White Allays Fear of Recession Despite Market Turmoil

White House officials pushed back on Sunday against concerns that economic growth may be faltering, saying they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States.

“There is no recession in sight,’’ White House Economic Adviser, Larry Kudlow, said on Fox News Sunday.

“Consumers are working. Their wages are rising.

“They are spending and they are saving…I think we are in pretty good shape.’’

U.S. stock markets tanked last week on recession fears with all three major U.S. indexes closing down about three per cent on Wednesday only to pair their losses by Friday due to expectations the European Central Bank might cut rates.

For a brief time last week, bond investors also demanded a higher interest rate on twoyear Treasury bonds than for 10-year Treasury bonds, often construed as a sign of lost faith in near-term economic growth.

However, Trade Adviser Peter Navarro on Sunday likewise dismissed last week’s warning signs, saying “good” economic dynamics were encouraging investors to move money to the U.S. “We have the strongest economy in the world and money is coming here for our stock market.

“It’s also coming here to chase yield in our bond markets,’’ Navarro told ABC’s This Week.

That sort “flight to safety” is typically driven by concerns of global economic trouble – in this case, the possibility that the Trump administration’s tariff battle with China may dampen business investment and growth worldwide.

The tariffs on Chinese goods, Navarro said, “are not hurting anybody here’’.

The U.S. economy does continue to grow and add jobs each month.

Retail sales in July jumped a stronger-than-expected 0.7 per cent, the government reported last week, and Kudlow said that number showed that the main prop of the U.S. economy is intact.

But manufacturing growth has slowed and lagging business investment has also become a drag.

Globally, flagging global trade appears to have pushed the German economy toward recession and dampened growth in China.

A slowdown would be bad news for President Donald Trump, who is building his 2020 bid for a second term around the economy’s performance.

He told voters at a rally last week they had “no choice” but to vote for him in order to preserve their jobs and investments.

Despite talking up the economy, the president and his advisers have repeatedly accused the U.S. Federal Reserve of undermining the administration’s economic policies.