As the stock market spirals out of control, some might say that we are now being exposed to the truth about the Trump economy. To be honest, these indexes are not very effective measures of economic health because they fail to tell us about the living standards of ordinary households. They do not account for negative externality costs, like those related to global warming. When it comes to economic performance, central banks have been very helpful by maintaining large balance sheets and keeping interest rates close to their neutral level, but we cannot say the same thing about Trump’s economic policies.
Indeed, even with the enactment of tax cuts that have a ten-year cost of $1.9 trillion, the Census Bureau found that there was no statistically significant change in the median household income between 2017 and 2018. It also did not lead to a large boost in the real median wages of full-time workers, who still earn 3 percent less than they did 40 years ago. Moreover, non-residential fixed investment has fallen to a low not seen since the Great Recession. But most importantly, the Trump administration’s decision to make no serious effort to mitigate climate change is unsustainable. In a scenario where temperatures rise by 2 degrees Celsius above preindustrial levels, perhaps as soon as 2040, the economic cost might be as much as $34 trillion. At 2.5 degrees, it could be $67 trillion.
To prevent this deadly regression, voters must make the Republicans a permanent minority party.