Recession Politics

Charlie Sheen is an icon of decadence.

I lit the fuse and my life turns into everything it wasn't supposed to be.

He's going the distance.

He was the highest paid TV star of all time.

When it started to change, it was quick.

He kept saying, no, no, no, I'm in the hospital now, but next week I'll be ready for the show.

Now, Charlie's sober.

He's gonna tell you the truth.

How do I present this with a class?

I think we're past that, Charlie.

We're past that, yeah.

Somebody call action.

Yeah.

Aka Charlie Sheen, only on Netflix, September 10th.

This is Radio Atlantic.

I'm Isaac Dover.

This summer, the U.S.

celebrated its longest economic expansion in history.

June 2019 marked a full decade since the end of the Great Recession.

But many of the people who pay close attention to these things are worried about hitting that record.

After all, what goes up must come down.

And recently we've seen warning signs of another recession around the corner.

Many of the economic numbers that President Trump used to tout on Twitter aren't so great anymore.

Manufacturing is slowing, the stock market is spooked, and the Fed cut interest rates for the first time since the Great Recession.

So this week he's wavered between claiming the economy has never been better and throwing out suggestions for new tax cuts.

Of course, without any legislative negotiations to speak of.

So what exactly is happening?

Is a recession around the corner?

And what would happen if one arrived?

I spend my time chasing candidates around the country, seeing and hearing what they're seeing and hearing on the ground.

And I have to say, for all the stories we write, all the other issues at play, our politics often comes down to how people feel about getting through their own lives.

paying their bills, feeling like someone is watching out for them on the basics.

Despite the record expansion, you can feel the anxiety in people, knowing they're not all right now and wondering if they ever will be again.

So with me to talk about all this and to explain the economics is Atlantic staff writer Annie Lowry.

Annie, thanks for coming on the show.

Thanks for having me, Isaac.

So let's talk about where we are.

Is there a recession coming?

What is this that's going on in the economy right now?

It's a funny thing because the economy is actually pretty good.

If you kind of just look at the numbers and not the direction that they're heading, unemployment is really low.

Job growth is kind of okay.

Wages are increasing.

So you look at this economy and you don't think that this is an economy that is in crisis or even feeling a lot of strain.

There's still pretty good business investment, that kind of thing.

But you look at the direction that we think the economy is facing, and there you have all of these signs that are kind of not green, but yellow or even flashing red.

So the biggest of these is the flattening or even the inversion of the yield curve, which is kind of like a technical financial thing.

But basically what it says is that the world's investors are looking at the economy and they are thinking that growth down the road is going to be worse.

And so they don't want to be making those kind of long-term bets.

That's like all you need to know about the yield curve in general.

Wait, wait, let's just, because I think the yield curve is one of those things that gets thrown around.

And so explain that a little bit more.

What it is that we're talking about here.

This is investors betting down the road.

Yeah, absolutely.

So what is the yield curve?

So normally investors, when they are lending out money, charge higher interest rates if your loan term is longer, because there's just more uncertainty about the future, right?

If you are borrowing money for longer, paying it back over longer, more things can happen.

And so short-term interest rates are lower than long-term interest rates.

When the yield curve flattens or when it inverts, it means that investors actually think there's more uncertainty in the short term than there is in the long term.

This is a really worrisome signal.

A bunch of different things could cause it, but it tends to be predictive of an immediate short-term deceleration or problems in the economy, or at least it can.

And so that's the worrisome thing when investors are like, man, I'm more worried about what's going to happen in the next year than the next five years or 10 years.

And so there could be lots of other things going on.

However, that's kind of the biggest sign, like, ooh, oh dear, oh no.

It's part of the herd mentality that goes on with this, right?

Absolutely.

And, you know, it is not a given thing.

There's all sorts of other things happening like central bank policy and financial regulation and, you know, just different stuff that would affect the yield curve that we could look at that might explain why what is happening is happening.

