Trump and the US economy: What can he take credit for?

In the 2016 US presidential election, large swathes of working-class Obama voters switched their support to Donald Trump, who campaigned on a promise to “Make America Great Again.” 

Vowing to drain the Washington swamp that had sold millions of US jobs overseas, the billionaire businessman and reality TV show host struck a chord with voters, who had, for years, tolerated the offshoring of high-paying jobs, stagnant or falling wages, and rising job insecurity.

By August 2018, Trump was boasting that half a million manufacturing jobs had been created during the first two years of his presidency and that his aggressive, protectionist policies, which included tearing up trade agreements, imposing tariffs on foreign aluminum and steel, and the wider US-China trade war, were benefiting the American people.

No Rust Belt revival 

A report by the Economic Policy Institute published last month contradicted his claims, however. It found that far from reenergizing the so-called Rust Belt — former industrial areas of the northeastern US that had seen a sharp economic decline since the 1990s — more manufacturing jobs left the US than were created during Trump’s first two years in office.

The Washington-based think-tank wrote: “President Trump’s erratic, ego-driven and inconsistent trade policies have not achieved any measurable progress, despite the newly combative rhetoric. On top of that, COVID-19  — and the administration’s mismanagement of the crisis — have wiped out much of the last decade’s job gains in US manufacturing.”

From January to July this year, nearly 750,000 US manufacturing jobs were lost, adding weight to accusations that Trump is an industrial president in a postindustrial country. After all, manufacturing makes up just 11% of gross domestic product (GDP) – the lowest level since World War II.

As the president bids for a second term in the White House, he faces derision for his inconsistent response to the coronavirus pandemic. So, neck and neck with his democratic rival Joe Biden, Trump is playing up the economic successes of his first term.

Record-high stock market

US stock markets, he regularly boasts, have skyrocketed under his leadership, even after the initial shock of the pandemic lockdown. Since he took office in January 2017, the Dow Jones is up nearly 40% and reached a record high of 29,570 in February this year, while the NASDAQ has more than doubled in value.

US workers making face masks

The coronavirus pandemic came at an untimely moment for US President Donald Trump, who’s seeking reelection later this year

Many economists, however, say the stock market boom began under his predecessor Barack Obama and was fueled by trillions of dollars in quantitative easing by the US Federal Reserve and stock buybacks by the likes of Apple, Microsoft and Google’s parent, Alphabet Inc. Main Street hasn’t benefitted from the meteoric stock market rise as much as corporate America.

“Pre-pandemic: In terms of growth, employment gains, and inflation, the US economy has performed about the same as under the Obama Administration,” Joel Prakken, chief US economist at IHS Market, told DW. Asked what economic successes Trump can take credit for, he added: “Little, if any.”

Tax cuts boosted wealthy

Tax cuts are another of Trump’s proudest achievements. In 2017, the top individual tax rate was cut from 39.6% to 37% until 2025, while corporate taxes were reduced permanently from 35% to 21%. Prakken said the cuts had helped boost the stock market by 5-7% but had also led to a “significant increase in the US budget deficit with potential negative long-run implications for the US standard of living.”

In a report shortly after the tax package went into effect, the nonpartisan Tax Policy Center wrote that the top 20% of Americans enjoyed more than 60% of Trump’s tax savings. Economists said any boost to consumer spending and business investment was shortlived and that little of the benefit had trickled down to low-income Americans. Despite this, Trump has promised to make the individual tax cuts permanent if reelected and plans to slash payroll taxes.

‘Free and fair’ trade deals

Trump has often bragged about his “America First” trade stance — including the levying of billions of dollars of tit-for-tat tariffs with China — which he said had gained an unfair advantage over the US. The president insists his policies have pressured multinationals to bring jobs back home and forced other nations to open their restricted markets to US firms. The tax cuts provided further encouragement, he said.

“Tariffs on China haven’t done much for the manufacturing sector, but have undercut farm income,” Prakken told DW, adding that there hasn’t been a notable shift in direct foreign investment coming into the US from Trump’s policies, while thousands of American farmers went out of business when Beijing restricted US agricultural imports.

In July, NAFTA 2.0 — an update of the 25-year-old North American Free Trade Agreement between the US, Canada and Mexico — came into force. But despite promises that it would bring 180,000 new US jobs, the trade deal has no provision to stop work being outsourced to low-cost Mexico. Car manufacturers have continued to relocate their US plants across the border.

Trump’s saving grace could be the flexibility of the US economy, which has quickly rebounded from the pandemic where it recorded record 40 million lockdown layoffs. Many economists, however, say the next seven weeks is insufficient time for Americans to regain their pre-pandemic economic confidence.

