General Motors announces mass layoffs and puts Trump's Industrial Renewal in crisis

Voices that announce a possible recession of the US economy in 2019 or 2020 continue to accumulate. Analysts of Bloomberg, Forbes and the Wall Street Journal warned that, at least, we would witness a significant deceleration. Alerts began to sound at the end of the first quarter of the year and by September 30. Bloomberg Sentenci: "In the United States, two thirds of business economists see a recession by the end of 2020".

Monday, General Motors, the largest US automaker, announced the dismissal of 15% of its workforce and the closure of factories in the United States and Canada. This is a brutal blow to Trump's economic message and a clear sign that the auto giant has a negative badysis of the future of the economy. Larry Kudlow, Trump's chief economic advisor, said today at the first press conference held weeks ago at the White House that the president had estimated that GM "was turning its back" after the Republicans had approved a reduction in spending last year. which has benefited large corporations.

Among the indicators of a possible recession is the yield curve of the Fed's bonds, in the short and long term. When an economy is healthy, long-term debt pays off better than in the short term, that is, above the chart. The fact that the gap between the two begins to shrink can be a negative signal, although it is not an axiom, but a possible indicator of problems.

The LPO consulted Olugbenga Ajilore, Chief Economist of the Center for American Progress, one of think tanks Most influential Liberals in the United States Founded in 2003 by John Podesta, a powerful member of the Democratic Party, chief of staff of Bill Clinton, Obama's presidential advisor and president of the Hillary Clinton campaign in 2016.

What is the probability of a recession next year?

I do not know if in 2019, but in 2020, it is very possible. There are many factors. Rates hit the economy very hard, including interest rates.

Yesterday, General Motors, the second-largest shipbuilder in the United States, made a devastating announcement. Shut down many of your plants and remove 15% of your staff. Do you think GM was rushing? Do you consider this another sign of what is preparing for the economy in the near future? Respond to market changes?

The automotive market has changed a lot crossings, SUVs and big trucks. They may have gone from the front, but they are also very worried and are trying to anticipate the future of the economy. If it involves closing factories, that's what they'll do.

How serious is General Motors?

I want to point out that now that we're talking about General Motors, GM is one of the companies that benefited from the tax cuts. People tell how they chose to buy back shares [con el dinero del recorte]but no one showed any concern for the workers. We are talking about 14,000 to 15,000 people who will be out of work, and as we already know, when bademblers shut down their factories, people in those cities have a hard time getting back on their feet. Many people will suffer and try to get up, we must focus on them and see what we can do for people who have lost their jobs. We can not forget them.

Do you think the federal government should intervene to help these people?

Without a doubt They can do things, transition programs to help people change jobs.

Do you think that the approval of NAFTA 2.0 will play an important role in the evolution of the economic situation?

It is hard to say that this will have an impact because there are no big changes. They call it Nafta 2.0, but in reality, there are small changes at the margin. Moreover, this will not happen in the period of lame duck [periodo que va desde la eleccin del pasado 6 de noviembre a la entrada del Congreso en enero de 2019], and now the Democrats will take the Assembly. They will try to make more changes [al acuerdo comercial], things like protecting the environment, not only here, but also in Mexico. They will try to lobby for stronger labor laws. If it stays as it is, it will not have a lot of impact because there will not be many changes, but I doubt very much that it can happen as it is.

What steps could Trump take to avoid or reduce the impact of the recession?

They must first focus on the workers. Workers experienced very little wage growth. The administration has not focused on them or on low-income people. Although they focus solely on tax policy, they can make many changes for low-income workers. Expand franchises, for example. Republicans have talked about increasing tax-deductible spending, but we have not seen them working on it. It's just an example of what they can do.

What about wages?

Salaries can play an important role. For example, if you see the federal minimum wage is $ 7.25 [dlares por hora]and they have not increased since 2009. There is a lot of pressure to raise it to $ 15 or $ 12, and you can debate the amount, but the fact that it stays at $ 7.25 … is incredibly low.

What number do you think is reasonable?

$ 10 or more. If you plan to match it with inflation, it will be at this level. They can bring it to 15 dollars by 2024 gradually. The problem is that it is very low and you can not believe that the states will raise it. Currently, only half of the states have a minimum wage above the federal level. This is not just for the workers.

You can not point to a certain Trump administration policy and say "this has led to recession", but many of their actions do not promote the growth of the economy. Specifying the biggest tax cut for businesses in 40 years does not help growth.

Do you think the Trump administration is responsible for a possible recession that some specialists predict?

It's hard to say. There is a lot of tax policy that just does not make sense to me unless you focus only on high-income people. But it's hard to blame a particular administration. You can not sign a public policy and say "this has led to a recession", many factors are beyond the administration.

But many things they have done do not help the growth of the economy. I mean, putting the biggest tax cut we've seen for 40 years to benefit businesses is not stimulating growth. And that's the only policy this administration has put in place. Public policies to increase labor productivity, increase wages, help consumers, have seen nothing like this. Now, if a recession occurs, it will be difficult to blame the administration, but it has brought nothing to the public policies promoted for a year and a half.