But I would say that that, along with the signs that job growth is slowing a lot,

and the fact that you have the trade war, which is going on and global growth is slowing, that's like not a great picture.

You do not want to be Donald Trump looking at that picture going into an election year.

Aaron Powell, Jr.: And we know that the job growth has been revised down, those jobs numbers that come out every month.

Then a couple of weeks after the first Friday of the month, there's like a reconfiguration of them, recalibration.

and

it's a drop-off from where we thought they were to where now we're seeing that they actually were, right?

Yeah.

So these numbers are noisy and sort of labile, right?

Like they jump around a lot, they get revised a lot, but this is not a great thing to have these numbers revised down, especially given that we've actually had a lot of stimulus in the economy.

We've been running a really large deficit.

And so you can think of that as like kind of fiscal policy is pushing on the accelerator and they're not getting a lot out.

And again, there could be lots of reasons that that might be happening.

But if you have kind of multi-hundred billion dollar deficits and you still have falling job growth, not a great picture, not a great picture.

And it means that, you know, we are very late.

probably in an economic cycle.

And so the economy is probably not going to be adding huge numbers of jobs because there's nothing to recover from.

But nevertheless, this is not a super great sign.

Aaron Ross Powell, right?

And the deficit you bring up, we're going to pass $1 trillion in the deficit.

The deficit has been getting bigger, it looks like every year for the last four years.

That matters why?

It matters for kind of two reasons.

So the first is the perception of fiscal space, which is this idea that Congress is maybe going to go into the next recession where you would want to increase government spending a lot and say, oh no, do we not have room to do that?

Do we not have money to do that?

If Congress were to cut spending in the next recession cycle, that would be truly disastrous.

And so you want to have those really, really big deficits when the economy is at its worst.

This is called being countercyclical, right?

Instead of being pro-cyclical, so meaning that you're kind of like pushing the economy in the same direction it's going, you know, there's this idea you want to be countercyclical.

So when businesses are firing people and stepping back, the government is increasing growth.

And I would note that I said perceived fiscal space because there's a lot of argument about how much deficit the government should be running at any given point in time.

And, you know, the government is not like a household.

It can't run out of money because it literally makes it.

So that kind of complicates things.

But that's sort of one thing.

And then the second is sort of the issue set that we were talking about before, which is if you have a deficit that is this huge and you are getting less and less juice out of that deficit,

what does that mean about the economy?

And so

if your

analogy to pushing on the accelerator, if you're pushing on the gas pedal now, are we like a car that's just not able to pick up speed on the highway?

Are we a car stuck in a ditch and kicking mud up in the back?

What is the

full extent of that metaphor?

Yeah, I think

I'm

two writers here, Annie.

Let's do some metaphors.

I'm like, how does a motor work?

I grew up in Manhattan and didn't have a driver's license until after I graduated from college.

So I might not be the best person to carry this metaphor out myself.

But I'm going to leave it to you.

I've been living in suburban Connecticut, and I still didn't learn to drive until I was in my 20s, which is probably much more safe for the people of suburban Connecticut.

But nevertheless, well, so part of the issue is, so what is the government spending a ton ton of money on is a really important question there.

Because you can make this argument that the reason that the deficit is so high is that we have had these truly enormous tax cuts that have primarily gone dollar for dollar to rich people and corporations.

And what are those rich people and corporations doing with that money?

Corporations are not really investing all of it.

They're investing a fair amount of it, but they're also just sitting on a lot of it and giving it a lot to their executives and their shareholders in the form of buybacks.

They're doing a lot of mergers and acquisitions, which doesn't really help the real economy terribly much.

And rich people, they're like saving and they're investing.

That's why you've seen really high stock prices, really high housing prices,

really high prices for assets generally.

That doesn't really help the real economy.

It doesn't really help growth.

And that's part of what you're seeing is this kind of distributional story where the Trump administration has quite purposefully made the economy more unequal.

