What Will Cause The Next Recession – Justin Wolfers Says Trump Is Biggest Risk

What Will Cause The Next Recession – Justin Wolfers Says Trump Is Biggest Risk


I think the biggest risk to the American
economy is Trump in the White House, an inexperienced crew at Treasury and a
willingness for the White House to mess with important American economic
institutions. It’s been now quite some time since the 2008 recession. So the U.S. economy now has been growing for 10/11 years. It’s a very long expansion. We’ve
seen recently if you just look at the popular press a bubble, I would say, in
discussion about recessions. Everyone wants to talk about it. Is there one just
around the corner? The fact that the expansion has lasted so long has no
predictive power whatsoever for whether a recession will start tomorrow.
So recessions don’t die of old age. They’re murdered. Through much of our
history, particularly we saw this in 1980/81. Federal Reserve that will try and choke off an expansion and maybe do so a
little too vigorously. I’m of the view that the Fed seems to understand how
difficult this act is and they’re being very very cautious about things. So I’m
not so worried about the Fed. There are sometimes external shocks. Things like a
sharp rise in oil prices. Productivity slow down. Of course any of those things
could happen. But those things are no more likely in 2019 and they were in
2018 or 2017 or 2016 or than they will be in 2020. They’re an ever-present risk.
So all of that makes me something of an optimist. Now of course the other thing
you got to think about is we’re in a particular historic moment. And it’s hard
not to think about the state of our politics and whether we have the A-Team
in the White House right now. And I’m not someone who sleeps easy at night.
Believing that if something went wrong the White House would figure out how to
make it right. I’m very worried that a small adverse shock could turn into
something more calamitous with policy mistakes coming out of the White House.
What is that policy mistake? I got to tell you I don’t know what it is it
could be something on trade. That you know with enough mischief and cutting
off enough trading relationships with enough trading partners, you could really
start to harm U.S. growth. We have negotiations going on with numerous
countries right now to pay a lot of money to the United States for what
we’re doing for them. I wouldn’t say they’re thrilled because they’ve had
many many years where they didn’t have to pay.
So now they’re gonna have to pay. The question is if something bad happens are
they going to have the right instincts? I think the biggest risk to the American
economy is Trump in the White House, an inexperienced crew at Treasury and a
willingness for the White House to mess with important American economic
institutions. What he’s doing with the Fed is it is a disgrace. It’s a risk. It’s
causing all sorts of strife that’s unnecessary and it’s an own-goal.
So we see meddling in important parts of American policy in a way that
we’ve never seen in our history. So the U.S. debt is not currently the level
that particularly worries me. What does worry me somewhat is the
trajectory for that debt. We’re at a point now where unemployment is about is below 4%. The basic rule of thumb that we teach our undergraduates
in school is when the economy is good, put a bit of money away.. So that when
things go south, you can come out spend a little more and stimulate the economy. So
it’s going to do a little better. You know, when unemployment is below 4%
it’s got to be the case that now is the time to be putting a little bit
away. Instead, what we’re seeing is large budget deficits that are raising the
debt substantially. That doesn’t worry me of itself. But what worries me is if the next downturn hits, will we be in a position to expand spending? Will we be
in a position to raise the debt as would be required if we’re in the midst of a
downturn? Now let me get temper all of that with a
note of optimism. The single best way of figuring out where the economy is going
next year is to figure out where it is right now and where it’s currently going.
GDP growth is robust, recent jobs numbers have all been very strong. And if that’s
the best indicator for the future, it says the economy has been on a straight
line. Improving year after year from 2009 of the present. If it keeps on that straight
line all of our lives will get a little bit better again next year as they have
for each of the last 10 years. If you want proof of that take a look at my own
home country Australia. People have been looking at its economic expansion ever
since it began 27 years ago. And I got to tell you after five years people worried
about turned south. After seven years. After nine years. After 11 years. it’s not
just the odd-numbered years. We keep one wondering can this expansion continue.
