Making News: New Magazine Article (Again) Debunks the Trump-as-Phony-Populist Claim

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Making News, middle class, Populism, The American Conservative, Trump, working class

I’m pleased to announce that a new article of mine has just been published in The American Conservative. It updates a piece I wrote last year for this magazine, and reports that, as then, official U.S. data indicate that President Trump’s administration has worked out well economically for most of the middle- and working-class voters in his base who bet that he’d be a genuine champion of their interests.

And keep checking in with RealityChek for news of media appearances and other developments.

(What’s Left of) Our Economy: A Curious Trade War Omission from the New York Fed

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(What's Left of) Our Economy, China, exports, Made in Washington trade flows, manufacturing, New York Fed, tariffs, Trade, trade war, Trump

If you were writing an economics blog item for a major government institution in America, and your subject was a trend that for two years now has been a major controversy in America, wouldn’t you include information on how that trend actually was affecting America?

Not apparently if you’re Hunter L. Clark, and you work for the New York branch of the Federal Reserve system – which hasn’t exactly been shy about weighing in on this controversy (President Trump’s tariffs on China) before (See, e.g., here and here.) Even more unusual: that previous New York Fed contribution to the trade war debate had emphatically concluded that the President’s policies have been an abject failure. Had this new item presented U.S.-relevant data, the clear conclusion would have been that the trade war has succeeded in at least one crucial respect.

Specifically, in a post last Friday, Clark wrote on how China’s export performance so far this year has been “supercharged” by the CCP Virus pandemic (which of course originated in one of its major cities).

Clark also noted various (convincing) reasons that this surge might be temporary, and even observed that some other counties had actually out-performed China export-wise. But China’s exports to the United States – which of course the tariffs (along with the rest of the President’s trade policies) aimed to curb and ultimately reduce) – went completely unmentioned. And that’s an awfully odd omission because combining Clark’s figures with readily available U.S. Census data shows that this wave of China export increases completely missed the United States.

According to Clark, compared with the same quarters last year, China’s overall goods exports this year “slightly increased in the second quarter and are currently forecast to grow by close to 6 percent in the third and fourth quarters of this year.” He italicized “increased” because forecasts generally expected a ten percent decline in Chinese overseas sales during these periods.

But despite that slight increase in China’s global merchandise exports between the second quarter of 2019 and the second quarter of 2020, during that year, official U.S. data show that these exports to the United States fell by 6.67 percent. And in contrast to the six percent improvement in China’s worldwide exports between the third quarter of 2019 and the third quarter of this year, its exports to the United States were down by 2.98 percent.

Also relevant to the trade war debate – did the Trump tariffs simply result in shifting the makeup of U.S. imports from China to other countries, therefore accomplishing nothing (at best) economically for the nation according to one of the Trump’s (and Trumpers’) favorite scorecards? Clark more reasonably doesn’t investigate this question, but the official American data make the Trump record look awfully good according to this standard, too.

As known by RealityChek regulars, the best global proxy for U.S.-China goods trade is U.S. non-oil China goods trade, and that’s especially true on the import side, since the United States buys no oil from China. And the numbers for this “Made in Washington” import flow (so named because commerce in these goods is strongly influenced by government trade policy) make clear that, whatever import shifting has taken place hasn’t prevented overall U.S. purchases of these foreign products from falling also.

Between the second quarter of 2019 and the second quarter of 2020, they fell by a whopping 18.92 percent. Since the U.S. September trade figures won’t be out until early next month, full third quarter results aren’t yet available. But on a July-August basis, these global Made in Washington imports were off by 2.13 percent.

These subjects, moreover, clearly are of more than academic or political score-settling interest. Despite facing the same CCP Virus-induced disruptions as the rest of the economy, domestic manufacturing – which is heavily exposed to Chinese and other foreign competition – has held up well. In inflation-adjusted terms, it’s production from its February peak through September is down just over six percent. Employment has been relatively resilient, too, along with capital spending.

Imagine how much worse its troubles would have been if it experienced the kind of Chinese export flood that’s washed over other economies. Indeed, this counter-factual seems eminently worthy of study. Including by the New York Fed.

(What’s Left of) Our Economy: The Public Outscores the Experts on China Trade Policy

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(What's Left of) Our Economy, allies, America First, Blob, Center for Strategic and International Studies, China, CSIS, elites, globalism, multilateralism, tariffs, Trade, trade war, Trump, World Trade Organization, WTO

So many big takeaways from a new poll on U.S. and global attitudes toward China and U.S. China policy (both the economic and national security dimensions), I hardly know where to begin! But if I could only write a lede paragraph for a single news article (or blog item), here’s what I’d say: The American public is a great deal more sensible on how to deal with the People’s Republic than so-called “thought leaders.” And what I mean by “more sensible” is more “America First-y” and less globalist.

The survey was conducted by the Center for Strategic and International Studies (CSIS), a Washington, D.C.-based think tank not only squarely in the globalist camp, but a charter member of the globalist, bipartisan U.S. foreign policy “Blob” (which includes a sizable trade and economic sub-Blob) that exerted dominant influence over America’s course in world affairs until Donald Trump came along, and whose supposed expertise still mesmerizes the Mainstream Media.