So that's like an important part of the story.

But nevertheless, the government is just kind of spending a lot and

it's not leading to like 5% growth.

And that's one of the things that when you look at those jobs numbers and where they were, which was not fantastic, they were pretty good.

But now being revised down, and you think about the tax cuts which have kicked in over the course of the last year,

it does not seem like the promise that was made about how they would boost the economy has come to pass?

No.

And what is worrisome for them is that voters are kind of interestingly a little bit myopic when it comes to voting on the economy.

So the actual literal state of the economy matters way less than the trend.

So let's say that you have a fictional economy that looks a lot like the United States economy, where the unemployment rate is like 3% or 4%,

so really low, but the economy, the growth rate is also really low, that economy is going to be much more perilous for the party in power than an economy where the unemployment rate is five or six percent, but the economy is growing well.

Voters care a lot about the direction of the economy more so than the pure state of the economy.

And that that fact is going to worry Republicans quite a bit heading into 2020.

Trevor Burrus, and look, I was saying in the intro that I spent a lot of time going around around the country with most of the Democratic candidates and seeing the voters that they're talking to.

So somewhat of a skewed sample group most of the time.

They're just trying to figure out which Democrat they want to vote for.

But what you see is, to me,

something that's like the next phase from where things were in 2016, where a lot of people looked at Hillary Clinton and Donald Trump and said, you know, whatever is going on here is just not working for me.

And that opened up the space for Donald Trump to come in and say, either he'll fight for me for the economy or just the status quo that Hillary Clinton represented doesn't work for me.

And so they were willing to go with Trump.

Now

the situation for a lot of these people has not been improved in their day-to-day lives.

And what you see is not only that frustration and anxiety, but it's starting to bleed, I think, into a level of hopelessness and despair of, well, maybe it'll never get fixed.

Maybe I'm just like, this is the way it's always going to be, or it's going to get worse.

And I'm never going to be able to pay off my mortgage.

I'm never going to be able to feel like I can say to my kid, you can go to college.

And that leads into a different space, but it's certainly not settled from where things were in 16.

I think that's absolutely right.

And I think that there's something really interesting happening in terms of voter perceptions of the economy.

So we know that voter perceptions of the economy have heavily polarized.

So if you are a Democrat, you probably don't feel great right now.

And if you're a Republican, you're probably like, hey, this is the Trump boom.

This is great.

This is wonderful.

So that's happening.

And it's happening at the same time that we have this really kind of high inequality economy where all this growth is still not trickling down terribly well to folks in the middle and the bottom.

And that makes it really hard to parse these economic conditions because on the one hand, again, unemployment is really low.

And on the other hand, you have just tremendous economic fragility that remains for millions and millions and millions and millions of American families.

And so that's complicating the picture.

Already the relationship between the economy and voting patterns is kind of a fuzzy one, intermediated by a lot of different things.

But I think that those two factors where you have these honestly kind of mixed economic conditions despite 10 years of growth,

it makes it really fascinating.

And I think as you point out, there's also also this question of, you know, for these undecided voters, in particular, in the kind of handful of states that we expect to be decisive, you know, how are things going for them?

It's not great, right?

The trade war is really having an effect.

We've started to see this real slowdown in manufacturing.

We have a lot of small business owners that are not feeling really great.

And so do those people identify with Donald Trump and they believe that he's going to win this trade war?

I don't know.

You know, Donald Trump should have much better approval ratings and should be really strong going into the next election, given where, you know, the fundamentals are.

But given

the political science calculations.

Yeah, exactly.

And he's weaker than that.

And that's for a lot of reasons that I think in part have to do with how polarizing a figure he is personally, but I think also have to do with some of these economic factors.

Aaron Powell, Jr.: It reminds me a little bit of in 2012 when Obama was running for re-election and there was the sort of the political science calculations then of, well, the economy is in this state, it should be incumbent loses.