“Most models of the economy’s impact on US presidential elections stress the role of [low] unemployment and income growth 6-9 months before the election,” IHS Markit’s Prakken explained. “So, the recovery is probably coming too late to help the president’s reelection chances, especially as some high-frequency data suggest a slowing in the recovery following a summer ‘bounce.'”

Citigroup wins deal to offer credit cards for Wayfair, edging out rival Alliance Data Systems

Niraj Shah, Wayfair CEO

Ashlee Espinal | CNBC

Citigroup won the rights to offer a pair of new credit cards with online furniture seller Wayfair, edging out Alliance Data Systems, CNBC has learned.

The deal happened amid surging demand for home goods as millions of Americans were forced to work remotely from their residences during the coronavirus pandemic. Wayfair saw an 84% jump in second-quarter sales and turned a profit for the first time since going public in 2014. The online retailer’s stock has climbed 192% this year. 

Credit-card issuers have been fiercely jockeying over multi-year co-brand deals as they offer banks a way to quickly tap into consumer spending at popular retailers. For instance, last year Goldman Sachs won the rights to offer the Apple Card, helping it immediately ramp up its nascent consumer finance business.

Citigroup, which wrested the Costco card from American Express in 2016, similarly displaced Columbus, Ohio-based Alliance Data, a major provider of private-label cards that had previously offered a Wayfair card, according to a person with knowledge of the deal.

E-commerce businesses in particular have seen robust sales as the pandemic makes it harder to shop in physical stores. Online spending by Citigroup card users jumped almost 30% this year versus 2019, said Citigroup spokeswoman Jennifer Bombardier.

“As retail continues to move online, we are thrilled to partner with Wayfair to provide customers with seamless, convenient financing,” said Craig Vallorano, head of Citigroup’s retail services business.

The Citigroup products include a store card that works only at Wayfair and its affiliated brands, and a co-branded card that works anywhere Mastercard is accepted, according to Bombardier. They both offer 5% in rewards on eligible Wayfair purchases and have a variable APR of 26.99%.

The co-branded card also earns 3% at grocery stores, 2% on online purchases and 1% on all other transactions. Customers can use the cards to defer payments on larger purchases for 6 to 24 months, or finance payments for 24 to 60 months at a 9.99% rate.

Wayfair co-chairman and co-founders Steve Conine (C) and Niraj Shah applaud as they ring the opening bell above the floor of the New York Stock Exchange on the day of the company's IPO October 2, 2014.

How Wayfair is becoming the Amazon of the home goods market

Donald Trump: ‘I never get credit for Osama bin Laden warning BEFORE 9/11’

Tomorrow will mark the 19th anniversary of the horrifying September 11 terrorist attacks on the US in 2001 by Islamic terrorist group al-Qaeda, masterminded by bin Laden. Almost 3,000 people lost their lives and 6,000 more were injured when two planes crashed into the World Trade Centre, another into the Pentagon, and a fourth into a field in Pennsylvania. And President Trump claimed he wrote a book in which he warned against the dangers of bin Laden, adding: “I didn’t get any credit. I never do.”

Speaking following the killing of ISIS leader Abu Bakr al-Baghdadi in October 2019, he added: “I said you have to kill him. You have to take him out. And nobody ever listened to me.

“Let’s put it this way – if they had listened to me, a lot of things would have been different.”  

The 74-year-old was referring to his book ‘The America We Deserve,’ which was published in 2000.

The President later added in a tweet the same day: “Of course we should have captured Osama bin Laden long before we did. 

“I pointed him out in my book just before the attack on the World Trade Centre. 

“President [Bill Clinton] famously missed his shot. 

“We paid Pakistan billions of dollars and they never told us he was living there. Fools!”

But many have questioned his perspective on the text, pointing out that the book was published more than a year-and-a-half before the 9/11 attacks, not “just before”. 

The Associated Press also added that the book made minimal reference to bin Laden and mentioned him as one of many threats to US security.

READ MORE: Joe Biden sparked fury after ‘forgetting when 9/11 happened’ during live interview

The memorial stands on the spot passengers and crew bravely fought over control of the plane, thwarting an attempted attack on the US Capitol building.

It has not been confirmed whether their visits will overlap, but if so, it will be the closest that they have been to one another in months.

The US National Park Service plans a 20-minute “Moment of Remembrance” set to begin at 1:45pm BST, without a keynote speaker or musical guests. 

The name of each passenger and crew member from Flight 93 will be read aloud with the ringing of the “Bells of Remembrance”.

