Donald Trump Predicts Depression
“We’re heading into a great depression,” stated former President Donald Trump. He continued that “no damage has been worse than the disaster known as Bidenomics.”1 His statement looks like more than just campaign rhetoric. In a RealClearPolitics average of polls, only 38% of Americans approve of Biden’s job on the economy. Trump identified four factors that could push the country into deep economic turmoil – inflation, deficits, wasteful spending, and a decline in manufacturing.2
Trump painted a grim overall picture of the Biden economy in contrast to his own. During Biden’s first 30 months in office, just 2.1 million new jobs have been created nationwide. In comparison, 4.9 million jobs were created during the first 30 months of Trump’s administration. He continued that under Biden, real incomes have gone down by $7,400 dollars per family. Versus under President Trump, yearly income went up by more than $6,000 dollars.3
Inflation
Over the past three years, cumulative inflation reached almost 20%. The dollar has lost more than 20% of its value. Annual inflation when Biden took office was 1.4%.4 It hit an astounding peak of 9.1%. In July, the rate was 3.2%. Down, but still more than double the rate he inherited and still much higher than the Fed’s 2% target.5
Inflation continues to increase. Only the rate at which inflation is increasing has slowed. Keep in mind that inflation is cumulative. Much like compound interest, it just keeps adding up. After a large increase in the prior year, that lower number comes on top of — or in addition to — the earlier year’s number. For example, the 4 percent increase this May was on top of last May’s 8.3 percent increase. That’s a two-year increase of nearly 13 percent.
Even if the Biden administration miraculously brought inflation to zero by the end of his term, it would still be the largest single term inflation increase since the 1980s.
The Biden White House was warned ahead of passing their $1.9 trillion American Rescue Plan. Larry Summers, the secretary of the Treasury under President Clinton, said that it could “set off inflationary pressures of a kind we have not seen in a generation.”6
Skyrocketing inflation resulted in record interest rate hikes meant to stop it. The consequences have been severe. Stocks are more volatile. The financial sector is destabilized with three of the four largest bank failures in our nation’s history. And expensive loans are increasing debt and smothering businesses. All in all, creating the conditions for a recession, or if left unchecked, a depression.
Wasteful Spending
Trump stated Biden has blown through $11.5 trillion dollars in wasteful spending during his term so far. 7
According to economists, one specific example stands out – the poorly named Inflation Reduction Act. The bill’s uncapped incentives could result in triple the price of initial estimates. A team of researchers at the University of Pennsylvania’s Wharton School worked with Goldman Sachs. They updated their own earlier estimate of $385 billion with a staggering new figure of more than $1 trillion.
The IRS still hasn’t worked out the details on how to administer the convoluted new law. And there is still no way to pinpoint the amount of spending that will occur. As those issues are resolved, a flood of companies could take advantage of the bill incentives. The cost of the bill could skyrocket well past the $1 trillion mark and create a negative feedback loop of its own. All adding to the very real danger posed by the growing deficits.
Deficits
America’s budget deficit doubled to $2 trillion in one year. Much of 2023’s surging deficit is, in one way or the other, paying the piper for the inflation of 2021 and 2022. Higher inflation means higher Social Security and Medicare costs. As well as everything else the government buys. Higher interest rates are also making the cost to service our debt much higher.
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A huge drop in tax payments caused by a steep fall in financial markets last year also fed the deficit. Runaway national deficits and debt can lead to catastrophic effects such as high inflation, soaring interest payments, reduced government spending on critical services, and increased economic instability. Ultimately, the astronomical US debt could theoretically lead to bankruptcy and total economic collapse.
Manufacturing Decline
Another signpost pointing to a depression is the sharp decline in manufacturing. The manufacturing sector has contracted 10 months in a row. The S&P Global Manufacturing PMI measures the activity level of purchasing managers in the manufacturing sector. It has taken a steep drop over the past few months. Now orders are falling faster than factories are cutting output. This suggests firms will need to continue scaling back production into the near future.
Conclusion
Within former President Trump’s speech are very real facts. The United States is a country in economic turmoil. And the conditions exist for a major downturn. Knowing this, safeguarding your own financial future is essential. A Gold IRA from American Hartford Gold can protect the value of your portfolio if the economy tumbles into recession…or worse. Contact us today at 800-462-0071 to learn more.
