President Trump has made grand promises concerning the U.S. economy. Trump has pledged to boost economic growth to 4 percent a year and create 25 million jobs in the next decade.
To accomplish these goals, Trump wants to revive America’s struggling manufacturing sector, raise wages and as his campaign slogan told us, “make America great again.”
While it is too soon to say what effect Donald Trump has had on the economy in his one week in office, we can look forward to the future and what investors are hoping for. I spoke to Paul Trogen, an associate professor of public finance at ETSU, to get his thoughts.
Many saw the Obama administration as pushing a global agenda. Policies such as the Transpacific Partnership were seen to make U.S. workers less competitive. Trogen says what investors expect now is change. President Trump has already signed an executive order to stop the Transpacific Partnership, which was set to be one of the largest free-trade agreements that the United States was a party to.
Trogen explains that although economists since Adam Smith have argued for free-trade, it is not always the best deal for workers:
“When a high wage country (like the U.S.) opens itself up to free trade, workers with low skills, or the wrong skills, will suffer from falling wages,” Trogen said. “Low wage countries will enjoy rising wages. Too many of the new jobs in the U.S. pay less than the old jobs that were lost. Since consumption is about between two-thirds and 70 percent of the U.S. economy, falling wages mean fewer dollars are available to purchase the goods and services American workers produce.”
Trogen also suggests that Trump’s major victory in the so-called “rust-belt,” or the middle section of America, may have to do with his policies on focusing on the American worker:
“Economic growth was about 2 percent last quarter,” Trogen said. “It takes 3 percent growth to generate jobs for each year’s college graduates. The middle class was shrinking and felt forgotten … Corporations “out east” and on the West Coast did reap the benefits of globalization. Nineteen states, mostly out east and on the West Coast, voted for the party that was in power. The benefits of free trade were not so apparent to American workers in the middle of the country, who have lost jobs and suffer from stagnant wages. Thirty-one states, sandwiched between the coasts, voted for a change.”
As a history major, I cannot make assumptions about the trajectory of current decisions. The passage of time clears our vision as to how events transpired and whether or not they can be judged as good or bad.
Trogen seems to agree with this sentiment as he says: “The new President is trying to spur economic growth and jobs. The stock market is showing optimism in the future. Will putting America first be better for America than globalization? Only the future will show whether investors’ optimism is justified.”