Re­ces­sion signs worry Trump ahead of 2020

The Morning Call - - NATION & WORLD -

coun­tries around the world.

Some of Trump’s clos­est ad­vis­ers have urged him to lower the tem­per­a­ture of the trade dis­pute, fear­ing that fur­ther tar­iffs would only hurt Amer­i­can con­sumers and rat­tle the mar­kets fur­ther. The pres­i­dent blinked once this week, de­lay­ing a set of tar­iffs in an ef­fort to save Christ­mas sales.

Aides ac­knowl­edge it is un­clear what steps the White House could take to stop a down­turn. Trump’s 2017 tax cut proved so po­lit­i­cally un­pop­u­lar that many Repub­li­cans ran away from it dur­ing last year’s midterms. And a new stim­u­lus spend­ing pro­gram could spark in­tra­party fight­ing over big deficits.

The hope among ad­min­is­tra­tion of­fi­cials is that a mix of wage gains and con­sumer spend­ing will power growth through 2020. Yet Trump knows his own sur­vival hinges on vot­ers be­liev­ing that he alone can pro­long the econ­omy’s decade-plus ex­pan­sion.

“You have no choice but to vote for me be­cause your 401(k), every­thing is go­ing to be down the tubes,” the pres­i­dent said at a Thurs­day rally in New Hamp­shire. “Whether you love me or hate me, you’ve got to vote for me.”

Trump has spent much of the week at his New Jersey golf club, many of his morn­ings on the links, his af­ter­noons watch­ing ca­ble tele­vi­sion and his evenings call­ing con­fi­dants and busi­ness ex­ec­u­tives to get their take on the mar­ket’s volatil­ity.

Though he has ex­pressed pri­vate wor­ries about Wall Street, he is also skep­ti­cal about some of the weaker eco­nomic in­di­ca­tors, won­der­ing if the me­dia and es­tab­lish­ment fig­ures are ma­nip­u­lat­ing the data to make him look bad, ac­cord­ing to two Repub­li­cans close to the White House.

His skep­ti­cism has been re­in­forced by White House of­fi­cials who have long been in­clined to only show Trump rosier eco­nomic as­sess­ments.

Amid the mar­ket tur­moil this week, the pres­i­dent tweeted out de­fenses of his eco­nomic record.

He blasted the Fed for not cut­ting in­ter­est rates deeper, un­der the be­lief that sharper cuts would lead to more lending ac­tiv­ity and make the U.S. dol­lar more com­pet­i­tive against for­eign cur­ren­cies. The pres­i­dent also high­lighted the strength of con­sumer spend­ing — as re­tail sales have jumped 3.4% from a year ago.

Yet his fo­cus on the Fed may be coun­ter­pro­duc­tive.

The Fed­eral Re­serve voted last month to trim rates for the first time since 2008, a step taken to in­su­late the econ­omy against trade uncertaint­y. But con­sumers in­ter­preted that as a pre­cau­tion­ary move ahead of a down­turn rather than as part of an ef­fort to keep the econ­omy grow­ing, ac­cord­ing to the Uni­ver­sity of Michi­gan’s con­sumer sen­ti­ment sur­vey re­leased Fri­day.

Con­sumer con­fi­dence has dropped 6.4% since July. The pes­simism could worsen if the Fed de­cides to slash rates in ac­cor­dance with Trump’s wishes.

One sec­tor al­ready suf­fer­ing this year is man­u­fac­tur­ing, the very in­dus­try that Trump pledged to re­vive and for­tify with his tar­iffs. Fac­tory out­put has fallen 0.5% dur­ing the past 12 months, the Fed said Thurs­day.

ELISE AMENDOLA/AP

Pres­i­dent Don­ald Trump speaks at a cam­paign rally Thurs­day in Manch­ester, N.H.

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