Trends of 2019: The United States of America
USA Editor Michael Abi-Habib contributed to this Trends of 2019 piece.
The last two years of President Donald Trump’s tenure will prove to be the most important to his reelection bid. With the United States facing various issues on the economy, domestic politics, human rights, and foreign relations, Trump will need to respond to the problems facing the U.S. and, at the same time, try to convince a polarized American public that his responses are the right ones.
In the first two years of his presidency, Trump has continued the United States’ nine-year economic expansion. Using the momentum provided by President Barack Obama’s post-recession bull market, Trump has reduced regulation and given big corporations tax breaks in an effort to continue positive economic growth. Although high liquidity helps fuel economic expansion, the Federal Reserve, in an effort to lessen inflation and prevent a potential recession, increased interests rates four times in 2018 and continued efforts to wind down its multitrillion dollar balance sheet, a remnant of its quantitative easing program.
In part due to the Federal Reserve’s new monetary policy, U.S. markets took a major hit in December and January. The Standard and Poor’s 500 Index (S&P 500) dropped more than nine percent in its worst December performance since 1931. Due to this, the yearly performance of the S&P 500 in 2018 decreased by 6.2 percent. Going forward, the big question is whether or not the United States economy will rebound from this.
The Global Economic Downturn
Unfortunately for the United States, there seems to be a global economic downturn happening as well. The release of the International Monetary Fund’s (IMF) yearly forecast of global GDP growth for the forthcoming two years estimates decreased economic output for this year. In light of this report, Chinese, European, and U.S. stocks experienced a slight drop. Over the course of the year, all three of these economies, as well as those of many Latin American countries, are expected to shrink. With a majority of its trading partners experiencing economic struggles, the ability of the U.S. economy to rebound through trade seems unlikely in the short run.
The Government Shutdown
Despite the low unemployment and high economic growth of Trump’s first two years in office, the 2018 midterm elections resulted in a Democratic majority in the House of Representatives. With public sentiment seemingly against him, Trump is in need of a political win. The recent government shutdown, which lasted over 35 days, coupled with recent weak economic performance, means that Trump has a lot to lose in the coming months.
According to a new government report, the economy lost 0.1 percent of real GDP in the fourth quarter of 2018 and will lose 0.2 percent in the first quarter of 2019 due to the government shutdown. The report asserts that most of the lost output will be recovered throughout the year, but there will be money lost due to the shutdown. The general thinking behind this is reiterated by Trump’s chief economist, Kevin Hassett, who assumes that government employees will excessively spend their back pay to make up for lost consumption during the shutdown.
Hassett fails to account for the fact that businesses are currently losing revenue from decreased consumption, thereby stalling present consumption and investment. Hassett also fails to account for the small businesses currently in need of loans from the Small Business Administration, a government-run agency. Tax refunds were also on hold, further exacerbating the conditions of small businesses and consumers.
On a bigger scale, mergers between large companies slowed down due to the shutdown. Government administrations such as the Transportation Security Administration (TSA) and the Food and Drug Administration (FDA) also experienced delays due to a lack of employees and regulatory approvals. The government’s poorly timed shutdown will only further exacerbate the economic downturn, and, going forward, it will be important to see whether the United States will regain any of the lost output from the government shutdown.
Relations With China
The U.S.-Chinese trade war only exacerbates the dismal state of the global economy. The United States and China, which began the largest trade war in history last year, are currently in the middle of a 90-day tariff truce that will last until the beginning of March.
Facing the rise of China as a global superpower, Trump is embroiled in conflict with Chinese President Xi Jinping over the South China Sea, intellectual property rights, and global supremacy. The Belt and Road Initiative and Made in China 2025 initiative are Chinese policies aimed at expanding the country’s sphere of influence by investing in other countries’ economies, while also placing a focus on the domestic development of high-value-added goods.
The race toward technological supremacy has led to various disagreements between the United States and China on intellectual property theft. With both economies experiencing downturns, the two superpowers met in early January to resolve their problems. United States Trade Representative Robert Lighthizer claims that there was no progress in the negotiations on this front. The Chinese telecommunications company now at the center of the trade war, Huawei, warned both countries of the consequences facing the tech industry. With the tariff ceasefire deadline approaching, China and America, which are the two largest trading countries, are pushing for an agreement that would potentially alleviate the problems facing their economies.
Following the government shutdown, Trump is in need of a political win. Coupled with the ongoing Russian collusion investigation and the poor economic outlook, Trump is currently relying on the “New NAFTA,” or the United States-Mexico-Canada Agreement (USMCA), and North Korea’s denuclearization to deliver him political wins.
With negotiations for a new trade deal between the United States, Mexico, and Canada done, despite insistence to reopen the talks from Democrats, the president’s supporters view the USMCA as a fulfilment of one of his campaign promises to revise NAFTA. Although the deal did not make extensive changes, the USMCA must still be ratified by Congress, including the House of Representatives, which Democrats control. The Democratic Party is advocating for better labor and environmental provisions.
This ongoing process will continue to develop throughout the year and may not be completed in 2019, meaning that the tariffs on Canadian products may remain in place for the foreseeable future, which will only further Trump’s political troubles and the country’s economic ones.
The Russian Question
Beginning on May 17, 2017, the Department of Justice’s special counsel investigation into the Russian government’s efforts to covertly interfere with U.S. politics has captured and held the attention of politicians, the media, and the public. With an investigation as polemical as the potential collusion between the president of the United States and the Russian government, historically one of America’s main geopolitical foes, every new turn in the story captures widespread media attention.
