US elections 2020, the economy weighed more than Covid. Trump did not collapse because unemployment and poverty fell until the pandemic
In the last three years of Obama, growth was on average 2.3%, while the tycoon recorded an average + 2.5%. Jobless in February were at their lowest for the last 50 years. The jobs created were 6.4 million against the 7 of the predecessor. The percentage of African Americans below the poverty line dropped below 20% for the first time. However, the tax cuts have only benefited the wealthy and corporations. And public spending has been inflated beyond measure
It was a long head to head. Finished in favor of Joe Biden on the wire. US voters have not "repudiated" Donald Trump's four-year term in the White House: despite the over 230,000 deaths from Covid and the poor management of the pandemic, the consensus for the tycoon has even increased. In this record round by turnout, he got about 7 million more votes than in 2016. The explanation? To direct the choice of the voters - as always, and perhaps more than other times - were the results and fears for the economy. If the $ 2.2 trillion Cares Act in response to Covid did not pull the country out of the crisis and the new aid plan was frozen pending the election outcome, unemployment was at its lowest in 50 before the pandemic. years and poverty was falling. Not without consequences: deregulation, tax cuts and the trade war, pillars of the Trump presidency, have obtained controversial results and overburdened the federal budget.
"It's the economy, stupid" - The research institutes agree. More than the coronavirus, more than terrorism and security, more than health, the economy is the most important issue for voters. Gallup stated that 89% of citizens consider the positions of candidates on this issue to be very or quite important, able to influence and guide the voting decision. A percentage that instead drops to 77%, in relation to the response to the Covid emergency. The same result was found by Pew Research, which in the comparison between the economy and the coronavirus, in terms of importance, saw the former prevail with 79%, compared to 62% of respondents. In short, as always, "It's the economy, stupid", around Washington, but this year aggravated by the impact of the "secondary" Covid.
The record rebound in the third quarter - In the third quarter, the United States recorded a growth in gross domestic product of 33.1%. The figure is not comparable with those of the European countries released in recent days because it is "annualized", that is, it says how much the economy would grow if it maintained the same level of activity for the rest of the year. However, “internal” comparisons are possible and this is the highest rate since the periodic quarterly survey was started in 1947. But as in many other countries around the world, this record increase followed a record collapse. In the second quarter, marked by the lockdown, the US economy lost 31.4 percent. A dynamic that at the moment still keeps GDP below 3.5% - that is, 670 billion dollars are missing - compared to the end of 2019. Moody's Analytics and Cnn Business have created an index called "Back-to-Normal", which examines 37 national indicators and 7 at the state level. The index, which goes from zero, that is no economic activity, to 100%, which is the return of the economy to pre-pandemic levels in March, today stops at 83%, indicating how the country with stars and stripes is still in full recovery. Idaho and Maine are the states whose economies are today closest to the levels of March, while still remain in great difficulty for Hawaii, Illinois, Massachusetts, New Mexico, New York and Oregon.
Rising GDP, falling unemployment and poverty - Even net of the crisis of the last year, however, lights and shadows are reflected in the "Make America Great Again" economy. In the last three years of Obama's presidency, US GDP growth averaged 2.3 percent. In his first three years of presidency, Trump instead recorded a growth of 2.5 percent. A modest increase compared to his predecessor, although the president has often claimed the good results of Wall Street, and above all the value of the Dow Jones index, which gathers the 30 largest listed companies, and which in the four-year period has come close to the record ceiling of 30 thousand points. Record numbers also for unemployment and poverty. The first in February stopped at 3.5%, at the lows of the last 50 years. However, if we consider the jobs created in absolute terms, in the first three years of his mandate - therefore before the pandemic - Trump has generated 6.4 million more jobs, while in the last three years of Obama's presidency the jobs created were 7 million. Compared to the second, however, 4.2 million fewer people were registered in 2019 than the previous year below the poverty line. Last year the percentage of people in poverty shrank to 10.5% of the population, with the African American community below 20% for the first time, to 18.8%. At the same time, however, the republican proposal which would redefine the very concept of poverty, changing the mechanism for measuring inflation from the minimum threshold, and making it more difficult for many citizens to benefit from support programs, has caused much discussion. But at what price have these results been achieved? There were three pillars of the president’s economic action: deregulation, tax cuts and trade war.
Deregulation in favor of oil companies and builders - "Tracking deregulation in the Trump era" is a project of the Brookings research center, a real-time monitoring of suspended and repealed regulations, canceled policies and new addresses in categories such as environment, health, work, promoted by the Trump administration. The last two innovations, approved last week, concern the environment: the reduction of royalties for the exploitation of mineral deposits on federal land, a regulatory framework that the Bureau of Land Management has described as "excessively restrictive, inflexible and burdensome, and a new rule that allows for timber harvesting and road construction in Alaska's national forests, including Tongass, the country's largest forest, granting exemptions to the protection of roadless areas. Almost one hundred standards have already been eliminated or are in the process of being eliminated in the field of air and emissions, water pollution, drilling and toxic substances, with obvious economic consequences. In a White House conference, Trump said, “In our first 11 months, we canceled or suspended over 1,500 planned regulations, far more than any previous president. And you see the results when you look at the stock market, when you look at the results of the companies and when you see the companies that come back to our country. Instead of eliminating two old norms for each new norm, we have eliminated 22 for each ”.
Tax cuts for the wealthiest - Deregulation has been accompanied by a massive tax cut. At the end of 2017, Trump cut personal income tax, including a 3% cut for people in the upper income bracket, but especially corporate taxes, bringing the rate from 35% to 21%. . The declared goal was to bring home the companies that had relocated to save on taxes, encouraging investments and promising an increase in average household income of at least $ 4,000 a year. The expected explosion of investments, however, did not happen. An International Monetary Fund analysis of Fortune 500 companies reported that only 20% of the companies' increased liquidity ended up in research and development, while 80% returned to investors through buybacks, dividends or others. adjustments to asset management. According to data from the St. Louis Federal Reserve, corporate tax revenues have fallen by more than 40 percent since the reform was approved.
But the tariffs have reduced exports and inflated the deficit - Fewer rules and fewer taxes should have caused an economic expansion that has only partially occurred. And one of the reasons that had the most impact was the new trade policy, which targeted the trade deficit of nearly 800 billion a year, which at the end of 2019 was just over 600 billion. Having started with steel to reinvigorate the declining industry, Trump ended up imposing tariffs on many other products and on many more countries than expected, and in a second phase clashing unreservedly with Beijing. China and the European Union have thus in turn imposed duties without discounts on American products, favoring employment growth, but with significant repercussions on exports.
And so public spending was driving growth. Last year, and until 2021, Trump promoted the suspension of the ceiling set in 2011, allowing the federal debt and deficit to increase beyond measure. Deficit has already grown due to the 2017 tax cuts worth 1.5 trillion, and the increase in spending, especially for defense, with a military maxi-budget reaching almost 750 billion dollars this year. Before, of course, the Covid storm hit, adding the $ 2.2 trillion from March's Cares Act to the bill.
