Trump’s response to recession fears
What happened
President Trump responded with alarm this week to warning signs of a possible recession, first saying he wanted to cut taxes to stimulate the economy, then reversing course and insisting that “we don’t need it.” The White House has been shaken by a raft of troubling economic data, including a brief inversion of the bond yield curve that sent the Dow Jones industrial average plummeting by 800 points. An inverted yield curve, in which the value of 10-year Treasury notes dips below that of two-year notes, indicates investors are worried about the near-term future, and has preceded all seven of the last recessions. Other data show falling levels of capital investment and declining optimism among business owners, with GDP growth slowing to 2.1 percent. Three out of four economists surveyed by the National Association for Business Economics now expect a recession within the next two years.
Trump appeared torn over how to respond. At first, he called for a payroll-tax cut and capital gains–tax cut to bolster the economy, before backing off the idea a day later. Nonetheless, the president again called on Federal Reserve Chair Jerome Powell to cut interest rates by a full percentage point, blaming him personally for hobbling growth. Privately, Trump told advisers he didn’t believe some of the negative economic statistics, and publicly accused Democrats and the media of exaggerating the threat in order to harm him politically. “I think the word ‘recession’ is a word that’s inappropriate,” Trump said. “We’re very far from a recession.”
What the editorials said
Rather than look for scapegoats to blame if the economy slips into recession, Trump should “look in the mirror,” said The New York Times. Trump’s trade war against China and other major American trading partners has created huge uncertainty for businesses and investors around the globe. That uncertainty has corporations “sitting on their wallets.” The best thing for Trump to do is to “stop making things worse” by constantly sending contradictory signals.
The president has been badly advised, said
The Wall Street Journal. President Trump’s economic message is utterly incoherent, said
Josh Barro in NYMag.com. One minute, Trump insists the economy is “very strong.” The next, he suggests that we need drastic measures to prop it up. “So, which is it?” If the economy is as strong as he says it is, why should the Fed cut interest rates again? If Trump wants a divided Congress to pass more tax cuts, he’ll have to explain why his last one isn’t boosting growth as promised. If he ends the trade war, he’ll have to admit it failed.
“Trump haters” wish there would be a recession, preferably right before the election, said John Crudele in the New York Post. A few, like liberal comedian Bill Maher, have admitted as much. “We have survived many recessions,” Maher said. “We can’t survive another Donald Trump term.” Rooting for a recession is reckless, especially since Trump is reacting by signaling that he’s worried. “The quickest way to cause a recession is to kill the confidence of consumers.”
“Trump—like the rest of us—had better hope and pray that we don’t have a recession anytime soon,” said Catherine Rampell in The Washington Post. The president has left himself few tools to respond if and when disaster strikes. Interest rates are already low, which means the Fed can only do so much to stimulate the economy. And the government can hardly afford more stimulus after Trump spent $2 trillion on a tax cut for corporations that has created a $1 trillion annual budget deficit, “leaving little powder left in the keg when we’ll actually need it.” If there’s a recession, “it’s gonna be bad.”