Swiss regulator starts enforcement proceedings over Credit Suisse's spying scandal

The logo of Swiss banking giant Credit Suisse is seen on October 17, 2017 in Zurich.

Fabrice Coffrini | AFP | Getty Images

Swiss watchdog FINMA, the country’s financial market supervisory authority, said Wednesday it had initiated enforcement proceedings against Credit Suisse over the spying affair that came to light last year.

“FINMA has opened enforcement proceedings against the bank, in which it will pursue indications of violations of supervisory law in the context of the bank’s observation and security activities and in particular the question of how these activities were documented and controlled,” the regulator said in statement.

“Typically such proceedings can be expected to take several months,” it added.

'Scotland would be bankrupt!' Sturgeon savaged as SNP given credit for Boris policies

A YouGov poll of 1,142 Scottish adults from August 6-10 found SNP ministers were given positive feedback for protecting millions of jobs in Scotland and the country’s economy – despite some of the measures coming from the Treasury. In the poll, nearly half of Scots (49 percent) said Nicola Sturgeon’s Government north of the border had performed well in protecting jobs, while 29 percent said it had done badly. Half of those quizzed (50 percent) were positive about the work done to protect the Scottish economy during the coronavirus pandemic, compared to just under a third (31 percent) who had a negative view.

Treasury figures have shown 155,000 people in Scotland have been supported by the furlough scheme, which was designed and implemented by Chancellor Rishi Sunak.

The massive scheme, costing tens of billions of pounds, initially 80 percent of salaries to help employers avoid making workers redundant.

But while Ms Sturgeon’s Government have the powers to change business rates and income tax, key decisions made on VAT, National Insurance and tax allowances are still made by Westminster.

Lord Digby Jones, a crossbench peer in the House of Lords, has accused Ms Sturgeon of taking the credit by spending money the UK Government in Scotland, and claimed the country would have been “bankrupt” without those vital funds.

Digby Jones wrote on Twitter: “So 49% of Scots think that La Suprema Sturgeon has ‘done well in protecting jobs in Scotland’.

“Amazing what you can achieve when, as all good Socialists do, you spend other people’s money then take the credit.

“Go on Nicola: tell ‘em it’s England’s money you’ve been spending & that Scotland would have been bankrupt months ago without England’s support.

“How does that fit with an independent Scotland Nicola?

READ MORE: Coronavirus map LIVE: ‘Local lockdowns’ could be BANNED

In another YouGov poll, SNP voters demanded English tourists be banned from crossing the border to Scotland, as coronavirus travel and quarantine rules continue to be tightened.

The poll of 1,134 Scottish people found more than half (54 percent) of SNP voters don’t want English tourists to be able to cross the border.

This compares with just over a third (37 percent) of Scottish Labour supporters and 19 percent of those who voted for the Scottish Conservatives in last December’s general election.

Just over half (52 percent) of Scots who voted “Yes” in the 2014 independence referendum also oppose letting in English tourists without entering a period of quarantine.

Fifty-five percent of “No” voters support allowing English tourists into Scotland.

Overall, 47 percent of people quizzed in the poll supported English tourists being able to enter the country without a period of isolation.

JPMorgan Chase partners with fintech start-up Marqeta to launch 'virtual' credit cards

A smart phone with the icons for the J.P. Morgan apps.

Christopher Wong | S3studio | Getty Images

JPMorgan Chase is ditching plastic for some of its credit cards. 

The Wall Street giant’s commercial cards team is partnering with Bay Area start-up Marqeta to launch digital-only credit cards. The new function will allow JPMorgan corporate cards to work in mobile wallets such as Apple Pay or Samsung Pay immediately — without having to wait for a physical version in the mail.

“This is another way of getting virtual company cards into the hands of those who need them very quickly,” John Skinner, head of commercial cards at JPMorgan, told CNBC in a phone interview. “We know there’s a need for this product — what Covid has taught us is that there’s more use cases for this than we imagined.” 

This type of immediate, “virtual” card has historically been used for gig-economy, or contract workers who may need to pay expenses but wouldn’t qualify for a corporate card. The digital version can also put certain spending parameters and per Diem totals, as well as restrictions on where an employee can spend.

But as many Americans work from home during the pandemic, Skinner said it might also help those who don’t have access to their offices, or primary address where a corporate card might normally arrive. Plus, the pandemic has accelerated the adoption of digital payments and contactless payments, upping the appeal for digital cards. 

Skinner said the feature will be available in early 2021, and only for commercial cards. He did not say if the bank has plans to expand to its Chase, consumer side.

