supporters: Will reject economic reality, blaming the failure on conspiracies rather than the inanity of the policies themselves.
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In Summary:
The economic trajectory for 2025 and 2026 hinges on whether Congress pursues policies that disrupt trade and labor markets. Sensible governance could avoid these pitfalls, but blind adherence to MAGA ideology will trigger self-inflicted economic wounds. We can only hope that Trump stays focused on crafting tweets rather than legislation.
The outlook depends entirely on whether the Republican-controlled Congress follows Trump’s policies of mass deportations and significant tariffs. If they do:
- Scenario: Deportations Exceeding 10 Million & Tariffs of 20–40%
1. Recession:
- The economy will contract for more than two quarters and shrink by over 2%, marking only the second recession since the Great Recession.
2. Inflation:
- Inflation will spike above 5%, driven by:
- Higher costs for goods due to tariffs.
- Domestic producers raising prices under tariff protection.
3. Stock Market:
- The market will decline by at least 5–10% as higher costs and retaliatory tariffs erode profits for U.S. companies facing supply chain disruptions and weaker sales.
4. Policy Response:
- Trump: Will remain oblivious to - but angry about - the economic consequences, offering no substantive explanation or course correction.
- Republicans in Congress: Some may recognize the damage and attempt to reverse these policies, though resistance within the party is likely.
- MAGA Supporters: Will reject economic reality, blaming the failure on conspiracies rather than the inanity of the policies themselves.
---
In Summary:
The economic trajectory for 2025 and 2026 hinges on whether Congress pursues policies that disrupt trade and labor markets. Sensible governance could avoid these pitfalls, but blind adherence to MAGA ideology will trigger self-inflicted economic wounds. We can only hope that Trump stays focused on crafting tweets rather than legislation.
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