And the fact that Australia can expand for 27 years in a row tells you that an
American economy, if it’s well-run if it’s not subject to outside shocks, could
easily continue expanding a whole lot further. There are many good reasons to
care about GDP. But there’s a lot of other things that real human beings, not
just economists, also care about. The first just thing about inequality. GDP
tells us how big the size of the pie is. it doesn’t tell us whether people are
getting fair slices. So we should care about the distribution of income, not
just how much of it there is. GDP only tells us how much of it there is. You
think about things that might shape your quality of life. It might be a lot more
things you might care about the level of crime is a really important factor. Your
freedom to pursue what you care about. Whether you feel respected. whether you
feel loved. There’s a whole lot of other things that are central to the human
experience. But outside of the stuff that GDP has historically mentioned. We could
double GDP tomorrow. Wouldn’t be that hard. What we do is we’d force everyone
to stay at work twice as long. Force everyone to work twice as many hours. Will probably get roughly maybe a little bit less but nearly twice as much stuff.
GDP would nearly double but I reckon people would be miserable. Because think about what really made you happy this year. It wasn’t the extra hour at
work. It was probably the time you took off. What was your leisure time. The time you spent with family. The time you spent with friends and so on. It’s not hard to find ways to make people richer. Just make them work harder. It’s much harder
to find ways to make people more satisfied and the way to do that is is
make them more productive. Give them more options. Give them more opportunities. Not
necessarily that money is what makes you happy. Maybe money is a marker for
something deeper. That this process of economic development gives people more choices. More freedoms to pursue the things that really matter.
So it’s possible it’s not the GDP itself that matters. It’s the process of economic
development gives us choices that people then use to make decisions that give
them the other stuff we care about. They give them the meaning, the joy, the love,
the freedom, from hunger, the freedom from want. So you know the flaws with GDP are
actually quite well-documented. We understand them the GDP focuses on what
happens in the market. It doesn’t pay enough attention to distributional
consequences. it doesn’t pay attention to what we do after hours. So one of the
things that the statistical agencies around the world are doing, including our
own Bureau of Economic Analysis in the United States, is finding ways to improve
GDP. So at the moment, any hours of housework you do if you do them in your
own family home, they don’t count as adding to GDP. But if you go to someone
else’s home and they pay your $12 an hour to do that housework, that does
count as GDP. So why don’t we instead find ways of taking all the domestic
work that people do and adding it up and counting that as part of our gross
domestic output? So that’s something we can do. We can pay attention to who gets
what. And so right now there’s concern about what we call distributional
accounts. We take GDP. We don’t just measure the size of the pie. We say, “who’s
getting what pop what slices?” We can also think about the environmental parts. So
one of the big problems about GDP is it doesn’t measure the environmental damage that we’re doing. GDP tells us about the value of
all goods and services bought and sold in markets. But a lot of really important
stuff doesn’t happen in market. Greenhouse gases are being expelled and
destroying the environment. So that damage, those costs, real costs to our
planet, are not being counted as part of GDP. Now when we have an old factory and we use it too hard and the machinery depreciates, we do count that . So we could do the same thing. It’s not beyond us. We measure the environmental harms that we’re doing as well. So, if I were asked to give advice to a country given what I know. Which is that rich countries tend have citizens that report having lived
happier more meaningful lives. How would I give them advice? I would tell them do a bunch of the things that are developed countries, like the United States, like
Sweden, like Finland. Do a bunch of those things. So it’s not just going being
richer. Right? Those countries also have more democracy, they have a freer press,
they have less crime, they have a better environment and so on. So this whole
package of Economic Development, which changes many, many things about both
society and the human condition. The one thing we know is that whole package of Economic Development somehow leads to happier more satisfied people.

