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Fri Oct 4, 2019, 11:01 AM

Krugman: Here Comes the Trump Slump [View all]

Now the U.S. economy is going through another partial slump. Once again, manufacturing is contracting. Agriculture is also taking a severe hit, as is shipping. Overall output and employment are still growing, but around a fifth of the economy is effectively in recession.

But unlike previous presidents, who were just unlucky to preside over slumps, Trump has done this to himself, largely by choosing to wage a trade war he insisted would be “good, and easy to win.”

The link between the trade war and agriculture’s woes is obvious: America’s farmers are deeply dependent on export markets, China in particular. So they’re hurting badly, despite a huge financial bailoutthat is already more than twice as big as the Obama administration’s auto bailout. (Part of the problem may be that the bailout money is flowing disproportionately to the biggest, richest farms.)
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The Trumpist trade warriors, it turns out, missed two key points. First, many U.S. manufacturers depend heavily on imported parts and other inputs; the trade war is disrupting their supply chains. Second, Trump’s trade policy isn’t just protectionist, it’s erratic, creating vast uncertainty for businesses both here and abroad. And businesses are responding to that uncertainty by putting plans for investment and job creation on hold.

https://www.nytimes.com/2019/10/03/opinion/trump-economy.html?action=click&module=Opinion&pgtype=Homepage

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