Of special interest, CSIS sampled opinion from everyday Americans, those so-called thought leaders (whose follower-ship, as implied above, is greatly diminished), and thought leaders from countries that are U.S. allies or “partners.”

The gap between public and elites on China policy views seems widest on the economic and trade issues that President Trump has made so central to his approach towards the People’s Republic, and the CSIS survey contains decidedly good news for him and his fans in this area: The general public is much more supportive of the “go-it-alone,” unilateral sanctions and tariffs imposed by Mr. Trump to combat and/or eliminate Chinese transgressions in this area than the Blob-ers.

Although a multilateral approach (using “international agreements and rules to change China” economically) won plurality backing among the general public (34.8 percent), fully 69 percent of the U.S. thought leaders favored this route. Yet nearly a third of the U.S. public (32.8 percent) endorsed employing “U.S. government tools like sanctions and tariffs”, versus only three percent of the deep thinkers.

As I’ve written repeatedly, (e.g., here and here) a multilateral China trade strategy is bound to fail because international institutions (like the World Trade Organization) are too completely filled by countries that either rely heavily on China-style predation to compete in the global economy, and because even (or especially?) longstanding U.S. treaty allies had been doing business so profitably with the People’s Republic that the last development they wanted to see was a disruption of the pre-Trump status quo. So support for multilateralism in this case can legitimately be taken as support for do-nothing-ism – especially since the vast majority of these elites so enthusiastically pushed for the reckless U.S. expansion of commerce with China that’s lined many of their pockets, but that’s undermined American prosperity and national security.

The CSIS poll, moreover, provides some indirect evidence for this argument: Nearly as high a share of the foreign thought leaders backed a multilateral approach for dealing with China economically (65 percent) as their U.S. counterparts. And their support of U.S.-only approaches (seven percent) was only slightly higher than that of the U.S. thought leaders’ three percent. (The foreign thought leaders may be slightly more gung ho for America going it alone due to confidence that their own products will fill any gaps in the China market left by U.S. producers shut out by the trade wars. On a net basis, though, their countries are coming out losers this year.)

At the same time, one surprising (at least to me) economics-related finding emerged from the survey: Whether we’re talking about the American people generally, or thought leaders at home or abroad, just under 20 percent favor substantial decoupling from China as the best economic approach for the United States.

When it comes to messaging, however, the survey isn’t such great news for Mr. Trump – and Trumpers – on China trade issues. On the one hand, answers to the question on evaluating his performance in this area can – although with a stretch – be interpreted to show majority support for the view that his record has achieved noteworthy gains. Principally, 27.8 percent of U.S. public respondents agreed that the President’s China measures have “been effective in producing some tactical changes in Chinese economic policy” and 9.9 percent believe they have “been effective in forcing long-term changes.” Those groups add up to 37.7 percent of the sample.

Another 20.5 percent checked the box stating that Trump policies have “hurt U.S. consumers and exporters but protected important U.S. industries.” A case can be made that at least some members of this group would give these policies good grades, or that many would give them partly good grades, possibly bringing the total for positive views somewhere in the mid-40 percent neighborhood.

Much more certain, however, is that the most popular single answer (with 41.8 percent support) was that the trade war “has damaged U.S. economic interests without achieving positive change in China.”

Also signaling a Trump China messaging problem – as with much other commentary, the CSIS survey mostly measures China policy success as changing Chinese behavior. In my view, that goal is much less important – because it’s much less realistic, at least in terms of producing verifiable reform – than protecting U.S.-based producers from China’s economic predation. The relative resilience shown by domestic industry both throughout the trade war and into the CCP Virus-induced recession indicate that this goal is being achieved. But neither the President nor his economic nor his campaign team mentions it much, if at all.

CSIS’ polling also found that fully 71 percent of U.S. thought leaders gave Trump’s China economic policies the big thumbs down – and although they don’t vote, their aforementioned influence in the Mainstream Media could partly explain why broader American opinion on the Trump record seems so divided. (For the record, foreign thought leaders weren’t asked to rate the Trump strategy.)

But having established that everyday Americans have a good deal to teach the experts on China trade and economic policy, how do the two compare on China-related national security policies? As indicated above, the gap here isn’t nearly so wide, but worth exploring in some detail – as I’ll do in a forthcoming post!

(What’s Left of) Our Economy: The Trade Wars Would’ve Been Much Easier to Win if Not for Boeing

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(What's Left of) Our Economy, aerospace, aircraft, aircraft parts, Boeing, manufacturing, metals tariffs, tariffs, Trade, trade wars, Trump

Today’s grim news about recent Boeing aircraft orders and deliveries is just the latest valuable reminder that any evaluation of the Trump record on manufacturing and trade policy has to take into account the entire aircraft and parts industry’s transformation from a slight to a bigtime industrial laggard. Moreover, Boeing’s weakness – which has nothing to do with the President’s trade or any other policies — seems likely to continue for the foreseeable future, at least according to Boeing. The company’s latest long-term forecast for the global aircraft market affirms that it will take years for aviation worldwide to return to pre-CCP Virus levels.

The degree of the pain inflicted by Boeing’s troubles – which also include major safety woes that started making headlines in early 2019 – on the whole of domestic industry, and how unrelated manufacturing’s overall Trump era performance has been to the President’s tariff-heavy trade policies, becomes clear from diving into the most detailed U.S. manufacturing output figures available: the Federal Reserve’s industrial production data.