100 thoughts on “What Will Cause The Next Recession – Justin Wolfers Says Trump Is Biggest Risk

  1. Do you think Trump's economic policies are helping economic growth? Or is his behavior a risk where "a small adverse shock could turn into something more calamitous" as Justin Wolfers thinks?

  2. I know many would love to see a recession happen on Trump's watch. But it's not going to happen. Other issues may happen leading to Trump's demise but the economy isn't going to be one.

  3. It' comes down to all politicians and big corporation s that's why the economy sucks … corporation pay politicians to enforce all these things..in white house Trump is a puppet ..there are higher powers that people don't know about and who do u think they blame.. Trump…

  4. Just keep printing more money dude!!! It's all good!!! Continue Printing more money out of thin air and give it to the people not the bankers $ 1%ers!!!

  5. So many wrongs with this video, where to start?

    1. The U.S. hasn’t really been expanding for 10 years. All the FED did was prevent a depression. Quantitative Easing didn’t end until 2014. Real analysts show the expansion beginning anywhere from 2013-2015.
    2. Using GDP or GNP both have issues, but his prescriptions are stupid. You cannot double GDP simply by doubling work time… it’s sad that this is what he teaches his undergrads.
    3. His points against GDP are really not about economic growth or performance, but rather about measuring the quality of life and social issues. Like pointing out a “rich” country but “poor” citizens?? Completely different metrics. Not that it’s unfounded to look at and study, but that it makes no sense in this topic. In other words, just fluff words and a distraction.
    3. He is clearly stuck in Econ 101 regarding supply and demand. His advice about saving now and spending later is… alright, but don’t go out spending thinking you’ll kickstart the economy again. Rather use those savings to support yourself until you can save again.

    I could do a complete response as to why you shouldn’t listen to this guy just based on this one video here, but it would be long and you wouldn’t read it.

    Just know, that real analysts and real economists are out there. This guy isn’t one of them.

    People are worried about a recession as its natural, but Trump is not the reason why. If anything, Trump, having already announced his intent for re-election will be more concerned with the economy since it will be the ultimate platform for his reelection.

    Seriously, think for a second, if the economy goes sour before he secures the office, the Democrats will have all the ammo to win. They will use it to support what they’ve been saying: that the system is “broken” and will promote their ideologies and big government as the answer.

    No doubt the system has flaws, and the battle for government and economic system has been going on since the American revolution, followed by the French and so on.

    What you should be worried about is how much freedom and liberties are you willing to give up to have food. As history has shown us, this is the critical point where we give into serfdom.

    If you read this far, I’ll end with this.

    I don’t criticize the left for their ideas to serve society, because it criticizes the evil in corporations or because it wants to tax the wealthy. I criticize it because they don’t understand what it’s actually happening. They don’t understand the history of the individual and of society. They don’t understand (or maybe they do) that they are undermining our liberties and democracy. They are trying to use an old idea, limited by the technology of an old era, to meet the problems of today and tomorrow.

  6. Unemployment is 4%, and I look just like I did when I graduated from high school, only 52 years ago. People say I look like Brad Pitt in Thelma and Louise!

  7. Be more specific than hating. Obviously Trump is fighting for US against China in trade deals and you are saying it's bad providing nothing to base on.

  8. Good thing is everything this fella says. the opposite happens. Who the heck is responsible for giving this goonball airtime?

  9. Anyone going to ignore the fact that this dude has a British accent? (While talking about the American economy?) Don't trust him.

  10. simple: YOU HAVE TOO MUCH DEBT AND CAN'T AFFORD IT! The idea of keeping the interest at 0 so you can keep burying yourself and get away with it is pure stupidity!!!

  11. Um, Australia’s boom had everything to do with China’s boom and China is slowing down. So, don’t pay yourselves on your back too hard. Wasn’t that much of an accomplishment when your’re commodity rich and at China’s doorstep. Plus, Sydney and Melbourne’s housing is beginning to melt down. Strong, yeah?

    And employment rates are almost always lowest prior to a recession so I wouldn’t parade that stat around too much either.

    Guy talks about how great the last 10 years was… talk about cherry picking your stats, buddy.