Marqeta provides the same technology for DoorDash and Instacart, which issue virtual cards to delivery workers to pay for groceries or takeout orders in person. Square also uses Marqeta for a virtual debit card launched through Square Cash and for a plastic debit card it unveiled in January.

JPMorgan has a history of partnering with, and buying up fintech companies. It acquired Silicon Valley-based start-up WePay in December 2017. In this case, Marqeta chief revenue officer Omri Dahan said it would have taken years for the Wall Street giant to build a similar product in-house. 

“These big financial institutions are tied to the legacy systems that they’ve built on top of for years, it’s hard for them to access modern technology,” Dahan told CNBC. “We are able to give them access to that, without a massive lift on their part.” 

Marqeta makes money in a similar way to incumbents Mastercard and Visa — by taking a percentage cut of every transaction from customers, and some software fees. The company would not comment on the financial details of the JPMorgan agreement. 

Marqeta recently raised $150 million from an undisclosed investor in May, doubling its valuation to $4.3 billion in just a few months. Other high-profile backers include Goldman Sachs, Visa Ventures, and PayPal alumni Max Levchin, according to PitchBook. The card company is reportedly seeking to hire investment bankers to advise on an IPO, Reuters reported earlier in July. A spokesperson for Marqeta declined to comment on plans to go public. 

JPMorgan Chase earns $4.7 billion in the quarter, sets aside another $8.9 billion for credit losses

Jamie Dimon, chief executive officer of JPMorgan Chase & Co.

Giulia Marchi | Bloomberg | Getty Images

JPMorgan Chase reported second quarter earnings. 

Here’s how JPMorgan did:

Earnings: $1.38 a share, although it isn’t immediately clear how that compares with the $1.04 per share estimate of analysts surveyed by Refinitiv.

Revenue: $33 billion, compared with the $30.3 billion estimate.

JPMorgan, the biggest U.S. bank by assets, is also the first major lender to report earnings. The company will be closely watched for clues on how the coronavirus pandemic is impacting banks’ retail and institutional businesses.

The key question investors have is whether the second quarter will represent the nadir for bank profits this year: Big banks are expected to show the largest loan loss provision for any quarter since the financial crisis because of the pandemic, according to analyst Jason Goldberg of Barclays.

The fate of the industry is tied closely to the path of the coronavirus because the unemployment caused by states shutting down their economies impacts the abilities of customers to repay debts.

JPMorgan CEO Jamie Dimon said in May that the odds were “pretty good” that the economy would rebound in the second half of the year, driven by the reopening. But that scenario could be threatened by the recent progression of the coronavirus, which has already forced some states to reverse course and shutter businesses again.

A bright spot for the industry has been trading, which has benefited from surging volatility and the Federal Reserve’s unprecedented actions to prop up credit markets. At JPMorgan, the bank’s trading division was headed for a revenue increase of more than 50% compared with the year earlier, co-President Daniel Pinto said in late May.

While bank stocks have rebounded from their March lows, they have underperformed the broader indices, which have been buoyed by the roaring technology sector.

One factor keeping bank stocks down: Low interest rates have pressured net interest margin, a key measure of profitability in the banking sector. The industry’s loan books have also begun to shrink, driven in part by lower credit-card usage and the fear of rising defaults.

This story is developing. Please check back for updates.

Americans are rapidly shrinking their credit card debt

The amount of consumer revolving credit, which is mostly credit cards, plunged by another $24 billion in May, the Federal Reserve said Wednesday. This costly form of debt is down more than $100 billion since hitting a record high in February and is now below $1 trillion for the first time in nearly three years.

In many ways, it makes perfect sense that Americans are swiping the plastic less. The health crisis, forced the widespread shutdown of restaurants, bars and professional sports. That was especially true during the March-May period captured by the Fed data.

“Consumers had no choice but to spend less on their credit cards,” Danielle DiMartino Booth, CEO and chief strategist at Quill Intelligence, wrote in a note to clients Thursday.

Trump warns stocks will 'disintegrate' if he loses. But stocks are climbing as Biden pulls ahead

Not surprisingly, spending at restaurants imploded during the spring when health restrictions made eating out impossible in many parts of the nation.

The seven-day average of spending (including on credit cards) at big chain restaurants was down by as much as 40% in April from the year before, according to Bank of America. That metric has since recovered in June to normal levels, Bank of America said.

Mass unemployment, wave of bankruptcies

At the same time, Americans are wisely paying down outstanding credit card balances and avoiding racking up new debt during this economically tumultuous period.

“Americans are behaving in an eminently rational fashion,” said Joe Brusuelas, chief economist at RSM International.

