The day Donald Trump announced he was going to destroy the global trading system, that has kept peace and brought prosperity to millions throughout the World, Economists voiced doubt that the “Liberation Day” plans would work out the way Trump predicted. Slapping massive import taxes on penguins in some Antarctic islands as well as virtually all major trading partners and allies, who had for years been funding the US budget deficit, was not going to bring prosperity and a new Golden Age to the US. They argued that instead it would lead to higher prices, more unemployment and generally falling living standards, particularly in the US where the additional taxes would have to be paid.
Everybody who has ever taken an ECON 101 course in high school or college knows that. However, for a few months the official statistics continued to paint a rather rosy picture of the US economy. Despite so-called “soft data”, i.e. anecdotal information gleaned from informal surveys and casual observation, suggested the economy was slowing down, the official data as gathered by the US Bureau of Labor Statistics (BLS) appeared to show solid jobs growth and stable prices.
Trump and his team felt vindicated. The believed they had proven the denizens of the dismal science wrong. They took a victory lap and passed a bill that would massively increase budget deficits, unless the economy not only stayed healthy but would accelerate despite the tariffs. In fact, they claimed that it was because of the tariffs that the economy was so strong, a view no serious economist could share.
Having taught economics at the College level I could witness first hand how easy it is for people with a limited grasp of economic theory, to fall for rosy projection based on flawed reasoning.
The Trump gang definitely has a very limited grasp of economic theory, if it has any understanding at all. And they loved the official numbers that seemed to prove people who knew more about economics wrong. Well guess what: the economists were right, and the data was wrong.
On August 1st the BLS released the latest employment statistics, and it turns out: the numbers were much worse than originally thought. In fact, had it not been for solid employment growth in the health sector, non-farm employment in the US would have fallen during the first quarter of 2025.
This is precisely what economist predicted would happen if Trump would proceed with his ill-informed crusade to jak up import taxes. But it did not sit well with the MAGA King and his acolytes, He reacted in typically Trumpian fashion: he fired the head of the BLS.