Is Japan's Economy in Deep Trouble Whether Trump Wins or Loses? Economic Commentators Who Stoke Anxiety Either Way
The U.S. midterm elections are over, and following the Democrats’ gains, the media and economic commentators have already begun sounding the alarm.
“Conflict between the Trump administration and Congress will intensify.”
“Presidential vetoes will bring politics to a standstill.”
“There will be serious consequences for the Japanese economy.”
As I watched television and YouTube, a thought occurred to me.
What would these people have said if the Republicans had won by a landslide?
They probably would have warned that Trump was becoming a dictator, that American democracy was in danger, and that the Japanese economy would face serious consequences.
In other words, whether the Republicans win or lose, the Japanese economy is in deep trouble.
What a convenient line of work.
Anxiety Brings in Views
Come to think of it, perhaps it is only natural that the media stokes anxiety.
“The U.S. Congress Is Divided, but the Impact on Japan Remains Unclear”
Who would watch a video with a title like that?
“Trump Crushed! A Massive Crisis Is Closing In on Japan’s Economy!” would attract far more views.
The same is true for economic commentators.
“Stock prices and exchange rates depend on many different factors, so we do not know what will happen.”
That would leave them with no work as commentators. If they said that every time, television programs would stop inviting them.
So whenever something happens, they predict a major crisis.
Even if the prediction is wrong, the next news story soon arrives. Before anyone has time to examine the previous forecast, they can begin explaining a new crisis.
It is an impressively efficient business model.
What Does a Midterm Election Actually Change?
If the Democrats increase their strength in Congress through this election, it will become more difficult for President Trump to advance his policies as he wishes.
Congress may pass legislation only for the president to veto it. Disputes over the budget could also lead to political gridlock.
But the United States has seen this kind of situation many times before.
Losing a midterm election does not mean that President Trump will resign. He also retains the executive powers of the presidency.
And if Congress applies the brakes to the administration’s large tax cuts and fiscal spending, it could help restrain the expansion of the budget deficit.
That might actually be positive for long-term U.S. interest rates.
The point is that an increase in political conflict and a deterioration in the Japanese economy are two separate matters.
If Anyone Could Predict Stocks and Exchange Rates, We Would Not Struggle with Them
What particularly bothers me is commentary that leaps directly from American political news to predictions about Japanese stock prices and exchange rates.
“A divided Congress will strengthen the yen.”
“Political turmoil will create headwinds for Japanese stocks.”
Will that really happen?
What will happen to U.S. interest rates? What will the Federal Reserve do? Will enormous investment in AI-related companies continue? How will the Trump administration’s tariff policy change?
There is no shortage of factors that can move Japanese stock prices.
What is more, stock markets move in anticipation of the future. Even after bad news, prices can rise if the news is better than expected.
In the end, no one knows what will actually happen.
I have long been highly skeptical of stock market forecasts from economic commentators.
If they could truly predict future markets accurately, they would make far more money investing their own funds than explaining markets on television.
And yet they kindly tell us what the market will do almost every day.
People Who Predict Crises Never Run Out of Work
Come to think of it, the job of an economic commentator has an interesting characteristic.
When the economy is strong, there is “the risk of a bursting bubble.”
When the economy is weak, there is “the risk of a severe recession.”
When the yen weakens, it signals “the decline of the Japanese economy.”
When the yen strengthens, it means “damage to exporters.”
And in this U.S. midterm election, whether the Republicans win or lose, there are “headwinds for the Japanese economy.”
At that point, every possible outcome becomes a problem.
I am not saying that we should ignore economic risks. The problem is presenting an uncertain future as though it were already a confirmed fact.
And the more dramatic the prediction, the more provocative the headline and the more it fuels the audience’s anxiety.
These days, whenever I watch the news, I find myself thinking less about the story itself and more about how they will connect it to the latest crisis.
It feels less like economic news and more like a contest to invent the cleverest punchline.
There is, however, one thing I can predict with certainty.
In the next election, no matter who wins, economic commentators will still be talking about a crisis for the Japanese economy.
That is one forecast I can make with confidence.