What if Trump Wins? The Coming Economy (Part 1 of 2)
In today’s newsletter:
- What if Trump Wins? The Coming Economy (Part 1 of 2)
- Fast Food, Market Watch, and Christian Bookstore Comeback
- Three Signs of a Healthy Church
Decision 2024 is just around the corner, and the American people have two very different visions of the future to choose from. In this two-newsletter series, we will be examining what the economy will likely look like if shaped by President Donald Trump or by President Joe Biden from 2024-2028.
Today, we begin with Former President Donald Trump.
The Track Record
The first three years of Donald Trump’s presidency boasted a roaring economy. Taxes were slashed, making everyday life easier on the middle class, corporate profits were up (in part due to a corporate tax rate cut from 35% to 21%), wages rose, the stock market rose a lot, and GDP grew at a rate of over 3%.
Business was booming, and economic confidence was very high.
Trump was not afraid to use tariffs as a bargaining tool against foreign players such as China and Mexico, and in most cases, that approach paid off. Illegal immigration slowed down, unemployment dropped, and 65% of Americans today call the Trump economy “good.”
Then… there was that pesky fourth year.
During COVID-19, President Trump shut down the economy and then extended the shutdown again.
The numbers, naturally, were excruciating. Because workers were told to stay home, massive stimulus payments were sent out, which sent our already-over-leveraged currency down an inflationary tumble that we are still seeing the effects of today, four years later.
Some argue that the numbers for 2019-2020 were not totally a result of Trump’s policies, because individual states, in many cases, instituted even harsher regulations on economic activity. Others say that as the executive, he is responsible.
What is uncontroversial, however, is that the stats were impressive for the first three years – Larry Kudlow called it “an economic boom most folks thought was impossible.” And that fourth year, wherever you lay the blame, had terrible, terrible numbers.
The Agenda
Nevertheless, it’s a new day, and the Trump campaign has made a series of promises regarding what Donald Trump will do, if elected, for another term. Here are the highlights:
- Trump will extend the 2017 Tax cuts which are due to expire next year, protecting the much higher standard deduction and child tax credit, as well as avoiding the additional tax burden on small businesses that Jack Sells spoke about in Sent to Win last month.
- Trump promises to use executive action to limit congressional waste and overspending, using a now-defunct power called “impoundment.” He has also floated the idea of eliminating the federal income tax and replacing it with tariff revenues – but as of yet, this is not an official campaign promise.
- Reciprocal tariffs for countries that try to limit American exports, thereby closing the trade imbalance.
- Trump promises to prioritize drilling and to produce the cheapest energy on earth.
- Trump will end Joe Biden’s electric vehicle mandate and protect the American auto manufacturing industry.
- He promises to secure the borders.
The Good
Naturally, politicians are not always able (and not always willing) to fulfill all of their campaign promises, but as we look at the positive possibilities, a few things stand out:
Trump has a track record for getting the economy moving and bolstering market confidence. When people feel optimistic about the economy, they are more likely to take that business loan, start a company, take a risk, and stir up the market. This can produce real growth in production, which is sorely needed to counteract the years of high inflation we are still dealing with. Inflation is fundamentally “Too many dollars chasing too few goods.” Therefore, Trump’s dedication to upping domestic production could, in part, have a positive impact on inflation.
Part of the good of Trump’s economy would be the undoing of some of the more economically damaging policies of President Biden, including an unrealistic regulation on the auto industry that would force them to continue producing high numbers of EVs that the market does not seem to want. Oil production is record high right now, but if Trump can produce even more, we may see prices for everyday goods and groceries begin to fall since fuel costs factor heavily into the supply chain and inflation.
And finally, extending the Trump tax cuts is going to prevent a significantly higher tax burden on the middle class and others.
The Bad
Sometimes, Trump speaks very boldly on things that just aren’t so, and his economic agenda contains some of that.
For instance, his campaign has touted “impoundment” as a presidential power Trump could use to limit the worst excesses of Congressional spending. This is simply a falsehood. Congress passed a law called the “Impoundment Control Act” in 1974 in order to stop presidents from unilaterally usurping their power of the purse. Unless SCOTUS sees fit to take this power from Congress and give it to the executive branch – which is extremely unlikely, given Train v. City of New York (1975) and Clinton v. City of New York (1998) – Trump will not be able to wave a magic wand and cancel wasteful spending.
