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Perceptions Are That Trump’s Policies Are Working

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Posted: March 20, 2017 at 7:00 am   /   by
Originally published on this site

Perceptions matter. People make decisions, even life-altering decisions, based on what they perceive as likely to happen. To the extent that public policy affects such decisions, the perception of likely policy change can affect behavior even before the change happens — even if it ends up never happening.

Something like that seems to be happening in America — and around the world. In the two months since Donald Trump was inaugurated as president, people have been making decisions based on perceptions of how he may change the country’s direction.

Take the economy. The numbers in the jobs report for February, Trump’s first full month in office, showing an increase of 235,000 jobs, are not wildly out of line with some monthly reports in recent years.

In contrast with the years of the Obama stimulus program, when the bulk of new jobs came in the public sector, it appears that the increase here is in the private sector. Moody’s Analytics says there were 298,000 new private-sector jobs in February, far more than the 189,000 it expected.

Construction jobs were up 58,000. Private educational services jobs were up 29,000. And manufacturing jobs were up 28,000. This suggests that lots of employers, small as well as large, are taking the plunge and creating new jobs.

Can I prove that they’re doing so because of perceptions that regulations and taxes will be decreased by the Trump administration? No, and I’m not sure any economist’s statistical model could, either. But it sure looks as if that’s what’s happening.

Big players in the financial markets seem to think so. Federal Reserve Chairwoman Janet Yellen suggested the Fed will raise interest rates twice more this year after doing so twice in the past three months. That’s a significant shift from her long-standing reluctance to increase rates at all for fear of dampening the economy.

JPMorgan Chase CEO Jamie Dimon said March 10 that Trump’s agenda of cutting corporate taxes, building infrastructure and rolling back regulations has unleashed the “animal spirits” — economist John Maynard Keynes’ phrase — of businesspeople. “Even if he gets (just) part of it done,” Dimon, a Democrat and Hillary Clinton contributor, told Bloomberg, “it’ll be good for growth.”

Does the unusual speed with which Paul Ryan is leading the House to vote on the first of three promised initiatives to repeal and replace Obamacare suggest that he and Trump are trying to strengthen the perception that the private-sector economy will boom? Given the significant risk of political damage and policy bollix, it certainly looks as if the answer is yes.

People at the high end of the income spectrum — a category that obviously includes the bulk of job creators — are not the only ones making decisions in response to perceptions. So, it appears, are undocumented immigrants and people deciding whether to cross the border illegally.

U.S. Customs and Border Protection reported that apprehensions of people who crossed the southern border illegally in February were down 39 percent from January and down 36 percent from February 2016. They were also lower than the border crossings in December — traditionally by far the lowest month — in the years 2016, 2015, 2014, 2013 and 2012.

That’s a starling drop. And it’s one that seems likely to reverberate far beyond Mexico, seeing as most people who have crossed the border illegally since the Great Recession have come from Central America.

Under Obama administration policy, Central American children (or adults claiming to be younger than 18) seeking asylum were mostly allowed to remain in the United States, effectively free of border enforcement.

Trump’s executive orders on immigration law enforcement have created the perception, probably accurately, that that policy has changed. That message has apparently been delivered to people hundreds or even thousands of miles south of the Rio Grande.

Of course, perceptions can change. Perceptions of an incoming president’s likely policies can shape the behavior of many; perceptions of an outgoing president’s policies, not so much.

As a president’s term goes on, perceptions of a president’s policies are replaced by the realities of actual policies, and perceptions of likely effects are modified by conditions on the ground. The wisdom of crowds is not always spot on.

But it’s sometimes superior to the wisdom of experts. Most experts predicted that Britain’s vote for Brexit and America’s for Trump would crater those countries’ respective economies. That hasn’t happened yet — and most people seem to perceive it won’t.

Michael Barone is a senior political analyst for the Washington Examiner, resident fellow at the American Enterprise Institute and longtime co-author of The Almanac of American Politics.


Last Updated: Thursday, Mar 16, 2017 07:55:57 -0700

Michael Barone

Michael Barone is a senior political analyst for The Washington Examiner and a resident fellow at the American Enterprise Institute.

From 1974 to 1981, Barone was vice president of the polling firm of Peter D. Hart Research Associates. From 1981 to 1988, he was a member of the editorial page staff of The Washington Post. From 1989 to 1996 and again from 1998 to 2009, Barone was a senior writer for U.S. News & World Report. He was senior staff editor at Reader's Digest from 1996 to 1998.

Barone is the principal co-author of The Almanac of American Politics, published by National Journal every two years. The first edition appeared in 1971. He is also the author of Our Country: The Shaping of America from Roosevelt to Reagan (Free Press, 1990), The New Americans: How the Melting Pot Can Work Again (Regnery, 2001) and Hard America, Soft America: Competition vs. Coddling and the Competition for the Nation's Future (Crown Forum, 2004).

Over the years, Barone has written for many publications, including The Economist, The New York Times, The Detroit News, the Detroit Free Press, The Weekly Standard, The New Republic, National Review, The American Spectator, American Enterprise, The Times Literary Supplement and The Daily Telegraph of London. He has served as a political contributor to the Fox News Channel since 1998 and has appeared on many other television programs.

Barone graduated from Harvard College (1966) and Yale Law School (1969), and was an editor of the Harvard Crimson and the Yale Law Journal. He served as law clerk to Judge Wade H. McCree Jr. of the United States Court of Appeals for the Sixth Circuit from 1969 to 1971.

Barone lives in Washington, D.C. He has traveled to all 50 states and all 435 congressional districts. He has also traveled abroad extensively and has reported on elections in Russia, Mexico, Italy and Britain.

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Perceptions Are That Trump's Policies Are Working