For example, the Fed numbers show that, during the Obama administration, adjusting for inflation, manufacturing output increased by 14.65 percent. Real aircraft and parts production output growth was just slightly slower: 12.39 percent.

But from the start of the Trump years until the arrival of the pandemic (February, 2017 through February, 2020), whereas the manufacturing sector as a whole expanded by 3.60 percent in price-adjusted terms, the aircraft and parts industry shrank by 13.10 percent.

Since the virus struck (from February through the latest available – August – numbers)? Manufacturing output is down by 6.39 percent after inflation, and aircraft and parts production is off by 10.81 percent.

As for the trade war impact, from March, 2018 (the first full month of President Trump’s metals tariffs and a good place for marking the start of the broader trade wars) until February, 2020 (the last month before the virus began significantly affecting manufacturing and the entire domestic economy), overall manufacturing production grew by a bare 0.83 percent. But that poor performance was clearly dragged down by the nation’s aircraft and parts factories – which turned out 10.74 percent less in terms of constant dollar product value.

Aircraft and parts were major industrial also-rans, too, during the comparable 23-month period preceding the first full month of the Trump metals tariffs. Their real production slumped by 4.11 percent, as manufacturing’s overall production rose by 4.07 percent.

The bottom line, then, couldn’t be clearer. The President was wrong in insisting that trade wars for big deficit countries like the United States are “easy to win.” But the facts also demonstrate that the victories the nation has won in these conflicts – which have been significant – would have been come much easier had the aerospace sector and its long-time leader Boeing not turned into such major losers.

Our So-Called Foreign Policy: America First by Any Other Name?

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America First, Council on Foreign Relations, establishment, Foreign Affairs, globalism, internationalism, Michael Beckley, Our So-Called Foreign Policy, Trump

Here’s a blog post lede I never thought I’d write. And if you’re familiar with the ongoing but almost always blinkered way the establishment debates U.S. foreign policy, you’ll find it pretty starting, too:

An intellectually interesting article appeared in Foreign Affairs. Or maybe more accurately, an article that’s far more intellectually interesting than either its author or the magazine’s powers-that-be realized.

First, here’s why this matters. Foreign Affairs is the journal of the New York City-based Council on Foreign Relations – an organization that literally was created in the shadow of World War I by America’s then-Northeast-centric ruling classes to push the nation to abandon its domestically focused collective impulses and priorities and remain comprehensively involved in world affairs following the conflict.

The organization became so influential that in 1962, the journalist Richard Rovere published an article (which appeared in various forms, notably Esquire) arguing (in my opinion, with tongue not so firmly in cheek) that the Council and its members were pillars of a broader national establishment that not shaped decisively not only American public policy, but the definition of which viewpoints were and weren’t legitimate to air in nationally influential media. (Full disclosure: From the mid-1980s or so through the mid-1990s or so, I was a member until I decided that the dues were no longer worth the candle.)

It’s not that Foreign Affairs never runs material that challenges the orthodoxy in the field of foreign policy – which historically has been called “internationalism” and which President Trump has re-labeled “globalism.” But such articles are published so rarely that their very infrequency clearly telegraphs even to minimally perceptive readers that they’re exercises in tokenism. Another big clue along these lines – they’re given the magazine’s blessing usually only after internationalist policies lead to outright national disasters.

One leading example is this piece, which came out at the height of the Vietnam War. Much less important examples include two pieces of my own, which indicated the Council’s willingness to consider that, with the Cold War ended, America’s military reach was needlessly and dangerously exceeding its grasp; and that the standard economic theories sanctifying free trade policies weren’t all they were cracked up to be.

Yet Michael Beckley’s essay in Foreign Affairs‘ November/December issue falls into a different category altogether. It not only decimates globalism’s core tenets. It does so unwittingly. And there’s no reason to suspect that the magazine’s editors or their superiors understand its profoundly subversive implications, either.

Even more startling: the author’s main arguments closely mirror those made in this 2018 article of mine (and foreshadowed in this Atlantic Monthly piece from…wait for it…nearly 30 years ago).

My own case against globalism first and foremost challenges its assumption that the United States has become exquisitely sensitive, and indeed downright vulnerable, to virtually every disturbance of a set of global circumstances whose default position is called “order” – even though the stability of the entirety of this so-called system itself in turn is considered as fragile as a pyramid of champagne glasses.

In fact, I’ve contended, because of America’s unique combination of geographic isolation, technological prowess and therefore military power, and natural wealth, it’s substantially unaffected by most outbreaks of instability overseas.

And where globalism claims that because of this vulnerability, U.S. foreign policy must engage in a ceaseless effort to create, maintain, or restore order and stability abroad, I’ve argued that because developments within the United States (including its actual or potential foreign vulnerabilities) are far easier for Americans to control than developments without, even when foreign developments threaten to impinge on its security and prosperity, the U.S. government is best advised to respond by addressing its own weaknesses and shoring up its own defenses rather than trying to fix what’s broken overseas.

There’s definitely a paradox at work here, but a paradox that makes perfect sense to the open-minded: The United States is anything but capable through its own devices of ensuring its security and prosperity by making or keeping the world safe and stable. But it’s entirely capable of ensuring through its own devices its own security and prosperity in a world that remains unsafe and unstable.