There were a bunch of studies then and articles then about how that looked.

And I was covering the Obama White House then and the first Friday of every month when those jobs numbers would come out.

There would be the official announcement of them followed by the Republican National Committee statement and all the candidate statements of how terrible things were.

And the Obama White House would put out its statement to say, well, one month does not

get for a full picture of where things are.

And things were looking at the broader picture.

And actually, the broader picture was that the economy was improving, but it was hard for people to feel it.

And again, those political science calculations seem to be pointing to trouble for Obama, but other factors about Barack Obama and ultimately Mitt Romney made it so that Obama

was not really ever in like panic about winning re-election.

There were some moments where they were in tougher spots, but Obama was in decent shape all the way through.

And it seems like we're seeing maybe a mirror image of that now, that there are economic numbers that point to good things for the incumbent,

but

because of other factors, it's dragging him down.

Aaron Powell, I think that's absolutely right.

And I think that what's interesting about Trump and Clinton to me is that Trump made this really, really deeply emotional case

to voters that they found really convincing, that was in part about their economic status, but was also in part about their racial status.

It was in part about kind of the status of elites and, you know, are people condescending to you?

And Hillary Clinton, I think that how her vote kind of played out as well had this like deeply emotional quality that you had people who really loved her and really believed that she was the person who was going to be best going forward, But you also had people who really, really hated her.

And I think it's one of these, again, these things where it just, you know, there's so many other things happening in that.

And I think that how the economic case gets intermediated by those personality factors in ways that like just are not going to come out in political science studies.

There's also kind of an interesting argument in political science that suggests that the better the economy is, the less it matters to voters, which I think might come into play in 2020.

Because if the economy is pretty good, maybe that opens the door for you to worry more about your second order, third order, fourth order issues, which may be they're the trade war, maybe it's abortion, maybe it's immigration, maybe it's green politics and the environment.

And so that, you know, that kind of scrambles things as well, right?

The economy is maybe less predictive when it's better than when it's bad.

Trevor Burrus, Jr.: Right.

It's the thing you don't have to worry about.

And you can think about other things, but if you can't pay the bills, then that's the thing you have to worry about.

Yeah, that's like, if there is a recession, Donald Trump has an enormously uphill battle.

Not impossible, but real, real hard.

At least by all the calculations that we think of with these things, right?

But let's look at what's happening on the Democratic side of things.

The economic issues on the one hand, I have noticed have been not the driving conversation going on in the Democratic Party.

You see a lot of other things going on in this primary campaign that are grabbing more headlines day to day, but they are the undercurrent throughout all of it.

It seems like when we talk about healthcare, among other things, that's about the economy.

But what is it doing beyond just Bernie Sanders and how he has shaped some of the conversation going on in the party?

Do you see that as explaining the seeming leftward shift that's going on in the party?

I think there's a lot going on in the leftward shift, but I think that you're right that people are not primarily concerned about like who is going to rescue this economy, who's going to make this economy better, who's going to increase wages even.

It's much more about class politics, right?

Like who is going to benefit from growth in future years.

And then I think that the healthcare issue is somewhat orthogonal to that, but there's this really deep desire in the party to finish the work that started all the way back during Bill Clinton's presidency of actually achieving something very close to universal coverage, which, you know, the United States is one of the worst OECD countries, so one of the worst rich countries on that front.

And that is an economic issue, right?

Becoming sick is a central predictor of bankruptcy in this country, which is not true in other places.

And also, the rising cost of co-pays and deductibles have been really, really painful for even families that do have insurance coverage.

But I'm not sure that that, right, as you point out, healthcare is about a sixth of the America, one sixth of the American economy.

It's not necessarily primarily an economic issue, but it is very much an economic issue.

It's an economic security issue.

And so I do think that this animating concern that has existed since the last recession, right, for the past 10 years, about inequality and about kind of the 99% and the 1% is almost more dominant than kind of basic questions about like, okay, how are we going to structure the government spend money?

