IRVINE – Economists trying to make sense of new President Donald Trump’s administration had mixed views of what to expect in uncertain times at the Irvine Business Outlook Breakfast Tuesday.
“We live in this era where anything can happen,” said Todd Buchholz, former White House economic policy director under George H. W. Bush. “I was in London last week. Brexit wasn’t supposed to happen.”
Buchholz was the keynote speaker and one of the five panelists who provided insights into national and local economic trends at the annual event sponsored by the newly renamed Greater Irvine Chamber of Commerce at Hotel Irvine.
Buchholz pointed out that the U.S. economy has grown and the unemployment rate has dropped to less than 5 percent (3.5 percent in Irvine) since the Great Recession, while inflation has been contained.
“Shouldn’t that have ushered in the Democratic Party for another four years in the White House?” said Buchholz, a frequent commentator on major networks. “Typically it would have, but it didn’t because those numbers don’t reflect what the American people are feeling.
“We live in what I call the age of anxiety.”
On one hand, globalization that swept the world after the Cold War pulled millions of people out of poverty in developing countries and raised the overall standard of living, Buchholz said. On the other hand, merger and acquisition booms, as a result of increasing global competition, led to some job losses and created anxiety in the U.S., he said
“They made many of our friends and neighbors to stay up late at night wondering, ‘How am I going to pay my bills?’” he said.
Trump, as well as Democratic presidential candidate Sen. Bernie Sanders, addressed that fear.
“A billionaire and a socialist and they were saying the same things: The system is corrupt and you are being squeezed and screwed by it and I’m going to make it better for you,” Trendbet Buchholz said.
Buchholz said one of his concerns is a backlash against capitalism in response to the Great Recession. Trump pulled the United States out of the Trans-Pacific Partnership, a free-trade agreement that Republicans traditionally support.
The U.S. has to deal with nearly $20 trillion in debt and a strong dollar, which makes it difficult for exporters, Buchholz said. The strong dollar could also discourage foreign tourists from visiting Southern California theme parks like Disneyland.
However, the most important economic issue for Irvine and Orange County is education, Buchholz said. Americans are competing for jobs against not only those in this country but also people from every corner of the world.
“We are in the worldwide race for IQ points,” Buchholz said. “Whatever town, city, country harnesses intelligence will prosper most in the 21st century.”
Fellow panelist Lucy Dunn, Orange County Business Council president and CEO, said Orange County’s ethnic diversity gives it an edge in international trade, which has been a driving force of the local economy.
“It is a competitive advantage that our people from other countries who have made it well here stay connected with those countries and help our economy,” Dunn said. “A slowdown in trade will definitely hit Orange County hard.”
Panelists were uncertain about their outlook for the next few years under President Trump, expressing both hope and anxiety.
UC Irvine economics professor David Neumark said Trump may eventually begin to reach out to his opponents, adding that the president doesn’t appear to have strong opinions on many issues.
Buchholz said “Good Trump” could rekindle patriotism and cut taxes, but “Bad Trump” may get the country into an “intractable trade war that could devastate the stock market and the economy.”
“I think there’s no doubt he’s coming to office like the bull wanting to demonstrate, especially to his hardcore voters, that he’s a man of his word, but I’m not sure if this kind of bluster continues,” he said. “I think the compromising will begin at some point.”
Contact the writer: tshimura@scng.com
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