So imagine my surprise upon reading Beckley statements like:

>”By 2040, the United States will be the only country with a large, growing market and the fiscal capacity to sustain a global military presence. Meanwhile, new technologies will reduce U.S. dependence on foreign labor and resources….”

>”Remaining the most powerful country, however, is not the same thing as remaining the guarantor of a liberal international order. Somewhat paradoxically, the same trends that will reinforce U.S. economic and military might will also make it harder to play that role—and make Trump’s approach more attractive.”

>For much of its history, “The United States could afford to pursue its goals alone because it, unlike other powerful countries, was self-sufficient. By the 1880s, the United States was the world’s richest country, largest consumer market, and leading manufacturer and energy producer, with vast natural resources and no major threats. With so much going for it at home, the United States had little interest in forging alliances abroad.”

>With the passing of the Cold War-era Soviet threat that could only be adequately contained with alliances (I disagree, but that’s a separate issue) “Americans will feel less dependent on foreign partners than they have in generations.”

>”As other major economies shrivel, the United States will become even more central to global growth and even less reliant on international commerce.”

>”The United States will also have less need for staunch allies, because rapid aging will hobble the military expansion of its great-power adversaries.”

>”The United States’ task of leading the liberal world order will grow harder as nationalists gain power and raise tariffs, close borders, and abandon international institutions.” 

One likely reason that neither Beckley nor the folks at Foreign Affairs or the Council understood the real importance of his article is that the author works so hard to paint such unattractive – and even ominous – picture of the rest of the world if the United States does pursue a go-it-alone strategy. Indeed, his portrayal of this kind of America (“rogue” and “illiberal”) isn’t exactly flattering, either.

Another likely reason for this obliviousness is that the second-best version of globalism that Beckley proposes as an alternative to the pre-Trump iteration isn’t so terribly different from traditional globalism.

It essentially entails a more explicit use of U.S. power and wealth to pressure current allies and neutrals into following U.S. leads in exchange for using its still (and increasingly formidable) military edge to protect them against China and Russia and other predators. But although, in Beckley’s words, this foreign policy approach would be “more stingy and uninspiring” than today’s globalism, to my eyes, it also looks comparably (and needlessly) ambitious, interventionist, and risky – especially if America’s relative military prowess doesn’t prove to be nearly as intimidating as the author expects, and the U.S. homeland remains exposed to the risk of nuclear attack from foreign aggressors.

Also crucial to remember – at this stage, even though Beckley’s views have been given something of a Good Housekeeping Seal of Approval by the Council, his voice remains an awfully lonely one. In particlar, there is absolutely no indication yet that anyone associated with the Biden presidential campaign remotely agrees.

At the same time, changes in national strategy rarely develop through knowing adoption of the master plans laid out by policy writers like him (or me). In fact, one of my favorite lines in non-fiction has been been the Victorian era British historian J.R. Seeleye’s contention that his countrymen “seem to have conquered and peopled half the world in a fit of absence of mind.”

I’m not saying I believe Seeleye entirely. But he usefully spotlights the crucial role played by the force of circumstance in producing national course changes. And that’s mainly why Beckley’s article genuinely deserves the descriptor “subversive.” It’s ably identified the many of the developments (including some I haven’t considered) that demonstrate the attractiveness of a genuinely America First-type foreign policy, and could well push the United States to adopt one whether he – or the still powerful globalist U.S. national establishment – likes it or not.

Im-Politic: VP Debate Questions That Should be Asked

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1619 Project, African Americans, Barack Obama, Biden, budget deficits, CCP Virus, censorship, China, Confederate monuments, Constitution, coronavirus, COVID 19, education, election 2020, Electoral College, filibuster, Founding Fathers, free speech, healthcare, history, history wars, Im-Politic, inequality, investment, Kamala Harris, Mike Pence, national security, Obamacare, police killings, propaganda, protests, racism, riots, semiconductors, slavery, spending, Supreme Court, systemic racism, Taiwan, tariffs, tax cuts, taxes, Trade, trade war, Trump, Vice Presidential debate, Wuhan virus

Since I don’t want to set a record for longest RealityChek post ever, I’ll do my best to limit this list of questions I’d like to see asked at tonight’s Vice Presidential debate to some subjects that I believe deserve the very highest priority, and/or that have been thoroughly neglected so far during this campaign.

>For Vice President Mike Pence: If for whatever reason, President Trump couldn’t keep the CCP Virus under control within his own White House, why should Americans have any faith that any of his policies will bring it under control in the nation as a whole?

>For Democratic candidate Senator Kamala Harris: What exactly should be the near-term goal of U.S. virus policy? Eliminate it almost completely (as was done with polio)? Stop its spread? Slow its spread? Reduce deaths? Reduce hospitalizations? And for goals short of complete elimination, define “slow” and “reduce” in terms of numerical targets.

>For Pence: Given that the administration’s tax cuts and spending levels were greatly ballooning the federal budget deficit even before the virus struck, isn’t it ridiculous for Congressional Republicans to insist that total spending in the stimulus package remain below certain levels?

