Economic cratering on the 2021 horizon as Goldilocks got the Stormy Daniels treatment by Trump

Continuing the Trump economy described initially as “just right” for a second term is more Red Riding Hood than Goldilocks.

Where “what was originally a frightening oral tale became a cozy family story with only a hint of menace”, the economy now becomes capital crime and assault. Mother Hubbard got knocked down on the way home.

White House officials have decided not to release updated economic projections this summer, opting against publishing forecasts that would almost certainly codify an administration assessment that the coronavirus pandemic has led to a severe economic downturn, according to three people with knowledge of the decision.

The White House is supposed to unveil a federal budget proposal every February and then typically provides a “mid-session review” in July or August with updated projections on economic trends such as unemployment, inflation and economic growth.

Budget experts said they were not aware of any previous White House opting against providing forecasts in this “mid-session review” document in any other year since at least the 1970s.

 

www.washingtonpost.com/…

White House is throwing up its hands and opting not to provide routine mid-year economic forecast. Banks and other major companies don't have that luxury and seem to manage https://t.co/kWD5ECbtfx

— Steve Daniels (@stevedaniels27) May 28, 2020

THE DOCUMENT WOULD BE SLATED FOR PUBLICATION JUST A FEW MONTHS BEFORE THE NOVEMBER ELECTIONS.

“It gets them off the hook for having to say what the economic outlook looks like,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office who served as an economic adviser to the late senator John McCain (R-Ariz.).

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The Trump economy in 2017 was described as a “goldilocks economy”.

2017	4.1%	2.4%	2.1%	Dollar weakened
2018	3.9%	2.9%	1.9%	Trump tax cuts
2019	3.5%	2.3%	2.3%	Goldilocks economy www.thebalance.com/…

This healthy economy is named after the famous children’s story, “Goldilocks and the Three Bears.” The little girl only ate the bear’s porridge that was neither too hot nor too cold. Like the porridge, the Goldilocks economy is one that is “just right.”

[…]

• 2010: Obamacare was launched which helped the government to cut down health care costs. The Dodd-Frank Reform Wall Street Reform Act was enforced to regulate financial markets and patch up the catastrophic failures of the banking industry in 2008.
• 2012: The U.S. was in an expansion phase, despite almost falling off a fiscal cliff that year.
• 2014–2015: The country was still in an expansion phase, with a strong dollar, low oil prices, and a steady, predictable rise in interest rates.
• 2017–2018: A weakened dollar and President Donald Trump’s tax plan boosted growth.

Origin of the Term

The term may have been created by David Shulman, senior economist of the UCLA Anderson Forecast, who wrote an article in 1992 called “The Goldilocks Economy: Keeping the Bears at Bay.”

In it, he described the economy during the Clinton administration, where the economy was hot enough to spur profitable business growth but cool enough to keep the Fed from using contractionary monetary policy to ward off inflation. That means higher interest rates, which stock traders and businesses dislike because of their negative impact on profit margins. The term includes a clever pun since the term “bears” describes stock traders who believe the market is declining or entering a bear market.

[…]

Former Federal Reserve Chairman Ben Bernanke reassured markets that the United States would continue to benefit from another year of its Goldilocks economy in his testimony to the House Budget Committee on Feb. 28, 2007. This was to counter a stock market sell-off triggered by former Federal Reserve Chairman Alan Greenspan’s comment that there was a 50 percent chance of a recession later that year. He was only one year off. Greenspan also mentioned that the U.S. budget deficit was a significant concern. Fed board member William Poole added that stock prices were not overvalued, as they were before the 2001 recession. The financial crisis timeline recounts how the Federal Reserve and the U.S. Treasury dealt with the 2007 financial crisis.

The President’s Council of Economic Advisers disagreed in its 2007 Economic Report of the President, warning of the end of the Goldilocks economy that the country had enjoyed since 2004. The report incorrectly assumed the bank liquidity crisis wouldn’t spread beyond banks, mortgages, and real estate and predicted growth would continue through 2008, with an upturn toward the end of the year. Advisers thought the Bush tax cuts would solve the subprime mortgage crisis.

www.thebalance.com/…

annieli

“You’re not mopping fast enough. (Laughter) That’s a socialist mop. (Laughter and applause) Grab a mop — let’s get to work.” – Barack Obama (2009); “Soyez réalistes, demandez l’impossible!”

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