Recession?
I noticed a lot of discussion in the Open Thread comments about whether or not we’re headed for a recession.
That’s the sort of thing on which my knowledge base is small, so I won’t make a prediction. I’ll just link to this post on the subject at Legal Insurrection.
Here’s a thread for you to talk about the topic to your hearts’ and brains’ delight.
A couple of things worth mentioning. We shouldn’t get too far ahead of ourselves. Bauxite was right that DOGE hasn’t saved enough money yet to make much of a dent – lord willing, it will. And Trump’s use of tariffs is still enigmatic.
My best guess is that Trump realizes that access to U.S. markets is a nuclear weapon that only we posses. No other individual country can begin to compete, including China – maybe more on that later. Step one for him is to establish that he is willing to use that weapon to get what he wants.
The entire thesis of the Greg Jensen WSJ article I linked to revolves around the U.S. meaningfully reducing its trade deficit. Trump Administration 1.0 didn’t at all.
Why should we not?
My theory of tariffs is that those who support them are on to something real. We were told that free trade is a win-win, but that’s not true. It is definitely a trade off. I think there’s a strong case that the upside is greater than the downside, but there is a downside and there are definitely losers from free trade. (And many of the losers are Trump’s working class base in the rust belt.)
The problem is that if you begin to unwind free trade with tariffs, you can’t just unwind the losses, you unwind the whole enchilada. It’s a trade off. You create new losers. And because free trade is a net win, you create more tariff losers than winners. And that’s what Trump will do with his “beautiful tariffs.” It’s great for Trump’s base, but probably, ultimately, a losing political issue, perhaps catastrophically so.
I actually think that Trump handled the matter well during his first term. He gave limited, targeted tariffs to his supporters in a way that maximized the benefit to his base and minimized the losses overall.
I fear he’s lost the plot this time around.
Bauxite:
This is the difference as I see it –
During his first term he used them for economic reasons. During his second he’s sometimes using them for that reason, but he’s also using them as threats to gain other concessions, such as foreign policy goals and action on the fentanyl trade. So he’s expanded their use. He hasn’t lost the plot; he’s trying to broaden the plot, and may not find much success on that score. The jury’s still out.
neo – I can’t figure out what Trump is up to this time around, but if his objective was to win specific concessions, especially from Canada, the fact that tariffs are actually going into effect is a damning indictment of his skills as a negotiator. That is, unless he intended to impose the tariffs all along and was using the concessions as a pretext. As between tariffs for their own sake and tariffs as a threat in negotiations, I suspect that he actually falls somewhere in the middle, which is why his decisions look so chaotic from the outside.
I think Trump sees increased tariffs as a necessary tool to return more industry to the US, but also sees *very* increased tariffs as deal-making leverage. He’s trying to do too much of the latter in too many directions at the same time and it looks chaotic.
Bauxite is of course correct that free trade and tariffs both involve winners and losers, not usually the same people. There’s no policy that is going to harm no one, or benefit no one.
From my perspective free trade is a fundamentally moral position, and there needs to be a more pressing moral concern to deviate from it (like not allowing our citizens to buy the results of slave labor) but I am aware this is not how most people look at it. I do also think that protective tariffs do more economic harm than good, and that this is fundamentally math, you can’t add up minuses and get a plus, and I am aware that not everyone accepts that argument.
Where I think Bauxite is not right is in saying Trump’s second term efforts here are “probably, ultimately, a losing political issue, perhaps catastrophically so.” There is no possible way there’s been enough time to see that, and I’m pretty sure that’s Bauxite’s bias against Trump talking there. We all have our biases, which is why I outlined some of mine before to pointing his.
Niketas Choniates – If Trump’s tariffs create more losers than winners, they will be a political loser. If they create significant losses for the more numerous losers, then they will be catastrophic. That’s really all it is.
I suspect there will be more losers than winners, and that the losers are going to lose things dear to them (jobs, retirement savings, affordability). I don’t think that the benefits are going to be that widespread. Now I could certainly be wrong. I guess we’ll see.
I agree with David Foster. We need more economic growth in the US to support the increasing entitlements. We can get that with 1. tariffs that incentivize companies opening operations in the US or we can get that with 2. reciprocal tariffs that incentivize other countries to remove their barriers (tariffs) to our goods which will increase production here for export markets.
With 1. our balance of trade deficit is reduced because we are importing more goods and with 2. our increased exports reduces the trade deficit.
I think President Trump would settle for either, but both would be ideal. And he might vary the strategy based on the sector. In the interim it could bet messy.
To the original question, here’s some data:
Here’s what the pro’s think:
Since Congress has no interest in cutting spending this year, we will likely have a deficit of $1.9 trillion-$2.2 trillion in fiscal year 2025. That’s 6.8% of GDP.
Since consumer spending is the lion’s share of GDP, it would really signify something seriously to go into a recession.
Lost the plot?
Trump’s ALWAYS losing the plot.
(Just ask Doug Ford. Just ask Zelenskyy. Just ask Starmer. Just ask the EU).
The “plot” being to destroy DJT, hog-tie the US and weaken the West, while using taxes to fund their pet projects (and enrich themselves) ALL under the rubric of “human rights”, “morality”, “progress”, “diversity”, “justice” and “saving the planet”, etc.
IOW, grand larceny on an astronomical scale, wall-to-wall mendacity, degradation and demoralization of the citizenry accompanied by all the requisite elaborate coverups…along with the—TOTALLY ETHICAL—persecution of perceived political opponents…all for the good of humankind (as indicated above).
At the very least, one might give Trump a bit of time (just a bit) and/or the benefit of the doubt.
Oh, right. Can’t do that…
(Since not only do we know better…but our elites and betters in the Democratic Party et al. AND the Global Media tell us so…)
Such that a sane observer just might be inclined to hope—FERVENTLY—that Trump keeps on “losing the plot”….
File under: The Audacity of Hope….
Losing the plot, continued….
CR passed the house.
Greenland has voted…
https://blazingcatfur.ca/2025/03/12/red-white-greenland/
USAID to engage in massive shredding and burning of confidential documentation (no doubt in the interest of transparency and reducing global warming…).