Who's going to be best for jobs in the coming years?

At least at this moment.

Aaron Powell, but I'm thinking about like the morning after the second debate in Detroit, Kamala Harris did this event with a union worker from SEIU who's a security guard.

They took a walk around the block.

It was supposed to be Kamala Harris, like walking in her shoes for a day.

They had spent a little time together before that, but then they came to talk to reporters standing across the street from City Hall in Detroit.

And

the conversation was about how this worker was looking for higher wages and was worried about her health care.

And this was maybe 12 hours, 14 hours after the Democrats had walked off the debate stage and barely talked about job growth or economic plans.

They talked a lot about health care over two nights.

And I said to Harris, do you think the Democrats are talking enough about what's going on in the economy and what's going on in people's lives?

And she said to me, no.

And I've heard that from a lot of other candidates that they say, no, we're not talking enough about it, which is a weird thing because it's not like they are powerless to talk about things on their own.

They just have had

other things that they've been talking about instead or decided that they don't want to talk about those.

I wonder, too, if you're looking at that kind of internal fight among Democrats, how much they're trying to kind of outflank each other to the left in terms of this kind of like policy nitty-gritty, right?

I'm for against the Green New Deal.

I'm for against Medicare for all.

I'm for against a debt jubilee for college.

I'm for against free college.

I have a plan for child care, right?

It's like a very wonky, wonky election on the left.

But I wonder when you're facing Donald Trump, how much this is going to become just a straightforward class politics.

This guy is a rich guy who has screwed over the middle class.

I imagine that once the primary is over, that that's just going to be the overriding message, right?

Like he's a rich crook who's screwed everybody else.

He's lied to you, right?

Because I agree with you that it's interesting.

You know, they don't, they just aren't and they don't talk a ton about just straightforward jobs wages.

You have been looking at how the millennial generation, which is a huge share of the voting bloc, this is the first time that we're going to see an election where more millennials will be voting than, or be eligible to vote, than baby boomers.

And how they're experiencing the economy is very different from how previous generations have experienced the economy.

And therefore, the kinds of decisions that they're making in the voting process might be different, right?

Absolutely.

So millennials are now, the oldest millennials are almost 40.

They have kids.

They like own homes or wish that they owned homes.

They are firmly established in their careers.

The very youngest millennials are now out of college.

They're in the workforce as well.

And so this is the kind of like younger, but certainly not young anymore cohort.

And they are doing worse than either the Gen Xers or the baby boomers were at the same point in their life cycle.

They own fewer homes.

They own fewer stocks.

They actually earn less money.

They have delayed getting married and having children, primarily for economic reasons.

And if the next recession comes, it's going to be pretty catastrophic for them because they have very little cushion.

They don't own homes.

They haven't built up wealth.

They've had these lower earnings for years and years and years.

And so it's not unlikely that they will end up the first generation in modern economic history to be worse off than their parents were.

And millennials like know this and feel this in their bones.

And so, you know, we were talking before about this this kind of, you know, this sense of futility, right?

Like, maybe none of this, like, maybe everything is just going to get worse.

Like, maybe none of this matters.

But I do think that there is a generational thing going on where they are aligning with a party that has promised a lot more redistribution that is looking and kind of saying, like, hey, we get that there's been 10 years of growth and you guys don't really feel it.

You're still really fragile.

And so you've seen this kind of like polarization again where the Republican Party has gotten older and whiter, the Democratic Party has gotten younger and more diverse.

And I think that that kind of matters here because the people who have done best in this economy are the people who look like Donald Trump, right?

They're the people who were asset holders, were older, they've really benefited from this run-up in housing prices and stock prices.

Their wages largely rebounded.

Not true for those younger, more diverse folks, including all those millennials.

Right.

And then there's the post-millennial generation, whatever we're going to call it, but they're starting to vote too.

