The Trump Recession Watch

The Trump Recession Watch Update - March 16, 2025

There will be a nasty recession if the tariffs go forward as Trump demands. Jobs are vulnerable to even a modest recession because so many of the jobs that have replaced the lost manufacturing jobs are in vulnerable discretionary industries like leisure and hospitality at restaurants, accommodations, travel, and a variety of optional business services and in retail. In 1990 manufacturing jobs were 13.08 percent of establishment employment. If they were still 13.08 percent instead of 8 percent there would be 20.7 million manufacturing jobs instead of 12.6 million. Jobs will melt away in a recession, which is strictly optional. Where are the oligarchs? They may have gotten to Schumer and convinced him to keep the government operating as they want but we can hope in exchange for some limits to federal cuts. Our rich oligarchs do not want us to know how put off they are with Trump but I have to think they still expect to control him and they do not relish a recession. Time will tell.

The Trump Recession Watch Update - March 6, 2025

Suspending the tariffs for a month is a sign that corporate America remains in charge of the economy and does not want, or expect to benefit from, a recession. Every single thing Trump proposes will set off a recession, or worse, and so it cannot be at all certain recession/depression is not what is intended.

The Trump Recession Watch Update - March 5, 2025

The tariffs alone should be enough to set off a recession. If the federal share of Medicaid is slashed as threatened there will be a grimy and nasty recession. It is impossible to pull that much money out of the spending stream and keep the economy going. Employment will be falling; unemployment rising. We might wonder why corporate America with its reported 12,000 lobbyists would sit by wringing their hands, when it was their money bags that bought the Republicans and Congress. Either corporate America intends what is going on or they are cringing cowards.

The Trump Recession Watch – February 25, 2025

Before predicting a Trump recession, it is useful to remember the George W. Bush recession that began in the fall of 2008 and did not recover until early 2010. Recall it was W’s Crony’s that depressed the economy looting the banking system with speculative gambling in home mortgage innovations. By the third quarter of 2009 the Gross Domestic Product was down $450.1 billion dollars seasonally adjusted at annual rates. For an economy approaching $15 trillion of GDP in 2009 that was only a 3.4 percent decline. However, the quarterly average of seasonally adjusted employment was down 6,692,000 jobs. Jobs just melted away in a 3.4 percent GDP downturn.

Since an economy is nothing but a flow of transactions measured over time, Trump might take a hint from the Bush debacle and avoid depressing the economy. As February 2025 ends Trump has allowed Musk to dismiss probationary federal employees, but news reports put the number losing their jobs at 200,000, significant, but small compared to 6.692 million. So far Trump is all talk but no serious action toward a recession.

However, that could change given the talk of draconian cuts to health care programs like Medicare and Medicaid. The Bureau of Economic Analysis that produces the National Income and Product Accounts (NIPA) reports in their Table 3.12 an annual Medicaid budget of $878 billion dollars for 2023. Table 3.12 reports a Medicare budget of $1.009 trillion. From the beginning of Trump’s first term to eight years later at the end of Biden’s term health care provided 3.163 million new jobs or 27 percent of all new jobs, more than any other sub sector.

Some of the worthies in Congress have discussed eliminating the $878 billion Medicaid budget, a good way to start a recession. While the amount remains to be negotiated, it is worth remembering the beneficiaries of Medicaid do not receive a dime of that budget. All of the Medicaid budget goes directly to corporate health care venders in what is only the first round of a spending decline. Payroll cuts to doctors and nurses and revenue cuts to medical suppliers bring a second round of decline to the spending stream. The initial cuts reduce production, income and employment by three to four times the initial amount; economists call it a multiplier effect.

Managing the economy requires making sure the flow of transactions remains steady and increases with the growth of population and our productive capacity. That is an important point because recessions in the modern economy are strictly optional and can be readily avoided with cooperation of the Federal Reserve Bank and the United States Treasury.

Back in the 19th and early 20th century recessions were a regular occurrence like the recessions and depressions of 1873-1878, 1881-1884, 1893-1897, 1907, 1913-14, 1920-1921. In those days it was tough to manage the economy without a central bank and corporate America determined to hang onto the gold standard. Once the Great Depression of 1929 got under way the Franklin Roosevelt administration threw out the gold standard and with the Banking Act of 1935 introduced the modern tools of monetary and economic policy.

Today’s monetary management makes recessions optional like the George W. Bush recession where rogues and scoundrels had enough concentrated power to pursue their own agenda. It is easy to notice Trump and Musk have their own agenda and any economic decline will be caused as their option. Trump threatened many depressing economic policies before his inauguration and his policy pronouncements since January 20 have been universally depressing. Corporate America has pursued lower tariffs for at least 60 years because they learned, slowly but surely, that tariffs bring retaliation. A 25% tariff on Canada, our biggest trading partner, will bring retaliation and depress both economies. Mass deportation, as opposed to slowing immigration, will be economically depressing as will draconian cuts in Medicaid and Medicare or in food stamp aid or AID with its food for peace program.

Since corporate America has been the primary force making economic policy in the United States since the 19th century, we might wonder who is in charge here? Corporate America made all economic decisions during Trump’s first term, which is why tariffs remained low and immigrant labor, documented or not, remained cheap and plentiful and the economy did well. Corporate America has been restrained and somewhat subdued so far, but going along with DEI pronouncements, beating up on the federal workforce or taking over the Kennedy Center does not threaten the larger economy.