For Harris: Last month, the bipartisan Congressional Problem Solvers Caucus unveiled a compromise stimulus framework. President Trump has spoken favorably about it, while stopping short of a full endorsement. Does Vice President Biden endorse it? If so, has he asked House Speaker Nancy Pelosi to sign on? If he doesn’t endorse it, why not?

For Pence: The nation is in the middle of a major pandemic. Whatever faults the administration sees in Obamacare, is this really the time to be asking the Supreme Court to rule it un-Constitutional, and throw the entire national health care system into mass confusion?

For Harris: Would a Biden administration offer free taxpayer-financed healthcare to illegal aliens? Wouldn’t this move strongly encourage unmanageable numbers of migrants to swamp U.S. borders?

For Pence: President Trump has imposed tariffs on hundreds of billions of dollars’ worth of Chinese exports headed to U.S. markets. But U.S. investors – including government workers’ pension funds – still keep sending equally large sums into Chinese government coffers. When is the Trump administration finally going to plug this enormous hole?

For Harris: Will a Biden administration lift or reduce any of the Trump China or metals tariffs. Will it do so unconditionally? If not, what will it be seeking in return?

For both: Taiwan now manufactures the world’s most advanced semiconductors, and seems sure to maintain the lead for the foreseeable future. Does the United States now need to promise to protect Taiwan militarily in order to keep this vital defense and economic knowhow out of China’s hands?

For Pence: Since the administration has complained so loudly about activist judges over-ruling elected legislators and making laws themselves, will Mr. Trump support checking this power by proposing term limits or mandatory retirement ages for Supreme Court Justices? If not, why not?

For Harris: Don’t voters deserve to know the Biden Supreme Court-packing position before Election Day? Ditto for his position on abolishing the filibuster in the Senate.

>For Pence: The Electoral College seems to violate the maxim that each votes should count equally. Does the Trump administration favor reform? If not, why not?

>For Harris: Many Democrats argue that the Electoral College gives lightly populated, conservative and Republican-leaning states outsized political power. But why, then, was Barack Obama able to win the White House not once but twice?

>For Pence: Charges that America’s police are killing unarmed African Americans at the drop of a hat are clearly wild exaggerations. But don’t you agree that police stop African-American pedestrians and drivers much more often than whites without probable cause – a problem that has victimized even South Carolina Republican Senator Tim Scott?

For Harris: Will Biden insist that mayors and governors in cities and states like Oregon and Washington, which have been victimized by chronic antifa violence, investigate, arrest and prosecute its members and leaders immediately? And if they don’t, will he either withhold federal law enforcement aid, or launch such investigations at the federal level?

For Pence: Why should any public places in America honor Confederate figures – who were traitors to the United States? Can’t we easily avoid the “erasing history” danger by putting these monuments in museums with appropriate background material?

For Harris: Would a Biden administration support even peacefully removing from public places statues and monuments to historic figures like George Washington and Thomas Jefferson because their backgrounds included slave-holding?

For both: Shouldn’t voters know much more about the Durham Justice Department investigation of official surveillance of the Trump campaign in 2015 and 2016 before Election Day?

For both: Should the Big Tech companies be broken up on antitrust grounds?

For both: Should internet and social media platforms be permitted to censor any form of Constitutionally permitted speech?

For Pence: Doesn’t the current system of using property taxes to fund most primary and secondary public education guarantee that low-income school children will lack adequate resources?

For Harris: Aren’t such low-income students often held back educationally by non-economic factors like generations of broken families and counter-productive student behavior, as well as by inadequate school funding – as leading figures like Jesse Jackson (at least for one period) and former President Obama have claimed?

For Pence: What’s the difference between the kind of “patriotic education” the President says he supports and official propaganda?

For Harris: Would a Biden administration oppose local school districts using propagandistic material like The New York Times‘ U.S. history-focused 1619 Project for their curricula? Should federal aid to districts that keep using such materials be cut off or reduced?

Now it’s your turn, RealityChek readers! What questions would you add? And which of mine would you deep six?

(What’s Left of) Our Economy: So Much for That Pre-Virus Trump Manufacturing Recession?

Tags

(What's Left of) Our Economy, Barack Obama, election 2020, Federal Reserve, GDP, gross domestic product, gross output, industrial production, Joe Biden, manufacturing, manufacturing recession, real GDP, real value added, tariffs, Trade, Trump, value added

A funny thing happened when the U.S. Commerce Department released its latest report on gross domestic product (GDP) by industry last Wednesday: Most of the evidence that American domestic manufacturing suffered a recession – even a mild one, as widely reported – before the CCP Virus struck disappeared.

The new figures also reveal that President Trump’s manufacturing record before most of the U.S. economy was literally ordered closed due to virus-related fears looks even better than previously thought in comparison with that of the Obama administration – in which the President’s Democratic rival for the White House, Joe Biden, served as vice president.

Focusing on this pre-virus data is anything but grasping at straws – unless you think the CCP Virus and its impact will last forever. For manufacturing’s fortunes have been closely connected to President Trump’s tariff-centric trade policies throughout his time in office because manufacturing is so thoroughly exposed to foreign competition both at home and abroad. And as this article (which featured unusual balance) made clear, recent evidence that industry had slumped last year – even before the virus’ arrival and the deep downturn it caused – was widely viewed as a major sign not only that the “trade war” was failing, and undermining Mr. Trump’s .broader determination to revive the sector.