And that, again, this is an experience that's different.

And one of the ways that this seems to be playing out is that you see among older voters support for Medicare for all, and they're talking about the leftward shift of the Democratic Party, but they say, but we're not really in favor of free college.

And right.

And so for younger voters who are thinking about college or thinking about student debt,

that is

a different way that that lands for them.

And they say, well, we do want that.

On the other hand, you have

two weeks ago, I was in Iowa where Michael Bennett, a senator from Colorado, who is running for president, was talking at the Iowa State Fair.

And he has been a big critic of Medicare for All and Bernie Sanders for proposing it.

And he said, Look, the reason why you talk about free college but not free preschool

is because

people who are in college or college age can vote

and preschoolers can't vote, but of course, parents of preschoolers can vote.

And then

you have this weird phenomenon of the Andrew Yang candidacy, who's been talking about universal basic income, topic you know well, of course, Annie, from writing a book about it.

Too well, to be honest.

And from nowhere, this guy who has been talking about what is going wrong in the economy and UBI as a way to maybe fix it

just jumped ahead of a lot of people who you would think would be strong presidential candidates in any other year, including just in the past week, two governors, one former governor, John Hickenlooper, and the current governor of Washington, Jay Inslee, dropping out as they couldn't make the debate stage, but Andrew Yang can.

There's something that is really appealing to people about this idea of maybe we need to change how we're thinking about the economy completely.

Absolutely.

And I think Andrew Yang, he's fascinating because he's like, he's a great campaigner.

He's a really funny guy who's really put his shoulder into things.

And I've known Andrew for years.

I was really unsure whether the message would take off or whether he would just kind of seem really fringy.

But I think that he speaks to this kind of deep anxiety that people have that like the economy can grow and grow and grow and it's not going to feel good for you ever.

And that's sort of the promise of UBI is like, hey, it doesn't matter if the economy is terrible.

We're going to make sure that you're doing better in this kind of really radical way.

Like, we are going to give you cash.

It doesn't matter if the robots come for all our jobs.

We have a plan, and it's maybe a crazy plan, but we have a plan.

You know, whereas some of these governors who are more centrist, some of these folks who are more centrist, you know, the promise is like, hey, the economy can work for you.

Right?

It's a sort of different formulation on things.

Let's take a quick break.

We'll be back with more with Annie Lowry in just a moment.

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And we're back with Annie Lowry, staff writer for The Atlantic.

Annie, let's talk about where things are now.

We've been talking about the 2020 election and the distance here, but if this recession comes, do we have a sense of like, is it coming in a month?

Is it coming in six months?

What is the timeline here?

How do you think it might line up with the campaign calendar as it goes?

No idea.

And

it's really hard to predict these things.

Economists are absolutely terrible about it.

Right.

If they could predict it, they'd be multi-billionaires, right?

Yeah.

And there's this kind of like funny thing where if everybody agrees there's a recession and pulls to safety, there just is a recession, right?

Like there's a lot of psychology, investor psychology, consumer psychology here.

So if you and I

took our

investor money, I was going to say our millions of dollars of totally non-existent retirement savings, and we're like, hey, we're going to put it in cash.

We're just really unsure about what's going to happen.

If everybody does that in an economy, like boom, recession.

And so

there's the worry that that would happen.

Everybody decides that there's a recession and there's a recession, but there's just a lot of external factors here.

If there is a recession

or just a significant slowing in growth, A lot of it would have to do with stuff that's kind of out of control of your average American investor or American government, right?

It wouldn't be that we have this bubble bursting like we did back in 2006, 2007, where you had a simultaneous collapse in the housing market and just huge problems in all American financial institutions.

That was a particularly painful recession back then.

It would be that global growth is slowing.

The problems with trade are increasing.

Investors have just gotten a little bit worried about things.

And, you know, add all of these things together and they can slow growth down a lot.

