President Trump’s lack of interest in the opinions of professional economists is causing concern. According to a February report by the Huffington Post, President Trump was concerned about the value of the dollar. Unsure of whether a strong dollar or a weak dollar is good for the US economy, he made a 3 AM call to (now) former national security advisor Michael Flynn, to ask what is essentially a question about macroeconomics. According to the report, Flynn admitted to not knowing, and advised the President to consult an economist instead.
This piece of information was picked up by the New York Times, which scathingly noted that “Judging by those with whom Mr. Trump chooses to surround himself, it seems that the new president is averse to talking with professional economists”. The Times goes on to point out that despite the President’s habit of saying that he “inherited a mess”, the economy is reasonably healthy, all things considered.
Another article in the New York Times also points out that while the current stock market is somewhat bullish, “Important measurements […] tell us that the market is quite expensive and that investor optimism is tinged with plenty of worry. None of this tells us where the market is going tomorrow, but it suggests that some caution is advisable”.
One can only hope that President Trump is willing and able to look beyond the stock market as a measure of economic health, however. A significant part of his political platform has been rhetoric centered around “fixing” problems caused by the Obama administration, but the fact remains that President Obama was able to stabilize an economy in the midst of a financial crisis, and leave it in a much better place. As the New York Times points out, “The unemployment rate is about 5 percent, close to what many economists consider sustainable in the long run. And inflation is close to the Federal Reserve’s target of 2 percent”. This means that in order for President Trump to stick to his narrative of mending a wounded economy, he may take actions with larger consequences than he anticipates.
The Times says that “Mr. Trump could try to push unemployment even lower through large tax cuts and vast infrastructure spending. But a large expansion in the aggregate demand for goods and services is not what the economy needs right now. It would either lead to higher inflation or, more likely, cause Janet L. Yellen, the chairwoman of the Federal Reserve, to raise interest rates faster and further than she now intends.”
Perhaps the most salient point that the Times brings up for consideration is the difficulty President Trump will likely face when trying to address the wages of his supporters. The voting presence of white, working-class Americans was a considerable factor during the election, but the Times argues that even more important than the flawed trade agreements that Trump often cites as the reason for stagnant wages is “what economists call skill-biased technological change”. The demand for skilled will increase as technology continues to advance, which will in turn widen the wage gap further.
The President will likely not find it easy to deliver on his economic campaign promises without causing himself significant trouble elsewhere, and one can only hope that he eventually begins to consult with experts from the fields he is so intent on meddling in.