Special counsel Robert Mueller maintains a low profile in Washington, D.C., and does not disclose the details of his investigation, leaving the public to mostly speculate about its findings. A divisive, currently uncorroborated article published on January 17 by Buzzfeed News claims new information of collusion that, if true, many in Washington argue would be grounds for impeachment.
Nonetheless, the question of U.S.-Russia relations will continue to be at the forefront of politics throughout 2019. Washington remains seemingly split over the future of U.S.-Russian relations, as Trump aligns himself more closely with Russian President Vladimir Putin through acts such as disagreeing with the Federal Bureau of Investigation (FBI) over Russia’s interference with the 2016 election or withdrawing from Syria, a move which undoes previous American Middle East policy and gives Moscow new power in Syria and the region. The Trump administration’s relationship with Russia has been unpredictable, and while both superpowers have certain aligned interests—such as economic prosperity, resolution of terrorist-driven conflict, and continued nuclear nonproliferation—nobody can predict what will next characterize U.S.-Russian relations.
Another major issue facing the United States is the planned denuclearization and lifting of sanctions against North Korea. The two countries’ leaders met for the first time in a 2018 summit to deliberate on these problems. With the promise of a “stable and lasting peace,” the two countries have aimed to improve their ties.
Despite this, National Security Advisor John Bolton claims that North Korea is not living up to its commitments. In lieu of this, Trump has reached out to Kim for another summit in 2019. Pundits viewed the 2018 summit as a major political victory for Trump but also noted that North Korea’s widely anticipated failure to comply will only hurt Trump and the United States’ credibility. Bilateral relations and the planned second summit in 2019 will be an ongoing story in the coming year.
As 2019 begins, politicians are launching bids for the 2020 presidential election. As of publishing, twelve Democrats have announced their intention to run, with numerous others hinting at their own potential bids. Big-name Democrats such as Senator Kamala Harris (D-CA), Senator Elizabeth Warren (D-MA), Senator Cory Booker (D-NJ), Senator Bernie Sanders (I-VT), and Senator Kirsten Gillibrand (D-NY) have already officially announced their candidacies. Several other big names were thrown around as potential Democratic candidates, including former-Vice President Joe Biden.
The Democratic candidates’ platforms will take strong stances on issues in the national debate on gun control, immigration, healthcare, income inequality, climate change, and more. Several Republicans have hinted at potential bids, though most are being quiet on the subject of challenging Trump for the Republican ticket in 2020. Presidential candidates on both sides will most likely use the election as a way to redefine their respective parties around a central political theme in the hopes of creating political unity.
The New Composition of the Supreme Court
The coming year will be the Supreme Court’s first full year with its renewed Conservative majority after the Senate confirmed Justice Brett Kavanaugh to the Supreme Court in the last quarter of 2018. His road to the Supreme Court was controversial but ultimately successful.
The Supreme Court guides the country’s interpretation of the Constitution and has the power to overrule policies or leave them in place. In 2019, the court will hear cases on the topics of gerrymandering, gun control, the separation of church and state in regards to a World War I memorial, and the legality of asking for a person’s citizenship status on the 2020 census. The decisions made by the Supreme Court will help legitimize or negate certain partisan policy debates currently occurring in Washington, D.C. The new conservative lean that Kavanaugh has helped cement will sway United States policy yet further to the right.
Human Rights in the U.S.
The U.S. and the international community will continue to re-examine and question the United States’ position on human rights in 2019. In June 2018, Trump withdrew from the United Nations Human Rights Council (UNHRC), citing the council’s alleged bias against Israel. Human rights organisations have criticised several American policies in recent months. A zero-tolerance policy and family separation at the U.S.-Mexico border affected at least 2,500 families, with children and parents held in separate detention centers; many questioned the ethical justification behind the separation policy, while others supported it as an effective way to stymie illegal immigration.
A Supreme Court decision to uphold Trump’s ban on certain transgender individuals serving in the military also calls into question discrimination against transgender citizens. Some reforms, however, such as a bipartisan criminal justice reform bill and efforts toward women’s equality that emerged from the Women’s Marches and the #MeToo movement, will press forward.
Border Security & Immigration
Judging from the first month of 2019, this year will be characterized by continued debate over the best ways to handle border security and immigration in the U.S. The country’s longest government shutdown, which left around 800,000 federal workers without paychecks, arose because of a partisan debate over the funding of a border wall.
Trump refused to sign a government spending bill that did not supply $5.7 billion for the construction of a border wall, a critical campaign promise of his, and, while bipartisan coalitions proposed bills that would allow the government to reckon with border security at a different time, the president held out for 34 days before signing a temporary budget measure.
Trump has called immigration at the border a “crisis.” On February 15, after signing a bipartisan annual funding bill providing $1.3 billion for border security, Trump declared a national emergency in order to build the border wall quickly, circumnavigating bipartisan resistance to the security measure. Several states and advocacy groups are challenging the national emergency, questioning its constitutionality.
The Supreme Court’s support for the travel ban against Muslim countries in 2018 also shows a reckoning with those from the Middle East seeking to enter the country. The coming year will hold new debates over the treatment of asylum-seekers, undocumented immigrants, and how the United States can best regulate the flow of people seeking to enter the country.