I am sick and tired of reading the same rehashing about you know who. So, from here on in, at least to the end of this column, there will be no politics. Instead, this will be a practical column about where the economy might be going according to the people best qualified to know. I will share thoughts and predictions about how your paycheck will shrink in the next few years and how rich you are not going to be now that America is on its way to being great again for the very, very rich. This will be confirmation for all you apoplectic left wingers, as well as of some value to the conservatives who read this—all six of you.
Let's start with the growth of gross domestic product, which averaged around 2 percent over each of the eight Obama years, up from zero average growth during the previous four. According to The Oracle of Omaha Warren Buffett and the National Association for Business Economics, GDP is expected to grow around 2-2.5 percent per year for the next eight years, regardless of who is president. So, anyone who has run, or will run in four years, promising better than 3.5 percent is considered to be flat-out full of crap. NABE is the smartest in America. Buffett is the guy who has given away more than $25 billion to philanthropies and has grown what is left to almost another $75 billion. He knows enough about money matters to project well in good times and bad.
Currently, the GOP Congress is dismantling Dodd-Frank regulations that were passed to guard against another banking meltdown and a repeat Bush recession. Congressional mischief will not improve economic growth. But it will make it much easier for those in the top 1 percent to get richer, as they again will be free to become too big to fail and require tax-dollar bailouts. They will prosper, as will the elected officials they pay. No swamp-draining here.
Your own prosperity is different. The reasons your personal economic growth will not improve are easy to understand. According to various reports by The Wall Street Journal and The Financial Times, and Warren Buffett, America is now edging close to statistical full employment. That doesn't mean that many folks who were left behind due to being replaced by high-productivity automation won't still be out of work. It means that most qualified workers will continue to have jobs. So, if Washington finally decides to go ahead and start rebuilding America's crumbling infrastructure, it will have to pay more to get skilled workers to quit those jobs. Then, competition for workers being what it is, American industry will have to pay more to keep the skilled workers they have.
(Humorous side note: Since most who are skilled might be working on rebuilding American infrastructure, or working in American industry, it may become necessary to provide green cards and hire Mexicans to build the border wall.)
In any event, even without raising the minimum wage, stiff competition for labor could result in higher wages and you could end up making, say, another $10 an hour. That's the good news.
But wait. If American companies have to pay more to produce stuff and there is that looming import tariff trade war between America and foreign countries that make most of what you buy—clothes, furniture, fresh fruit, etc.—your cost of living could shoot up beyond income. We call this inflation.
During the Carter administration, inflation was so bad at one point that the dollar you saved for retirement on Jan. 1 was only worth around 87 cents by Christmas. So in the next few years, if infrastructure plans are implemented and if we stop getting good deals from China and Mexico, you could be paying $7 for avocados and $2,400 for iPhones. As for your next Ford 150, $75,000 is not out of the question.
Further, if America starts tariffing imports, China, Mexico and many other trading partners might stop buying the tons of things we now export. The International Trade Administration of the U.S. Department of Commerce reports that exports result in 11.5 million jobs for Americans. So, if we push China, Mexico, Europe and other countries, we will face layoffs and rising unemployment. We will still be stuck with those inflation-devalued dollars, making some of us, in effect, earning more, but poorer. Isn't economics fun?
James Mackintosh, columnist for The Wall Street Journal, recently pointed out that opining on what's likely to happen is different from how we learn what's really happening. He favors looking at how investments are priced in "the market." He determined that the yield curve of the U.S. Treasury market "tells a story of Trumpflation." Mackintosh has compared investments with 10-year yields to 30-year yields, under the headline "The Markets Don't Believe in Trump for the Long Term," referring to people on Wall Street with big money in the game. I won't go into the details (too much math), but the new economic strategy is weak enough to be concerning to the smartest money guys.
Don't mistake this as stock-market predictions, nor investment advice. There are so many variables in that discipline that I'd be stupid to make global predictions and you would be stupid to follow them.
That said, there is a growing consensus among the best economists and financial professionals that, even if we are not in for some tough sledding in the American economy these next few years, there are enough signs that those who voted with an eye toward making America great again through economic growth should brace themselves for significant disappointment.