Deardorff analyzes strength of economy in MLive

September 11, 2019

Though Vice President Mike Pence claims President Trump’s economic policies alone are responsible for recent increases in employment, wages, and salaries both in Michigan and nationally, Alan Deardorff, professor at the Ford School, disagrees in the September 8 article “How has Michigan fared in Trump’s economy?” by Julie Mack on MLive. 

Speaking before the Detroit Economic Club last month, Pence said the Trump administration delivered on promises to cut taxes, roll back regulation, secure advantageous trade deals, and unleash an energy revolution, but Deardorff does not view these and other moves by the administration as net positives: “I would say it has to be almost certainly has to be a net minus,” with the caveat, that it will be some time before data will show the full extent of the impact. 

Deardorff and fellow economist Charles Ballard from Michigan State University readily acknowledge the overall economy is strong, but stress that strength is largely built on gains started during the Obama administration. In fact, in several measures of Michigan’s economic activity, including employment, manufacturing jobs, weekly wages, and gross domestic product, were outpaced in the Obama presidency compared to the first years under Trump. 

One looming threat to a healthy economy, according to Deardorff, is the current trade war with China. “All the states are losing from the tariffs in both directions, because they are making the supply chain of everything we produce and everything we buy more expensive.” Looking toward other U.S. trade policies, specifically the impact on Michigan should NAFTA be replaced by USMCA, Deardorff predicts the resulting increase in production costs would hurt the state. 

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Alan V. Deardorff is the John W. Sweetland Professor of International Economics and a professor of public policy. His research focuses on international trade. With Bob Stern, he developed the Michigan Model of World Production and Trade, which has been used to estimate the effects of trade agreements. Deardorff is also doing theoretical work in international trade and trade policy. He has served as a consultant to the U.S. Departments of Commerce, Labor, State, and Treasury and to international organizations including the Organization for Economic Cooperation and Development and the World Bank.