Furthermore, though Trump has branded himself an enemy of inflation, many pundits have concluded that much of Trump’s program will have the unintended effect of increasing inflation. Unfortunately, putting dollars back in Americans’ pockets can devalue the currency in an already inflationary environment if it is not met with a corresponding (or greater) increase in production and real economic growth. Former Treasury Secretary Larry Summers, for his part, referred to Trump’s economic plans this way: “There has never been a presidential platform so self-evidently inflationary as the one put forward by President Trump.”
Finally, the national debt is a problem. Last year, the government paid $658 billion in interest on our national debt, which has only continued to balloon at an alarming rate. Interest payments on our national debt now take up more of the budget than defense. The primary drivers of our ongoing deficits are Medicare and Social Security, but Trump has promised not to touch those programs. In a very real way, Trump’s attempts to cut spending in some areas is really just trimming around the edges. Entitlements and non-discretionary spending take up over 70% of the annual budget.
Conclusion
It’s a mixed bag, and some secondary factors could have an effect on the economy as well. If Trump is better for global stability than Biden, that will contribute to our economic benefit. If Trump is able to leverage tariffs to open up foreign markets, the growth could offset the inflationary aspects of his plans. Most Americans will appreciate the relief from Trump’s tax cuts, but without serious economic growth or a new taxation scheme to pay off our out-of-control deficit, the national debt disaster will only hasten.
Trump may be just what this economy needs, or he may accidentally set off another inflationary spiral. Either way, the Trump economy, if there is one again, will certainly be deregulatory, protectionist, and pro-business.
What will the Biden economy look like in 2024 if the incumbent wins in November? Tune in for our next issue to find out.
INDUSTRY INSIGHTS
Fast Food, Market Watch, and Christian Bookstore Comeback
Fast Food
The price of fast food has skyrocketed in the past few years, as 40% of Americans report cutting back on restaurant spending in general, and many say that fast food just isn’t worth it anymore. The numbers are shocking: Inflation was 31% from 2014-2024 (that in itself is a problem…), but major fast food chains increased prices well above that figure. Taco Bell, for example, increased menu prices by 81% over this time period, and Popeyes increased prices by 86%. Topping the list is McDonald’s, which doubled its menu prices in the last ten years. Because of increasing consumer backlash, some burger chains have recently brought back the value menu, as Burger King, McDonald’s, and Wendy’s now offer $5 meal deals. Profits were up for a while, but as more and more people change their habits due to the price increases, time will tell if the new, lower-price options can win back customers or not.
Market Watch
The Nasdaq is up nearly 20% YTD and 6% just this month, as its futures increase while Dow futures fall. The Dow lost about half a point in the past week, as of Monday. Chocolate prices remain very elevated, and over-speculation may now be contributing to the valuation. Bitcoin has been trending downward this week, settling around $65k as of Monday. There was some good news in the May inflation report, which showed flat month-to-month inflation in the CPI, though year-over-year inflation was still at 3.3%. Energy, in particular, dropped 0.2%, but was still up 4.7% YoY. Unemployment is up slightly, at 4% in May. According to some sources, 30-year-fixed mortgage rates are down, hitting 6.5% this past week. Rates for refinancing, however, remain around the 7.5% mark. The Small Business Optimism Index reached its highest level so far this year, but still remains well below the historical average.
Christian Bookstore Comeback
It’s well known that the once common Bible bookstore took a beating in the 2010s, with at least hundreds of brick and mortars closing – but suddenly, things don’t look so grim for the ones that are still standing. The Parable Group recently found that 79% of surveyed Christian stores experienced a rise in sales from 2022-2023. Sales rose 8%, to $84 million across 200 Christian bookstores, with gifts generating the most revenue, and adult books coming in at a close second. The Christian publishing industry took in over $750 million in 2022, and there may be a renewed viability to this once-strong partnership between producer and distributor, as consumers are turning back to in-person bookstores to find real, interpersonal engagement in an all-too-digital world.
Sunday School
Q. Who is known as “The Weeping Prophet”?
A. Jeremiah, the author of Jeremiah and Lamentations
“Jenny was initially appreciative about Todd trying to find a church for them to attend, until she discovered his criteria for choosing was the coffee shop reviews on Yelp.”