Yet the new GDP by Industry numbers (which take the story through the second quarter of this year, and incorporate revisions going back to the first quarter of 2015 and which were part of a broader release of four different measures of manufacturing production) generally revised that recession away. So presumably, judgments about the effectiveness and impact of the Trump tariffs and similar trade decisions during normal economic times should turn much more positive.

Understanding that the federal government uses four different measures of manufacturing production is the key to understanding why those manufacturing recession claims now look largely mistaken, and why some uncertainty remains. The four measures are: gross output and inflation-adjusted (real) gross output, and value added and real value added. The latter two measures try to eliminate the double-counting in the gross output numbers that economists generally agree results from including in its results both the parts and components and other manufactured inputs of final products, along with the final products themselves.

As of now, the only one of these gauges that still shows a pre-virus Trump-era manufacturing recession (defined as two straight quarters of declining output) is current dollar (pre-inflation) gross output. According to these data, this downturn began in the second quarter of 2019 and continued through the end of the year – and of course into this year. But a recession doesn’t show up in any of the other measures, and its absence in the new real gross output figures is especially important, since that’s the measure that the Federal Reserve uses to measure manufacturing production in its closely followed monthly industrial production reports.

At the same time, those real gross output figures still leave one manufacturing production uncertainty remaining. For even though the Commerce Department’s tables, and their quarterly numbers, show no pre-virus Trump era recession by this measure, the Fed’s monthly numbers do. Specifically, they report three consecutive quarters of manufacturing production decrease last year – from the first through the third.

Yet the quarterly figures reported by the Commerce Department show that real gross output in manufacturing fell between the first and second quarters of 2019, but rose between the second and third before dropping again between the third and fourth. Even odder: Although these Commerce numbers show a weakening manufacturing output picture for the fourth quarter of last year, the Fed figures show a brighter one.

As for the comparison between administrations, here’s what the new numbers show for the two most comparable pre-virus periods (because they’re closest together in the same business cycle) – the last three years of the Obama administration and the first three years of the Trump administration. And they demonstrate that, whether due to Mr. Trump’s policies or not, industry performed considerably better during his watch. The Trump numbers are all the more impressive since 2019 was marked in part by major production woes at Boeing that greatly undercut the output numbers for the huge U.S. aerospace industry and its vast domestic supply chain.

last 3 Obama years first 3 Trump years

Gross output: -6.50 percent +12.71 percent

Real gross output: +1.40 percent +4.63 percent

Value added: +5.41 percent +11.72 percent

Real value-added: +2.33 percent +9.00 percent

This year, of course, has been terrible for domestic U.S. manufacturing. Between the first and second quarters, in real gross output terms it decreased by 1.03 percent at an annual rate between the fourth quarter of 2019 and the first quarter of 2020, and by 9.47 percent between the first and second quarters.

Interestingly, put together, those are about the same as the declines suffered by the entire U.S. private sector (1.11 percent and 9.14 percent, respectively), even though manufacturing employment during this that period held up notably better than its overall private sector counterpart. During the first and second quarters of this year, the private sector lost 9.92 percent of its jobs, compared with 6.25 percent for manufacturing.

The GDP by Industry figures for the third quarter won’t be out until well after the election (December 22), so voters won’t be able to judge the full Trump manufacturing output record during the CCP Virus period. But from what’s known so far, it looks like something the President can point to during the rest of the campaign as a promise kept.

(What’s Left of) Our Economy: The New U.S. Jobs Report Underscores Manufacturing’s Resilience – & Possibly Tariffs’ Value

Tags

automotive, China, Jobs, machinery, manufacturing, manufacturing jobs, non-farm jobs, non-farm payrolls, private sector jobs, tariffs, Trade, Trump

The headline figure for today’s September U.S. jobs report might have been lousy, but America’s manufacturers delivered excellent results, continuing a show of resilience that’s lasted throughout the CCP Virus era, and that could be closely connected with President Trump’s tariff-heavy trade policies.

Industry added 66,000 net new jobs from month to month – its best totally since June (now confirmed for the time being at a 333,000 gain. And revisions overall were positive.

August’s previously reported manufacturing jobs increase of 29,000 is now estimated to have been 36,000. And July’s results held at 41,000.

Moreover, although the automotive sector’s payroll improvements once more dominated the manufacturing results, the dominance was, as with the data since June, much less pronounced than during the spring. Combined vehicle and parts payrolls rose by 14,300.

Another encouraging development – the broad machinery sector, which is so closely connected with other segments of manufacturing as well as with much of the non-manufacturing economy (e.g., construction and agriculture) – added 13,800 new jobs on net. That’s a major acceleration from previous months’ results.

The other significant manufacturing monthly jobs winners in September included non-metallic mineral products (+6,200), the continually strong food products sector (+5,000), printing and related activities (+4,700), and fabricated metals products (4,200).

By far the the worst September sequential manufacturing jobs performance came in primary metals (-3,400), followed by the huge chemicals sector (-2,000).

September’s advances mean that manufacturing has now regained 716,000 (52.53 percent) of the 1.363 million jobs it lost in March and April, as the CCP Virus was peaking. (Those earlier job losses represented 10.61 percent of the last pre-virus – February – manufacturing employment level.)

