A thought for Sunday: the economy is on autopilot. Pray that it stays that way
by New Deal democrat
A thought for Sunday: the economy is on autopilot. Pray that it stays that way
It’s Sunday, so I get to step out from nerdy analysis, and opine as I please.
Back in 2014, when there was another GOP “wave” election in the Congress, I wrote that the silver lining was that we were at the best point in the economic cycle for it to function on autopilot for the next 24 months. In other words, almost all of the long term indicators were positive, so if all the Congress did in 2015-16 was agree to continue to pay the country’s bills, we would probably be OK. And we were.
So, a little over 3 months into the Trump Administration, what action has it taken to materially change the economic trajectory?
Basically, nothing. Yes, a bunch of executive orders have been signed promising to undo Obama regulations, and the telecoms have gotten the right to sell all of your data, but in terms of actual action, the economy is still on autopilot.
All of the mid-cycle indicators have made their highs, and a couple of the long leading indicators have vacillated between neutral and negative, and a few more of them are weakening, but are still positive. If the economy stays on autopilot, it probably doesn’t have a bad accident until at least the middle of next year — although I do expect things like job and real wage growth, while still positive, to weaken.
So, the good news is that if Trump and the GOP Congress continue to be unable to form a majority to enact actual policy, we’re not in any serious economic danger for now.
The bad news is that something might happen within the next week. If stopgap funding is not passed, at least a partial government shutdown seems likely. Actually welching on our debts is apparently still a few months off.
And Obama’s negotiating with the hostage-takers at the time of the 2011 debt ceiling debacle is coming back to bit us in the butt, now that it serves as a precedent. First Trump threatened to cut off funding for Obamacare. The Democrats responded by insisting that its statutory funding be codified in the debt ceiling resolution (something that probably a lot of GOPers silently want to happen as well). Now Trump has threatened to shut down the government and stop paying its bills if he doesn’t get all of his legislative wishes, like a border wall and a big tax cut for the wealthy, as part of the deal.
Since the odds of a 2/3’s majority in both Houses of Congress overriding any Trump veto are essentially zero, the Full Faith and Credit of the United States is in the hands of an ignorant narcissist. One week from now, the economy might be taken off autopilot and deliberately steered into a mountainside.
For the record, I see no reason for Democrats to go along with any of this. The GOP is in nominal controls of both Houses of Congress, and there is a nominally GOP president. Time to put on their big boy pants and govern. If they won’t do that, there is no reasonable rationale for trying to negotiate a less awful, but still awful, outcome.
“The bad news is that something might happen within the next week. If stopgap funding is not passed, at least a partial government shutdown seems likely. Actually welching on our debts is apparently still a few months off.”
First, “welching” is a racist term. Cymru am byth.
Second, interest payments on the national debt are only 6% of spending, so there is no possibility whatsoever of default.
“interest payments”
Just stop.
Do you really think we will not be able to roll over principal?
Auto pilot has been good for investors, another thing that has been good for investors is Democrats in power — look it up, S&P return always rise when the Democrats are running the show.
As for Trump he seems keen to blow things up (again). Sure the 28th is just days away, but as usual there are always a few tricks up the sleeves to keep things going. Of course that implies that the WH wants to keep the government open — don’t forget the GOP’s mantra — Government is evil and bad…
Anyway, the real issue is that, like in Europe, those who govern are letting things slide, one day there will be a reconning. Maybe not just this week!
Please, please stop.
The topic has nothing to do with interest payments.
geez
Anne?
“The topic has nothing to do with interest payments.”
True. But trolls gotta troll.
“The topic has nothing to do with interest payments.”
Then why is this in the article:
“Actually welching on our debts is apparently still a few months off.”
first off I’m not a troll — since I used my real name, the article is only marginally about interest rates! It is about how good things are in the market…still. Open interest and massive stock borrowings are something else too.
Still two facts, closing the government could be a WH strategy (look at Bannon’s pronouncements this evening) and interest payments is only one aspect of government obligations — rolling over the debt is not an issue since it doesn’t increase the debt.
The Federal government pays a lot more than just the interest on the debt!
Warren,
I simply cannot believe there is anyone stupid enough to continue the way you have.
I would tell you why your thoughts are inane, but I want to see how long you can go on with your thoughts.
Fascinating that the internet main contribution to discussion is that people can make such fools of themselves; get caught in the act; and let it roll off their back.
In the days of personal discourse, they would slink away in embarrassment and never be heard from again….
EMichael, do you ever actually offer counter-arguments, or do you rely completely on personal insults?
Now, not increasing the debt ceiling will not require shutting down the government, just reducing spending to match revenue.
Close.
No cigar.
The reason I did not “offer counter-arguments” is because the post you are commenting on IS the counter-argument.
In short, you have nothing.
hehehehe
what a maroon
Well, at least you watch Bugs Bunny, so you can’t be ALL bad.
Yeah, and I also understand him
Take every one of your posts in here. Find the section of the column you are referring to in your posts. Obvious that none of your posts make one teeny tiny bit of sense.
“The boy, I say the boy, is as sharp as a bowling ball.”
You’re built too low — the fast ones go over your head.
If the president and congress will not do something, the economy is safe. It’s quite ironic but if that helps the economy, why not. Good work in making this article.
Thanks!
Rebecca:
Welcome to Angry Bear