TIPS & TRICKS
Three Signs of a Healthy Church
Fish don’t know that they’re in water, as the saying goes, and when you’ve been inside a church or an organization for a long time, it can be difficult to see it objectively. As laypeople, we have a crucial role in the life of the church to help keep our corporate body accountable, healthy, and strong. Here are some key indicators of a healthy church, and some ideas on what to do if your community needs to make some reforms:
A Healthy Church Is Financially Prudent, Generous, and Transparent
A church isn’t a company selling a product, like Apple or Walmart. It is a body. Whether your church has formal membership or not, it is a voluntary association, and the people who participate have a right to know what’s going on with the finances. This certainly doesn’t mean that everyone has a key to the tithe box or a book of checks, but it does mean that the numbers are not a secret. A healthy church is open about its expenses, facilities costs, and other overhead, as well as missional giving, benevolence, and total revenue that comes in each year. Many faithful givers sacrifice greatly in order to support the local church, and that money needs to be apportioned wisely. Transparency helps ensure that frivolous or wasteful spending will not be the norm, and it increases trust between congregations and their leadership. Unfortunately, ecclesial theft, fraud, and outright foolish financial behavior is not uncommon, but the good news is that sunlight is the best disinfectant.
One particular expenditure that needs to be examined is a church’s benevolence. Benevolence is when the church gives to people in difficult times – maybe paying rent for a few months when a church member’s husband leaves her, or getting groceries for the family whose breadwinner just had an accident and can’t work, etc. One of the reasons for the Old Testament tithe was to take care of the poor and needy among the people of God, so the church today ought to do the same.
A healthy church may expect you to be generous – but they will need to be generous as well, with the people who need it most (and are often in the messiest situations).
If your church is spending badly, overleveraged, or secretive about the books, suggest to leadership that a third-party auditor be brought in to help shed some light on the finances, or if any of the church body is in financial planning, have them help the staff come up with a budget, and suggest twice-yearly reports to the church body.
A Healthy Church Ties Its Teaching (and Ministry) to Scripture
A weekly Bible Study, sermon, worship, prayer, and communion is a valuable, helpful, good thing – and the bedrock of our spiritual practice as a community. However the modern church has a stage, and stages attract charismatic individuals. This is wonderful when the individual is submitted to God, humble, and desperate to stick to the mission. This is not wonderful when the preacher is just there for a platform. These two kinds of speakers can sound very similar in speech and tone, but what separates a good preacher from a bad one, in many cases, is the place and space that is given to the Bible.
Far too many churches today give sermons that are more like motivational talks with one key scripture reference that is quickly passed over, taken out of context, misapplied, and then forgotten. A healthy church, on the other hand, is going to have teaching that begins from scripture most of the time. There’s nothing wrong with a speaker giving you his opinion from time to time, but the pulpit has a lot of authority, and it is all too easy for a dynamic preacher’s opinions to come across as having been blessed with God’s stamp of approval. A healthy church will be careful in its teaching, have a high view of the scriptures, and search through those scriptures together.
If your church regularly gives teaching without meaningful use of the scriptures, suggest to leadership that they institute a traditional practice of scripture reading before the sermon each week, to keep the congregation grounded in the Bible. Or, mention your hopes that the Bible would be explained and read in context, for the good of the church body. If the preacher does not really ever teach from the Bible, and if he is not open to changing that in the future, it may be time to consider a new church.
A Healthy Church Encourages Ministry Outside the Walls of the Church
There is certainly nothing wrong with a church that has a lot going on. Sometimes, however, a church can start to pressure its members to have no social life or work outside of the church programs. This is unhealthy for a number of reasons, but foremost among them is the fact that Christians can’t be effective in the world… if they are not in the world! Workplace evangelism may well be the most important kind of evangelism, and it cannot be neglected or crowded out.
A healthy church is going to view its mission like Paul’s Letter to the Ephesians describes it – as a gathering to equip the saints to go out and do the work of the ministry. Most ministry, no matter how big, organized, or effective your church organization is, ought to be happening at the individual level, with people who develop genuine relationships with coworkers, classmates, or gym buddies, hang out on the weekends, and are able to serve them like Christ. Christians ought to do life together, certainly, but it should not become an impenetrable bubble where the only strategy for doing God’s work in the world is inviting others to a Sunday service.
If your church has slid into being overly insular, see if one of the programs they offer can be evangelism training, and ask leadership to encourage, from the pulpit, people to spend time with their friends and neighbors, but to do so as ambassadors for Christ, who show his love, servanthood, and wisdom to the world.
Quick Hits
- Influential evangelical megachurch pastor Tony Evans steps down, citing unnamed sin as reason.
- CNN releases a list of the top 10 “impossibly unaffordable” cities.
- The Economist gives Donald Trump a 2 in 3 chance of winning the presidency in November, according a new statistical forecast.
- Housing expert Kirsten Jordan warns that housing prices could fall 10% in some areas this summer.
Our “What if Trump Wins?” graphic was generated using AI prompts. Guess the prompt for your chance to win Sent To Win gear. Just reply to this email with your best guess.
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