    And best of all, what does improving GDP have to do with feeling respected and loved?! Lol. Students may want to avoid going to Michigan University, some quacks teaching over there. Most jobs are going to get automated away so students should find education that will give them a future (hard to automate away trade jobs, let’s say), think and little deeper, and worry less about the fuzzy feelings.

  12. There was no recovery. Obama ordered the Fed to paper over until he left office. The next recession will be bigger than the last one. Trump is ordering the Fed to do the same and start QE when the Fed was in the middle of raising rates. Will the Fed have enough ammo to raise rates? No.

  13. It's almost like these people want a recession so they can be like "hah" told you I was right. Trump caused a recession and not the market.

  14. Oh Because lazy & corrupted middle class is more harder find "easy money" then you can blame current Government.. i am not US but i see the positive US economic rather then 10 year ago

  15. TLDW: "We don't know what will cause the next economic downturn, even though all the parameters show that everything is going strong. But we will nonetheless continue with our Trump Derangement Syndrome and make sure to fear monger because we hate him so much"

    Fake news is at it again.

  16. i think white people should be changed to pink people or orange people. i’m watching this and realizing how dark you people are.

  17. Capitalism is dead. The old idea has ran its course. Manufacturing use to be the oil of the US. The new oil of now is technology. Cashing in the tax havens corporations money and using it to rebuild this country smarter and greener. We need to push into the future with energy independence, healthcare innovation and converting our roads, bridges, electricity and water delivery systems with 21st century tech.

    You don’t need a whole new grade of education for the adult working class to achieve this. You need hands on training and commitment from everyone to get this done. Adopt the moto that in America, if you want to work, we have work that needs done and anyone willing can come and contribute. ANYONE

  18. "Thank You," GOP, for giving us Trump, a Russian asset in the White House, and for giving us the last recession [called now "The GREAT Recession"] under Bush. As the old Scottish song goes, "Such a Parcel of Rogues in a Nation!" ;(

  19. Study what the rich kids’s father and grandparent did not they do. Developing countries should complete ignore what this guy’s generation. Democracy will only lead to printing money and meaningless wars.

  20. Bro if you believes this back it up, put all your money on a market short. See how it goes, if not this is a nonsense political attack.

  21. Have you looked at the Bureau of labor statistics? Easier said than done because a lot of people live from paycheck to pay check and can't put money in a savings. But you are rich enough you don't have to worry about it and you sure aren't living in the real world. Just look at this guy. It's hard to take him seriously.

  22. All lies border patrol will twist any situation to make them look like a hero! Immigrants are good people at least they don’t brain wash people and tell them if you don’t believe in Jesus your going to hell lol

  23. @3:15 is what my husband and I have been doing since 2018 putting away every cent we can for when the 💩 hits the fan. We honestly believe it’s coming.
    If you study the past the U.S. economy performed better under Democratic than Republican presidents since ww2.

  24. Developed countries live on the backs of crippling interest payments from the developing countries. Until that changes, they will always be developing.

  25. . The president is rarely to blame for the state of the economy unless there are DIRECT policy's that affect the economy like tariffs and tax cuts. Most of the times economies regulate them selves and slowdown due to over supply, or attempts to slow inflation. There are rarely economic slowdowns caused by outside factors. It is always internal in your country with some foreign events that exacerbate the economic slowdown that your country might experience.

  26. All the more reason to vote for #Yang2020.. Justin you actually spoke on many of his policies and theories that will change our economy for good. Like measuring other things than just GDP.

  27. Yea sure.. the businessman wont know how to handle a business crisis. You liberals think that the only solution to a crisis is an expansion of government in the business sector. The only place the US government has in business is the restrained implementation of rules and restrictions in business sector with the additional benefit of future economic growth. Businesses should be allowed to function as independently as possible, the less legal jargon, the better for Americans to pursue future enterprises .

