The canary in the coal mine.

Today I’m going to talk about the economy, and I’ll direct your attention dear non-existent reader to this article, because I love these guys for their unfiltered views on the stock market and the broader economy as a whole. Now they aren’t reading some arcane tome or reading the tea leaves here, and the data is there for anyone willing to dig into it. Most of us have other things on our minds besides what the employment rates were for the past decade, despite polling that suggests the economy is a top concern among likely voters. That’s why it’s important to look beyond what current and former presidents are saying about it, and go directly to the numbers.

When it comes to U.S presidents, former and sitting, they all follow the same pattern. Obviously anything bad is quickly attributed to their predecessors in the White House. They are also quick to claim credit when the numbers are glowing. That should make blame or credit taking on behalf of any particular administration immediately suspect, and the current administration is no different.

My absolute favorite number in the article is the number of coal mining jobs created in the past three months. Spoiler alert! It’s a big, fat goose egg. That tells us a few things about U.S presidents and their ability to actually affect the economy. Trump has failed to create any coal mining jobs in an era of record low unemployment, despite making it a key campaign promise, despite easing the regulations around the coal mining industry, despite corporate tax cuts, and despite having a party majority in both houses of Congress.

No matter what the Trump administration does, they will never be able to fulfill that campaign promise. Why? Because no U.S president is directly in control of the economy. While they may be able to influence it with policy, market forces will always “trump” executive action. In other words, Trump’s policies run counter to market forces, forces which literally favor all other forms of energy production other than coal.

So the next time you hear a president take credit for the current state of the economy, or blame it on his or her predecessors, remember that it’s all more or less bullshit.

When the party is over.

Yesterday the opening salvos of a new trade war began. Despite what Trump believes, trade wars are not easily won. In fact, in the end, nobody wins and everybody loses.

Consider what happens when a tariff is enacted. Overnight, the price of the affected items goes up. Since the price goes up, industries that rely on such products or commodities are now unable to afford to buy as much. Take automobile manufacturers for instance. They rely on steel to produce cars. If steel goes up in price, they cannot buy as much steel and consequently they produce fewer cars. If they’re producing fewer cars, they have need for fewer employees and will begin reducing their workforce. As unemployment goes up, fewer people can afford to buy new cars, and a vicious downward spiral of reduced employment leading to reduced economic activity begins. It doesn’t stop there either, because now that demand for steel is going south, so goes the jobs for steelworkers.

Then consider the countries who we enact such tariffs against, and how they will respond. They could slap tariffs on automobiles for instance, leading to reduced exports and further deepening the reduced need for automobile and steel workers. It’s mutually assured self destruction economically speaking.

How do we know that this is what happens? There is a whole history of protectionism, tariffs and trade wars to draw from (google the Smoot-Hawley act, which preceded the Great Depression). If the Trump administration continues to pursue protectionist policies, expect it to chip away at the record low unemployment. We may also expect it to halt the historic, decade long bull run on the stock markets. Nobody has ever won a trade war, because it’s not a winner take all, zero sum game. It’s a draw, with numerous casualties for all parties involved.