No recession looming for U.S., Trump says
President, advisers defend economic moves
BERKELEY HEIGHTS, N.J. — President Donald Trump on Sunday dismissed concerns of recession, hours after two of his senior advisers shared their own optimistic outlooks about the economy.
“I don’t think we’re having a recession,” Trump told reporters before returning to Washington from his New Jersey golf club. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut, and they’re loaded up with money.
“I saw the Walmart numbers; they were through the roof just two days ago,” Trump added, referring to the Bentonville-based retailer’s announcement last week of $3.6 billion in net income for the quarter that ended June 30. “That’s better than any poll. That’s better than any economist.”
Last week’s drop in the financial markets came amid fears that the global economy is on shaky ground. U.S. consumer confidence has dropped 6.4% since July, and on Wednesday the yield on short-term Treasury debt briefly was higher than the rate for long-term debt — an
“inverted” yield curve that suggests investors are also losing confidence.
But Trump said the U.S. economy was outperforming the rest of the world, citing in particular Germany, the U.K. and China.
“We are doing better than any country, or even area, anywhere in the world,” Trump said. “We’re doing great.”
Two of Trump’s aides sought to emphasize the same message Sunday. Larry Kudlow, who serves as Trump’s top economic adviser and the director of the National Economic Council, and White House trade director Peter Navarro appeared on the Sunday morning talk shows to defend the president’s economic record.
“We’re doing pretty darn well in my judgment. Let’s not be afraid of optimism,” Kudlow said on NBC’s Meet the Press, adding: “Consumers are working at higher wages. They are spending at a rapid pace. They’re actually saving also while they’re spending. That’s an ideal situation. So I think actually the second half, the economy’s going to be very good in 2019.”
He acknowledged a slowing energy sector but said low interest rates will help housing, construction and auto sales.
“I don’t see a recession at all,” Kudlow said on Fox News Sunday. “There’s no recession on the horizon.”
On CNN’s State of the Union, Navarro disputed that the U.S. had seen an inverted yield curve on Wednesday.
“Technically we didn’t have a yield curve inversion,” he said. “All we’ve had is a flat yield curve.”
Navarro also said on CNN that interest rate increases under Federal Reserve Chairman Jerome Powell were to blame for any sluggishness in the economy.
“The Federal Reserve chairman should look in the mirror and say, ‘I raised rates too far, too fast, and I cost this economy a full percentage point of growth,’” Navarro said.
On ABC News’ This Week, Navarro maintained that a recession can be staved off if the Fed stops raising interest rates and if banks in Europe and in China make similar moves. Last month, the Fed reduced its benchmark rate — which affects many loans for households and businesses — by a quarter-percentage point to a range of 2% to 2.25%, the first rate cut since December 2008.
“Have Europe do what they need to do, China do their fiscal stimulus, and the global economy will — will have a bullish cycle going through 2020 and beyond,” Navarro said.
Hours later, Trump also criticized the Fed, saying, “I think I could be helped out by the Fed, but the Fed doesn’t like helping me too much.”
TARIFFS’ EFFECT
Trump and his advisers also argued Sunday that the administration’s trade offensive against China isn’t harming American producers or consumers.
On CNN, host Jake Tapper told Navarro that economists at Harvard University, the University of Chicago, the International Monetary Fund and the Federal Reserve Bank of Boston have concluded that U.S. tariffs are effectively tax increases on Americans, and that they say a key measure of U.S. inflation in July shows the tariffs are filtering through the economy.
“That dog won’t hunt,” Navarro replied. “Just do some math with me — $200 billion [of Chinese imports], we put on a 10% tariff, and China devalues their currency by 12%. Are consumers bearing anything on that? No. … China is slashing their prices. Tariffs aren’t hurting anybody in the United States.”
The U.S. government has collected $57 billion in customs duties in the fiscal year that began Oct. 1, according to the Treasury Department.
The White House announced Tuesday that it is delaying until December new tariffs on a number of popular consumer goods, including cellphones, laptops and strollers, that were set to take effect next month.
“We’re doing [it] just for Christmas season, just in case some of the tariffs could have an impact,” Trump said last week.
Navarro argued that China stood to benefit most from the decision, calling it “a goodwill gesture that the president made to the Chinese. It was a wise decision to delay the tariffs to Dec. 15, and in the meantime half of those tariffs are actually going on Sept. 1. The tariffs are working.”
Kudlow also defended the president’s use of tariffs on goods coming from China. Before he joined the administration, Kudlow was known for opposing tariffs and promoting free trade during his career as an economic analyst.
Kudlow said Trump has taught him and others that the “China story has to be changed and reformed.”
Trump maintained that China’s economy is struggling because of the tariffs. He said he could make a “bad deal” with China, and U.S. stock markets would go up, “but it wouldn’t be the right thing to do.”
DEMOCRATS’ CRITICISM
Trump’s trade war with China has been a target of criticism by Democrats vying to challenge him in 2020.
Democratic presidential candidate Beto O’Rourke said the U.S. needed to work with allies to hold China accountable on trade. He said he fears Trump is driving the global economy into a recession.
“This current trade war that the president has entered our country into is not working,” O’Rourke said. “It is hammering the hell out of farmers across this country.”
Mayor Pete Buttigieg of South Bend, Ind., a Democratic presidential candidate, said on CNN that it was “a fool’s errand” to think tariff increases will compel China to change its economic approach.
“There is clearly no strategy for dealing with the trade war in a way that will actually lead to results for American farmers or American consumers,” Buttigieg said.
Sen. Kirsten Gillibrand, D-N.Y., appearing on ABC, said she worries that the pending trade deal to replace the North American Free Trade Agreement will end up exacerbating economic woes.
“I’m concerned because I think NAFTA 2.0 is a disaster,” Gillibrand said. “I think it was a giveaway to drug companies in Mexico. It’s going to harm our jobs. President Trump said no bad trade deals. Not only has he entered into them, but he’s started a trade war with China.”