Introduction
The United States is the world’s largest economy in terms of nominal Gross Domestic Product (GDP) and Purchasing Power Parity (PPP). The nation is still recuperating from the great recession it experienced between 2007 and 2009 that caused severe economic decline This paper reviews Trump’s role in the state of the US economy, assesses whether the economy is in trouble or not, and concludes if the economy is in recession or depression.
Trump’s role in the state of the US economy
The state of the US economy under President Trump is different from that of Obama’s reign, especially in terms of nominal GDP. President Trump, in his claims, “Our economy is the envy of the world. Perhaps the greatest economy we’ve had in the history of our country” (Pettypiece & Jacobs, 2019) depicts a robust economic growth. Statistics show that the second quarter of President Trump’s term registered an increase of 4.2 %, whereas during President Obama’s second quarter of administration in 2014 5.1% growth was recorded (Posen,2018). Well, I think President Trump is doing his best, considering that the 4.2% growth was an improvement from the 3.1% achieved in the first quarter of his administration this year.
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President Trump has contributed towards the decrease in unemployment rates among the African-Americans in the US (Posen, 2018). Unemployment rates are currently at 6.2% but had declined to a remarkable 5.9% in May 2018 for the Black Americans (Rasmus, 2012). During Obama’s presidency, unemployment rates among Black Americans showed a significant and consistent decline too. Following the Great Recession in 2009, the unemployment rates were at 16.8% as of March 2010 (Ünay, 2017). The figure recorded in January 2017 was 7.8 %. President Trump boasts of a more exceptional contribution to the current state of unemployment, but I think he exaggerates the claims since both presidents did contribute towards the victory.
Is the US economy in trouble?
The stability of the US economy is currently facing threats due to uncertainties in policy-making processes. Of particular concern is the application of tariffs that have been President Trump’s primary focus (Posen, 2018). Economists blame his uncertainty, evident in the announcement of new tariffs which was postponed then re-announced again at higher levels than the former. Furthermore, the president’s idea of ordering US companies out of China and his later thoughts of reconsideration add to the confusions that compromise healthy business (Hur 2018). In my opinion, the president should ensure minimal business uncertainties, especially regarding international trade, because they might cause economic decline.
The US economy faces threats due to the rising value of the dollar. The value of the US dollar has been substantially increasing, making exports in the international market expensive (Cohen, 2015). The agricultural sector is mainly affected by the rise in the value of the dollar. The price of grains such as soybean in the US has been declining since 2014 when the value of the dollar started rising thus affecting farmers since their commodities cannot compete favorably with others in the external market (Posen, 2018). In my opinion, the Federal Reserve should strive for lower dollar value for exports to be cheaper and thus ensure a competitive economy.
Is the US economy in recession or depression?
An economic recession occurs when there is negative GDP often preceded by a decline for at least six months while economic depression is a prolonged recession, the last in the US having lasted from 1929 to 1933 (Ünay, 2017). The current US economic state is in danger of a recession and not a depression because the Federal Reserve and the US Central banks learned from the 1929 Great Depression and are working on monetary policies to prevent ever falling to such great extents (Brian, Robert, Dean & Arsen, 2016). A recession is, however, likely to occur due to compromised consumer confidence such as those posed by President Trump in his protectionist trade policies against China.
The past recessions highlight monetary tightening, fiscal policy contractions, and inflation asset market bubbles as the leading causes of recession (Ünay, 2017). The current state of the US economy is at risk of monetary policy contraction seen in the attempts of the Federal Reserve to balance the economy by raising interest rates when aggregate demands threaten to cause inflation (Cohen, 2015). Monetary policy has been argued, however, to be less effective in preventing recession and more focus should be in the fiscal policy (Brian et al., 2016). In my opinion, much as there is a possibility of the country facing a recession again, members should not panic lest they worsen the already predicted bad results but focus on preventive measures.
Personal Opinion on the state of the US economy
Most media platforms will report and comment positively on the current state of the economy. Nevertheless, government data and websites pain a different picture.The government has a lump sum of debts currently, even compared moments of recession in 2007 in which debt levels were tolerable.We are at 22 trillion dollar debt during President Trump’s administration, and I doubt if we are progressing well economic-wise. I just checked what these debts translated to, and I noticed that the burden is on the citizens.The cost of living is rising to curb the financial crisis, and I pity the average US resident with a minimum wage for he will have to forego a lot of luxuries, leave alone afford adequate medical services.
We have said much about the president’s inconsistencies in policy-making and the increasing value of the dollar as the most significant contributors to the fall of the economy of the US. I also wish to point out that the rising levels of automatization and mechanization to replace human labour in the country is doing more harm than good to the economy. We have shifted to the use of robots to work in many fields, forgetting that the economy of a nation depends on expenditures by the people. Machines neither earn nor spend money; hence, in the long run I think we are posing a threat to the economy, and if we are not careful, another recession is coming in a few months.
Conclusion
In conclusion, I think Trump has contributed to the state of the US economy. I feel that he is triggering notable break in the ties between US and China with his rather protective policies, and this might bring business challenges between the two nations.Many economists foresee a recession in 2020.However,I believe we can do much as a nation before things get that bad. We learned from the Great Depression of 1929 and the 2008 recession that fiscal policy is the critical point of concern when preventing a recession. I am confident that if the Federal Reserve sets regulations pertaining government finances and revenues, the economy of the US will stabilize yet again and as the president puts it, our economy will be envy of the world.
Reference
Brian Grinder, Robert Sarikas, Dean B. Kiefer, & Arsen Djatej. (2016).The Financial Crisis: Lessons from History. International Journal of Research In Business and Social Science , (1), 1
Cohen, B. J. (2015). Currency Power : Understanding Monetary Rivalry . Princeton:
Hur, N. (2018). Historical and Strategic Concern Over the US-China Trade War: Will They Be within the WTO, (Issue 2), 393
Pettypiece, S., & Jacobs, J. (2019). Trump Formally Announces Re-Election in Grievance-Filled Speech. Bloomberg.Com , N.PAG. Princeton University Press.
Posen, A. S. (2018). The Post-American World Economy: Globalization in the Trump Era. Foreign Affairs , (2), 28.
Rasmus, J. (2012). Obama’s Economy : Recovery for the Few . London: Pluto Press
Ünay, S. (2017). Global Political Economy After the Crisis : Theoretical Perspectives and Country Experiences . Hauppauge, N.Y.: Nova Science Publishers, Inc.
