Sohn: Recession? What recession? Down is up in Trumpworld

Sohn: Recession? What recession? Down is up in Trumpworld

August 20th, 2019 by Pam Sohn in Opinion Times

White House chief economic adviser Larry Kudlow talks with reporters outside the White House, Tuesday, Aug. 6, 2019, in Washington. (AP Photo/Evan Vucci)

Photo by Associated Press /Times Free Press.

President Donald Trump speaks with reporters before boarding Air Force One at Morristown Municipal Airport in Morristown, N.J., Sunday, Aug. 18, 2019. (AP Photo/Patrick Semansky)

President Donald Trump speaks with reporters before boarding...

Photo by Patrick Semansky

What recession? President Trump doesn't see a recession. Larry Kudlow, Trump's top economic adviser, says he doesn't see a recession. What recession?

Never mind last week's sharp drop in financial markets. Never mind consumer confidence dropping 6.4% since July — yeah, that was a short 20 days ago. Never mind the trade war that was supposed to be fun and easy to win. Farmers aren't having too much fun. And neither are shoppers in America's grocery and big-box stores.

Oh, and never mind that five of the world's biggest economies are at risk of a recession now, too. And the week of whiplash on Wall Street spiked fears the U.S. economy could be dragged down as well.

Even Trump over the weekend conceded that economies across the world are "not doing well like we are doing, the rest of the world, if you look at Germany, if you look at European Union, frankly, look at the UK, look at a lot of the countries, they are not doing well." But he stuck to this guns that "most economists actually say we are not going to have a recession."

"We are doing tremendously well," Trump told reporters before boarding Air Force One to return to Washington. "Consumers are rich, tax cut loaded up with money. I saw Walmart numbers through the roof, better than any poll."

But to quote Bloomberg's Barry Ritholtz, " the broader economy, the market and any potential recession are now firmly attached to, and under the influence of, President Donald Trump [who] inherited an accelerating post-credit crisis recovery, and he only had to avoid disrupting those healthy — and improving — economic trends. What occurred instead is a litany of unforced errors and misguided decisions, many of them made by Trump political appointees."

Indeed. Trump came into office in midst of a strong recovery from the 2008 financial crisis. The last recession ended in June 2009, and by the time Trump was sworn into office, the expansion had been underway for 91 months and the economy was operating at close to full strength. The stock market, which Trump loves to take credit for, already had risen 236% from its March 2009 low before Trump ever set foot in office.

Between 2010 and January 2017, the economy had created 16.1 million jobs and the unemployment rate had been cut by more than half, from 10% to 4.7%. Under Trump, 5 million jobs have been added and unemployment has declined 1%.

Last month, after much pressure from the president, the Federal Reserve dropped its benchmark rate by a quarter of a point for first time since December 2008. It's a low rate which affects many loans for households and businesses, but consumers may be too spooked to take advantage of the new 2% to 2.5% rate.

Now — two and a half years into his chaotic term — Trump wants that rate dropped still further in order to keep growth from slowing — you know, the looming recession no one sees. Trump wants the rate cut by at least a full percentage point "over a fairly short period of time."

And while we're never-minding, never mind that such a move would leave the Fed with only scant room to cut further — in case we really need some growth stimulus later.

Trump says dropping the rate would make the U.S. economy even better and would also "greatly and quickly" enhance the global economy.

Still, many analysts are fearing that we're heading right back into a recession again, thanks in large part to Trump's chaos.

For Never-Trumpers, recession concerns have a silver lining: A souring economy could potentially threaten Trump's 2020 re-election bid. The economy has been an important talking point for the president, who often depends on voters' poor memories to invoke the economy's growth as a way to boost his administration's popularity.

Amid all this, we mustn't forget the president's assurances that China would pay for his tariff war (kind of like Mexico would pay for the wall). Of course just last week we saw Trump's tacit acknowledgement of that "China-will-pay" falsity when he paused a planned 10% tariff hike for China-made cellphones, laptops, toys, shoes and clothing — until stores could stock up for the Christmas season "just in case some of the tariffs could have an impact," the president said.

Recession? What recession? On NBC's "Meet the Press" Sunday, Kudlow said "Let's not be afraid of optimism."

On CNN, White House trade adviser Peter Navarro brushed off concerns of an impending recession, saying that a critical economic indicator related to U.S. Treasury bonds, the yield curve, was not "technically" inverted last week. (When inverted, the curve often precedes recessions, according to experts.)

But don't worry. Down is up. And up is down. It's the rule of Trump.

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