The total decrease in nonfarm payrolls (NFP – the U.S. government’s definition of the nation’s jobs universe) in March and April was 22.16 milion – 14.53 percent of the February total and thus a steeper drop than suffered in manufacturing. Since then, 11.417 million, or 51.52 percent, of those jobs have been recovered.

As for private sector employment (which, unlike non-farm jobs, omits public sector employement, which is affected far more by government decisions rather than economic fundamentals), its levels fell by 21.191 million, or 16.34 percent , during the worst of the pandemic. Since April, 11.39 million, or 53.75 percent, of these jobs have been regained.

Given U.S. manufacturing’s extensive exposure to foreign competition, this relative strength is difficult to imagine absent Mr. Trump’s tariffs, especially the high levies remaining on most imports of goods from China. Without the tariffs, it’s easy to imagine a much greater flood of Chinese manufactures into the U.S. market once the People’s Republic and its factories emerged from their own pandemic shutdown, and depressing demand for domestic U.S. produced manufactures – as well as for the employees that make them.

Im-Politic: The Debate and the Current Danger

Tags

Blob, Democrats, election 2016, election 2020, globalism, Im-Politic, Joe Biden, Mainstream Media, Never Trumper, Populism, presidential debate, progressives, Trump

As difficult as it might be to believe that the verbal knife fight of a presidential debate held Tuesday night changed absolutely nothing about the election campaign, it’s increasingly clear to me that it changed absolutely nothing about the election campaign.

Politically speaking, that’s bad news for President Trump. After all, however flawed the national and, more important, the state polls might be, they’re virtually all saying that Democratic challenger Joe Biden is in the lead. Yes, there may be a significant hidden Trump vote out there, comprised of folks who either are too embarrassed to tell canvassers their real preferences, or too mistrustful of strangers, period. Yes, an enthusiasm gap does seem to favor the President. Yes, both nationally and in some key swing states, the results are tightening. But the hidden vote hypothesis remains a mere hypothesis. Anti-Trump sentiment could well overcome the lukewarm feelings about Biden. And the narrowing hasn’t been major or uniform as best as I can tell.

Therefore, for the debate to have helped the President, he needed to throw the former Vice President considerably off his game, or Biden needed to stumble into major trouble on his own. Neither happened. And since Mr. Trump and many of his backers set the expectations bar for Biden so low with their constant “Sleepy Joe” refrain and insistence that the 77-year old Democrat was losing his marbles along with too much of his physical energy and stamina, Biden’s at-least-perfectly fine coherence and energy level earned him a solid passing grade, and for now surely reeassured many voters worried about his capacities.

Interestingly, in this vein, the Trump performance displayed almost no interest in overtures of the President’s own aimed at enhancing his appeal beyond his base. One possible exception: For the first 20 minutes or so, the President was actually even-toned and on-message. But for whatever reason (some successful early baiting by Biden, frustration with moderator Chris Wallace, surprise at Biden’s performance, an inability to maintain self-control, or some combination of these), Mr. Trump eventually reverted to quasi-rally mode.

So it’s evident that, unless he decides to become more “presidential” (for lack of a better word) – a tactic that may well be way too late to convince any late deciders in any case – the President will continue to bank mainly on achieving two goals: first, amping up the (considerable) base to ensure astronomical turnout; and second, convincing some in key Democratic voting blocs that Biden can’t be trusted – as with his Tuesday night dig that Biden’s rejection of the Green New Deal proper means that hes “lost the Left,” and his Kamala Harris-like attacks on the former Vice President’s record on racial issues. Not that the first claim in particular can possibly be reconciled with other Trump allegations that his opponent will let “Socialism” run wild. But in American politics, consistency doesn’t necessarily equal effectiveness. At the same time, if the aforementioned polls are generally accurate, this Trump tack hasn’t paid off sufficiently yet.

But pure politics and the debate’s impact on the election aside, it’s also important to deal with fears that the event’s rancor once more revealed an American political system that can no longer produce leaders with both the competence and the personal qualities needed by any society to remain reasonably united – and therefore adequately successful by any measure. Of course, Mr. Trump and his supporters seem to have generated the greatest concerns along these lines, but there’s no shortage of worries that Biden is simply (as per the Trump statements above) a pawn of equally angry and reckless groups on the Left.

What, however, is new to say on these scores? The country was deeply and angrily divided before Mr. Trump was elected. It’s been deeply and angrily divided now and obviously will remain so after November 3. America’s most successful Presidents – the ones to whom the nation is most indebted – have been unifiers and motivators across the political spectrum. Mr. Trump has failed abjectly here – and revealingly, he’s failed despite a solid pre-CCP Virus record on that supposedly supremely important political issue, the economy.

Whether you believe he’s fanned these flames or not (and his regular use of violent words and phrases to describe what he’d like to do, or see happen, to some opponents clearly qualifies in my view), his interest in mollifying any critic’s legitimate concerns is nowhere to be found. He appears to have no clue how many women and for how long (a) have been victims of sexual assault and harmful, derogatory physical and verbal treatment of all kinds and (b) how they and others are genuinely pained and outraged by the (unpunished) behavior revealed on the “Access Hollywood” tape and alleged in several other cases, and by appearance-based insults of women (whose vulnerability to such verbal abuse has mattered so much more than that aimed at men simply because society and culture have been so thoroughly sexist for so long).