And that could be what happens, that you just have a lot of kind of small things that add up and all of a sudden you're at zero.

And again, that wouldn't be some big crisis, some big bubble popping, though who knows, maybe there is one out there.

It could just be kind of a crummy period to get through.

And,

you know, there will be a recession at some point.

It's certainly not an inevitability that could happen in the next.

you know, three months or one year or two years or even five years.

But eventually, eventually it'll happen.

Because that's just the way it works.

It's never not happened before, right?

We've gone longer and longer periods without them, which there's a lot of kind of like interesting thought about sort of the advent of modern central banking and a better understanding of fiscal policy.

And so maybe you can stave them off for longer.

But thus far, you know, it's actually funny.

Australia has gone now, I think it's like, oh, gosh, I think 25 years without a recession.

But

that's kind of

a record.

Things are different in Australia, right?

Yeah, they're a big exporter of commodities, is the reason that that's happened.

But they have not actually ever, they missed the global recession the last time around.

Well, in the early 2000s, there was that period where things were on the up and up.

And people said, well, maybe that will never turn around.

It'll just keep growing, right?

And obviously.

And then there was like the worst recession ever.

Like a really bad recession, really, really bad recession.

Yeah.

So there's this idea that maybe countries are going to go longer and longer without them, but they're not going to avoid them forever.

So we've got President Trump over the course of this week and the last couple of weeks, it seems like responding to the economic news that he's seeing either on television or from his advisors.

He's threatened the Federal Reserve, said some bad stuff about Jerome Powell, whom he appointed to be the chairman of the Federal Reserve

over

Janet Yellen, very specifically put Powell in place.

He has talked again about payroll tax cuts and capital gains tax cuts.

He is not at all backing off of any of the tariffs and trade war.

What is going on, you think, and where does that lead us?

Does it lead to more economic anxiety?

Does it lead to more questions from investors about this?

Does it start to settle any of it?

Yeah, so if there's a recession or if they just want to kind of guarantee victory and they are willing to use the fiscal policy tools of government to do that, how would you want to do it?

So something like capital gains tax cuts are not going to do anything because most of us do not have any capital gains, right?

Most of us are very small ones, right?

Like we're not primarily a country of like, you know, rich investors.

We're primarily a country of people who make their money by working.

Payroll tax cut, especially one where they like mailed you a check with like Donald Trump's face on it, that would be really immediate and would really quickly flush money into the pockets of people.

So you could do something like that.

And that would have a pretty good economic effect.

Like what Bush did, right?

Yeah, exactly.

This is like a classic old political thing to do, right?

Here is your money.

Here's a check.

Here's a large check that's showing up in your house shortly before election day.

Enjoy it.

But, you know, you need Congress to do it.

And again, we're already running really big deficits.

And so, you know, there's kind of that question of, you know, are they going to be able to do that?

Monetary policy, he can't affect really.

He can't fire Jerome Powell.

If he did, I think that the market reaction would be really bad.

And so he's not going to control what the Fed is going to do.

Jerome Powell has said ad nauseum now that he's just not listening to the White House.

You know, ideally, you would want fiscal and monetary policy working in concert, and they haven't been for some time now.

And there's some concern about that.

But, you know, the big worry in the Fed is that if there's another recession and it's kind of a big recession,

they don't have a lot of juice left because interest rates are still pretty low, even though they have raised rates a number of times.

So there's not a lot of space for them to kind of help push that accelerator down.

And again, fiscal policy is already pushing it down.

It's not to say that there isn't anything that the government could do,

but it's not like there's a ton of, again, we were talking about this perception of space.

It's going to be a little bit hard.

Aaron Powell,

so where does that leave things?

Are we in a place that

it makes sense that Trump is casting around this much?

Do you think that that'll happen more?

I mean, some of this is,

I can't ask you to get inside the president's head, but it seems like when the bad economic news mounts, then he starts going with more and more of these things.