  28. yes yes very interesting….but actlually if you could just help me out I am a nigerian prince who would like to help you but my money is stuck in a trust, but with your help I would love to get it for you

  29. Are you sure the dude who needs a haircut is cute/sounds smart enough to use as clickbait for the Democrat voting audience that you’ve chosen to feed?

  30. This guy said something positive about the fed and how they handle things I don't trust him I hope trump dismantles the fed I believe that why JFK was assassinated rip

  31. U DIRTY BRITISH PIG…HAS THERESA MAY HANDLED BREXIT? OBAMA MERCLE THERESA MAY , THE 3 DIRTY WOMEN WHO HAVE CAUSED THIS DISASTER BY PRINITING 50 TRILLION TO PROP UP THESE ECOMONIES TO THE POINT THEY HAVE DESTROYED THE MIDDLE CLASS AND TO THE POINT WE CAN NEVER GET OUT OF THIS DEBT WITHOUT HYPERINFLATION !!! AND U DIRTY BRITISH PIG ARE SAYING U DONT TRUST TRUMP? HES THE ONLY ONE THAT CAN GET US OUT OF THIS U DIRTY GROBALIST RAT !

  32. No point blaming Trump! Economic cycles repeat themselves – irrespective of who's president. https://www.youtube.com/watch?v=TAEl0dJRRFU Anyone w/ basic economic know how would know that.

  33. The dollar is literally floating currency that is partly getting its evaluation because of some countries in the Middle East like Saudi Arabia and Gasoline. if gas prices are cheap, the chances are that America will be going strong.

  34. TRUMP IS THE GREATEST PRESIDENT WE'VE EVER HAD IN THE HISTORY OF THE UNITED STATES OF AMERICA !!!!!!

  35. I don't know what's dumber, the way this brainless imbecile LOOKS, or what he's actually SAYING. He called the US economy "robust." What are they smoking Down Under? Kangaroo poop?? Then, this financial genius suggests that Americans "save more money." WHAT MONEY, YOU IDOTIC CRETIN??? At least half the US population can't even raise even $200. in cash in an emergency, and you give advice like this? Then, on top of all of this baloney, you claim that, "Trump is the biggest risk"? In the depths of your stupidity, don't you even realize that the problems with the US economy began DECADES before Trump even took office?? Go back to elementary school, Einstein. You don't belong on You Tube.

  36. The Trump Bubble is mainly Obama's doing.. Trump's mental instability is already dragging the economy down. Trump's rabid bigotry will generate boycotts and even product sabotage. A business is a fragile thing: social discord is bad for business in the long run. We see examples of hate-ridden nations all over the globe, most of which are dirt poor.

  37. DEBT to GDP is big scam . If i get a salary of 1.000 $ pay my rent of 500 $ out of my salary , the maintenance on the unit is 200 $ ( comes out of the 500) ALL THIS ENTERS IN GDP its easy to understand that for every real 1$ 3 other dollars are created for GDP, But DEBT to GDP in the USA is already 105% so basically the real debt is probably 300% – 600% for every real dollar

  38. This POS should get a real life and get a hair cut, and close his liberal trash bs! I could give a crap of what he cares about.

  39. are these top end academics way too wordy? listen to thomas sowell, who's and absolute genius. even if i didn't agree with him politically (obviously i do), he can make a complex topic, as plain as ham and cheese sandwich….it's a gift and he's always had that trait.

    while the krugmans and this little cabin boy (you'd hate to meet him on an elevator) just bloviate and elongate on and on….and it's meaningless, because their predictions usually are crazy wrong.

  40. US Economy is not the same as Australia which with so much natural resource and geographical advantage right next to China, has been able to avoid recession. To apply Australian recession proof economy to US, and deluding yourself that US will be OK for the next 27 years, is very very dangerous. I would not bet my money on it.

  41. US…where you have to go bankrupt to pay for child labor medical fee, will never change. You just throw playstation, and facebook to people to distract, while a class of wealth get away with murder. It's a living hell.

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