Moreover, although it may technically be true that the United States has cured itself of most truly systemic racism, he’s equally insensitive to the impact of cursory denials of these claims, and of how African Americans could validly point out that, contrary to the Trump MAGA campaign slogan, the nation wasn’t remotely “Great” for them for most of its pre-Trump (or pre-Obama) history. (I’m aware that former President Bill Clinton invoked the same idea, but Trump hard-liners need to do better here than such “What About-ism.”)

Nevertheless, lots of What About-ism is justified when it comes to the reactions – and previous records – of so many Trump critics. Unless they should be absolved of all blame for the nation’s current hot mess? As I’ve urged so many Never Trumpers since the President began his first run for the White House in 2015, it’s not enough to decry his various offenses. The best way to defeat him and insure against any Trumpist revivals (whether led by Mr. Trump or not) is to address seriously the genuine grievances that created so much of his base in the first place. To this day, however, the Never Trumpers have not only failed miserably or shown no signs of learning curves whatever. They’ve bent over backwards and turned cartwheels – often in some of the most deluded and/or dangerously unethical ways imaginable – to justify remaining in deep denial.

How do I count the examples? They include:

>the glaringly obvious effort to politicize intelligence and law enforcement agencies to sabotage his presidency with Russia collusion charges that turned out to be not only phony but look to have been planted or spread by the camps of both his 2016 Democratic rival Hillary Clinton and of the late globalist neoconservative Republican Senator John McCain of Arizona — among others;

>the literally hysterical drive to impeach Trump based on an almost completely routine instance of diplomacy and foreign policymaking;

>the utterly shameless leaking and fabrications – by career bureaucrats and establishment Republicans with whom Trump needed to staff much of his administration for lack of a large enough cadre of talented and experienced populists and America Firsters – that helped foster and sustain these anti-Trump campaigns;

>the eagerness of the Mainstream Media to swallow the leakers’ claims on these and other subjects, and propagate them without any meaningful, on-the-record corroboration;

>the adamant refusal of McCain and other card-carrying members of the globalist bipartisan foreign policy Blob to admit to the disasters their strategies produced (the Iraq nation-building effort, their gushing and often bought-and-paid-for support of the rise of China), and to acknowledge the possibility of viable alternatives;

>the mind-bogglingly hypocritical attacks on the Trump China and other tariffs by Congressional Democrats and labor leaders who spent literally decades calling for the exact same policies in order to improve working- and middle-class economic fortunes;

>the transformation of support for more lenient but still sane immigration policies into thinly-disguised support for an Open Borders approach (epitomized by the backing of every Democratic candidate at this primary debate for providing free government healthcare to illegal aliens);

>the full-throated endorsement by growing numbers of progressives and other Democrats of dangerously divisive identity politics, education as outright propaganda, and authoritarian curbs on free expression;

>and perhaps most tragically ironic of all, the now common calls for anti-Trump and other forms of violence by Democrats – including Biden.  

All of which leaves much of the country with a dispiritingly Hobson’s Choice. I continue making it as I have since it became apparent that Mr. Trump was in the 2016 race to stay: If I could have chosen anyone in the U.S. population to stand for a critical mass of the public policies I’ve long supported, Mr. Trump wouldn’t have been in the first 95 percent of my choices – for all the inexperience and personality-related reasons that were on everyone’s mind.

But against virtually all expectations (including my own) he prevailed against a large, experienced Republican field. And for the reasons described above, his Democratic opponent struck me as being both unacceptable on most issues and dwnright scary on the intangibles.

Four years later, I see the same situation – though my fears about Trump’s opponents now go way beyond Biden himself. So I’ll make the same choice. I’m also left with these observations and (unanswered) questions, which first appeared in a 2018 article in connection with U.S. foreign policy, but which apply to all other major issues as well:

“….American elections have brought to power any number of mainstream politicians, and through them any number of policy operatives, skilled, experienced, and knowledgeable enough to maintain the status quo competently and even effect important reforms. And as shown by Trump’s election, the White House can be won by an outsider with avowedly disruptive ambitions who is largely unfamiliar with Washington’s formal and informal levers of power (and lacking an advisory corps large and savvy enough to at least partly tame the federal bureaucracy).

“But what is still unknown is whether a leader unconventional enough to develop or support truly innovative foreign policy ideas can rise to the top through the current political system and all of its stay-the-course influences and incentives. Equally uncertain—can the world outside mainstream political and policy circles produce a leader both willing to think and act outside establishment boxes, yet versed enough in its ways to achieve transformational goals? And perhaps most important of all: can the nation produce such a leader before war or depression make overhaul unavoidable.”

Making News: Last Night’s National Radio Interview on China, Manufacturing, & the Election Now On-Line

Tags

China, election 2020, Gordon G. Chang, Joe Biden, Making News, manufacturing, reshoring, The John Batchelor Show, Trade, Trump

I’m pleased to announce that the podcast of my interview last night on John Batchelor’s nationally syndicated radio show is now on-line.  Click here to listen to a timely, wide-ranging discussion involving John, co-host Gordon G. Chang, and me covering the presidential election, China, trade policy, and bringing manufacturing back to America.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.