Friday, July 27, 2018

"The Man Who Wasn't There" at Trump's GDP Press Conference



I could have kept my television on mute during the broadcast of President Trump crowing about the Q2 GDP gain of 4.1% and still heard it here on the West Coast.

He was that loud and proud about it. Joining him at the celebration were Treasury Secretary Mnuchin (perhaps thinking he was living another Carly Simon moment), Commerce Secretary Wilbur Ross, who looked alert (perhaps because he had just completed a mid-morning nap), "Baghdad" Hassett (more about him in a minute), Vice-President Pence (who rereads key lines in Shakespeare's Julius Ceasar nightly) and Larry "I'll take a heart attack for the President" Kudlow.

But the one man missing from the party was the one man who had something to do with the 4.1% GDP number, the one man who can, as they say, "take the punch bowl away," Federal Reserve chairman Jay Powell. You see, it is Fed money and interest rate manipulation that brings us the boom-bust business cycles. Yeah, we are in a boom phase but there always is a bust. Trump has nothing to do with it and you will learn this when we get into the bust phase of the cycle when Trump will be holding no GDP press conferences.

And, by the way, there is a twisted part to the GDP gain.

I report in the EPJ Daily Alert:

Net exports contributed a full 1.06 percentage point to the pace of growth, partly on a surge in soybean shipments being rushed out ahead of retaliatory tariffs. See chart below.
Net Exports of Good and Services (Change in Billions of Dollars)

Now, as for Baghdad, (aka Kevin Hassett, Chairman of the Council of Economic Advisers), he spoke at the GDP presser and said to Trump:
You said you would bring down the trade deficit, and you have. The $50 billion reduction in trade deficit proves if you stand up for America’s workers and let our allies know that deals that aren’t reciprocal are unacceptable, then you can make a lot of progress.
This was a total fake comment only worthy of a Baghdad spokesman. MarketWatch explains:
WILDLY MISLEADING. Exports of agricultural products like soybeans shot higher because farmers were racing to beat the imposition of Chinese tariffs. They already fell in June. There’s absolutely no evidence the U.S. is now trading on better terms than previously.

-RW