Corporate America has always expected Presidents to serve corporate power, not the other way around. Since WWII corporate America has preferred a stable economy, but never assume as economists like to do that corporate America can be counted on to just maximize profits. America’s labor history proves a segment of corporate America and the wealthy like class warfare. In 2025, Musk represents the warfare segment of the wealthy who know a depressed economy generates inequality as a perk of the upper class. If Trump wants his second term economy to go as well as his first, he will opt out of recession. The upcoming budget debate will tell the story. Watch the policy fight coming up, but expect corporate America still has the unity to neutralize the budget ax, tariffs, deportations and Musk. Updates!

Trump versus Biden on Jobs

Trump versus Biden on Jobs

To compare jobs in the economy during the Trump years of 2017 to 2021 with the Biden years of 2021 to 2025 requires allowing for the job losses from the Pandemic quarantine, which recall started in the early spring of 2020. In the jobs data for March 2020 establishment employment reached 150.898 million jobs. A month later in April 2020 establishment employment declined to only 130.421 million jobs, a decline of 20.477 million jobs.

Both presidents were in office for 48 months, the usual four year term. In the first 39 pre-Pandemic months of Trump’s first term in office, establishment employment increased by 5.262 million jobs. The Pandemic job decline of April 2020 and slow job recovery restored the Pandemic job losses by February 2022, the thirteenth month into the Biden Administration. While many continued to wear face masks and be wary of spreading Covid, the pharmaceutical industry had a vaccine available and jobs had returned to their pre-Pandemic total and a semblance of normality. This leaves the last 35 months of the Biden administration as a normal and comparable period for review with the first 39 months of the Trump administration.

In the first 13 months of the Biden Administration jobs increased just under 7.960 million to 150.876 million jobs, which restored the remaining Pandemic job losses left from the Trump term. In the last 35 months of the Biden administration beginning with February 2022, national employment increased by 8.660 million jobs. Therefore, the Trump economy that generated 5.262 million new jobs during the 39 months the pre-Pandemic months did not do as well creating jobs as the post Pandemic Biden economy that generated 8.660 million jobs in 35 months.

The Biden administration’s superior performance on jobs resulted primarily from a selection of industries where the Biden economy did much better.

Health Care and Education

Start with health care where Trump created 1.326 million health care jobs in 39 months while the Biden economy created 2.691 million jobs in 35 months. Move to education where the Trump economy created 90 thousand jobs in private education, while the Biden administration created 256 thousand jobs. In state supported public education the Trump economy created 84 thousand jobs while the Biden economy created 192 thousand jobs. In the local public schools the Trump economy created 130 thousand new jobs where the Biden economy created 457 thousand new jobs.

Leisure and Hospitality

Leisure and hospitality did much better during the Biden Administration and in all its sub sectors: performing arts, spectator sports, museums, historical sites, amusements, gambling, recreation, accommodations, restaurants and related food services. The combined changes were 284 thousand more jobs for Trump in 39 months while the Biden economy added 1.527 million jobs in the last 35 months of his administration.

Government

In government employment, excluding education, Biden and the Biden economy created more jobs and did so in all three levels of government: federal, state and local. The first 39 months of the Trump administration brought a combined increase of 313 thousand government jobs, with 80 thousand of those jobs in the federal government, not counting the post office. Under Biden the total increase was 879 thousand.

Trade, Transportation and Utility

Retail trade employment during the first 39 months of the pre-Pandemic Trump economy dropped 440 thousand jobs, but more jobs in the courier and messenger sub sector Trumps pre-Pandemic economy created 216 thousand new jobs. The result undoubtedly reflects the general decline of sales at the cashiers check out in exchange for home delivery of Internet sales. The combined increase of courier and messenger jobs and 366 thousand new jobs supporting home delivery in the warehouse and storage sub sector during the first 39 months of the Trump administration were large but not as large as a recovery of trade jobs, modal transportation and utility employment during the Biden economy. The combined trade, transportation, and utility sector, a.k.a. NAICS 40, had 345 thousand new jobs during the pre-Pandemic Trump years but 465 thousand new jobs during the post Pandemic Biden economy.

In those sub sector industries where remote work is possible Pandemic job losses were small and quick to recover. These were primarily in finance and banking, and the professions such as law, accounting, computing, engineering and various management consulting and research industries. Job gains in these sub sectors were comparable for Trump and Biden as, for example, in management and technical consulting services where there were 164 thousand new jobs during the 39 pre-Pandemic months of the Trump administration, but 142 thousand new jobs during the 35 post-Pandemic months of the Biden administration. The Trump economy did somewhat better in goods production – natural resources, construction manufacturing - in the pre-Pandemic period than the Biden economy in the post-Pandemic period: Trump 1.082 million jobs, Biden 811 thousand jobs.  It should be mentioned that goods production was 21.96 percent of establishment production in 1990 that has declined continuously to 13.58 percent by 2025, a decline of 8.38 percent in a decline that shows no sign of ending.

The superior job performance during the Biden economy came in part because of much higher job growth, but especially in the jobs of the future. New jobs will have to come in health care and education as they have been. Otherwise, replacement jobs for the millions of manufacturing jobs corporate America has moved abroad have been coming in leisure and hospitality and government service and will have to continue given remaining service industries continue to grow so slowly they have a declining share of national employment.

During his first term Trump liked to brag about the new jobs on the Bureau of Labor Statistics monthly jobs report and take credit for creating them. As his second term gets under way, he appears determined to enlarge the unemployed as fast as he can. For the new unemployed among us beware of ventilating politicians and union officials advising obedience to the “law.” Try hard to understand the significance of January 6.