And obviously, he's been talking about some other things too, like buying Greenland.

Where does this go for him, you think?

And where does it go for the rest of the government that is beyond his statements to reporters and tweets about the things that he wants to talk about?

What is the government's role here moving forward?

So, the thing that I think he could do that would most concretely help things at this point is just give up on the trade war stuff, right?

Get to some agreement that both sides can claim is a victory and stop it, right?

Like pull away the tariffs, stop screwing over farmers and just quit it.

And

he really has that capacity.

He really could, right?

Like this trade war all was generated inside the White House.

So he could step back from it.

I think ideologically, there's this feeling that the United States must win something over China.

And so he hasn't put himself in an easy position to do that.

He's really, really strained relations with the Chinese who

are a little bit bewildered and frankly confused and angry.

When you talk to foreign country trade negotiators, they talk pretty openly, if not on the record, about how they're basically waiting the Trump administration out to have a more reasonable administration to work with.

And they're trying to, you know, kind of forget that the White House exists a little bit.

But, you know, so he could do that.

And I think that that would relieve a lot of pressure.

Markets would be like, all right, he's not actually going to tank the economy because he's decided he wants to pick this fight.

And so that he does kind of control.

If you are a political observer, the single thing that you can watch most closely, which is going to be most predictive of how Donald Trump is going to do in 2020, is going to be the change in real income.

So basically, how much more money are people making in the early months of next year?

There's this theory that, like, early next year, voters are going to decide, you know, am I going to go with one of the Kajillion Democrats or am I going to go with Donald Trump?

And the change in their real income is going to help them determine that.

So, you know, if that number is going up, then that's really going to help him.

He's an incumbent in a strong economy.

He should be pretty hard to beat, but he's Donald Trump and growth might be weakening.

And so that's what I would look at.

And, you know, he doesn't have a ton of levers to pull to make the economy suddenly a lot better, at least not without the help of Congress.

Aaron Powell, our colleague Peter Nicholas, has a story that includes Donald Trump wanting to be able to say to people the old Ronald Reagan question, are you better off than you were four years ago?

And have them say yes.

Do we know whether they'll be able to say yes?

Do we know whether they'll be able to say no?

Or is it really just still so much up in the air?

It's unlikely at this point

that, you know, unless the economy could be in recession and we wouldn't know, right?

Like that happens all the time.

It takes a little while to sort of see what's happening.

But even if that were happening, people would be better off than they were four years ago.

Unemployment is lower, wages are increasing, but people really don't feel that.

And I think that that's scrambling a lot of our expectations about how politics works.

I would also note that that is not a case that Donald Trump has made.

He has not made that kind of reasonable, common political case, like, hey, I'm out here delivering these things for you.

It's come coded in a sort of identitarian and heavily racialized message.

But you know, he's out here saying, I started a trade war and now I'm going to win it.

And it's just a very different thing coming from the White House.

So I think it's going to be fascinating.

If the economy is doing poorly next year, if we have a lot of those signs that are flashing red and yellow, what case he makes?

Because my guess is that then it just becomes about blaming the Fed and Democrats.

And I don't know if that's going to be compelling to voters.

And And I don't know what that's going to do, just in the sense of, you know, what he then seizes on as

his issue.

Maybe he seizes Greenland at that point,

which would be economically perilous as well as diplomatically perilous.

I don't know about invading Greenland as the answer to a struggling economy, but maybe, Annie.

World War II did help get out of the way.

Just putting it out there.

World War II got us out of the Great Depression in a way, right?

Yeah, it did.

So, I, I, gosh, yeah, let's let's pray on that one.

All right, Annie Lowry, thank you for being here on Radio Atlantic and walking us through so much of this that gets talked about

in the background of what's going on in politics in the country.

But

it's important to know what's actually going on.

So, thank you, Annie, for being here.

Thanks for having me.

That'll do it for this week of Radio Atlantic.

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