In just the past few weeks, major companies including Brooks Brothers, Neiman Marcus and Chesapeake Energy (CHK) have all filed for bankruptcy. United Airlines (UAL) announced plans this week to furlough up to 36,000 employees, while Levi Strauss (LEVI) and Harley Davidson (HOG) detailed hundreds of job cuts.
Unemployment claims are falling. But 1.3 million still applied for assistance last week
The unemployment rate surged to 14.7% in April. It has since dipped to 11.1% due to blockbuster job gains, though that unemployment rate is still higher than at any point during the Great Recession.

Given that backdrop, it’s little surprise that Americans are pulling back on debt. The March-May period marked the first time in a decade that overall consumer credit declined for three months in a row, according to Oxford Economics.

However, some types of debt are showing signs of life. Specifically, the amount of nonrevolving credit, which is mostly student debt and auto loans, actually rose by $6 billion in May.

Signals consumers are hunkering down

Credit card debt typically carries punishing interest rates — even for borrowers with the strongest credit scores. The fact that this type of pricey debt is shrinking is encouraging given the economic uncertainty.

However, this trend, along with the surging saving rate, also reflects a broader hunkering down among Americans that is problematic for an economy that is two-thirds driven by consumer spending.

The debate over $600 payments could dictate the US recovery

“That’s bad news for the economy,” Brusuelas said. “You want a confident consumer to expense her income. We’re just not seeing that right now.”

Shrinking credit card debt also highlights the unprecedented support being provided by Uncle Sam right now.

More so than during the onset of the past two recessions, Congress and the White House have taken bold steps to provide emergency relief to households and businesses via the CARES Act.

Specifically, stimulus checks of up to $1,200 per household were sent out in the spring. And the federal government is providing $600 of extra weekly unemployment benefits for people who lost their jobs during the pandemic.

Stimulus cliff

Taken together, those emergency moves have lessened the reliance on swiping the plastic.

“The need for credit cards as a smoothing mechanism has been greatly diminished,” according to Booth, the Quill Intelligence CEO. “The credit cycle that would have begun to emerge has been frozen by the CARES Act.”

But the problem is the $600 of enhanced unemployment benefits expires at the end of July. And there is a heated debate among economists and politicians about whether extending them at the current level — or at all — will discourage Americans to look for new jobs.

What is clear, however, is that letting this benefit lapse will force some unemployed Americans, particularly those in lower-income households, to rely on expensive credit card debt to make ends meet.

That means the recent plunge in credit card debt may prove to be short-lived — but potentially for the wrong reasons.

Credit card industry reins in balance-transfer offers as banks from JPMorgan to Amex fear defaults

Banks have pulled back from a popular credit card promotion on concerns that borrowers struggling during the coronavirus crisis may leave them with defaulting loans.

Balance transfer offers, which typically entice borrowers to move their debt to a new lender in exchange for a temporary 0% interest rate, have been sharply reduced at banks including JPMorgan Chase, Citigroup, Bank of America, Barclays and Capital One, according to people with knowledge of the matter at each firm.

American Express took the most drastic step, dropping the product altogether, according to a company spokesperson.

“We are not currently offering balance transfers across all our card products,” American Express said in a statement. “From time to time, we make adjustments to our offerings to ensure we’re managing risk for our customers and the company in a responsible way.”

When the economy was booming, credit card issuers fell over themselves to lure borrowers and their debt, mailing hundreds of millions of no-interest solicitations. Banks made money from transfer fees, typically around 3%, and begin to earn interest on debt after the promotional period, usually lasting six months to as long as two years, ended.

But banks were burned in the 2008 recession when users of balance transfers defaulted at among the highest rates in the industry, according to the sources. Some theorized that borrowers took advantage of balance transfers after worrying about their job security, or even after they’ve lost their jobs, putting them at risk of eventually defaulting.

Now, lenders are being more selective about who they make no-interest offers to, favoring customers with higher credit scores and other advantages, said the people. More than 40 million Americans have filed for unemployment benefits since the pandemic began.

At the same time, the industry has offered many borrowers forbearance during the pandemic, waiving late fees and interest for months. For many customers, those programs are ending soon, and it’s an open question as to whether they will resume making payments.

The industry’s move deprives borrowers of one of the best ways to cut down on credit card debt. When used properly, balance transfer cards can save thousands of dollars in interest payments over time.

Janette Scott, a retired accountant living in Florida, had been planning on using balance transfers to pay down her daughter’s school debt, but was recently told by eight banks that they no longer had them. Just months before, they had flooded her with offers. 

“I have an excellent credit rating, am current with all my accounts, paying the balance in full every month,” Scott said. “This just doesn’t make any sense to me.”