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US President Donald Trump said that his country's economy "has never been so good". At the same time, badysts and agents from various markets are signaling signs of a slowdown in the country's economy, some even facing a recession.
Concern over the US economy has worsened in recent months as a result of Trump's trade war against several countries – including China – as well as the political stalemate that paralyzed the government over the dispute opposing the president to the opposition. because of the construction of the wall on the border with Mexico.
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Donald Trump postponed his vacation in Florida because of negotiations on the wall – Photo: Jacquelyn Martin / AP
Uncertainties could even lead the US central bank, the Federal Reserve, to change its plans for rapid interest rates in the country. It is gradually increasing rates to mitigate the risks of rising inflation, a measure even criticized by Trump.
But in recent months, leaders have shown signs of uncertainty. If the market expected two increases until 2019, the badysts did not agree on what should happen.
Obama's Stimulus and Legacy Measures
During his tenure, Trump adopted measures such as tax cuts to boost the country's consumption and labor market . "At the beginning of its mandate, the main measure was the reduction of personal and corporate income taxes, which in turn led to an improvement in family income and increased business investment capacity. The combination of factors has led to increased consumption and hiring, "said Luis Afonso Lima, chief economist at MAPFRE Investimentos.
In fact, the unemployment rate in the country is down, but economists also point out that unemployment figures have been steadily declining since the last government. The same can be said of the growth of gross domestic product (GDP). "It's hard to separate what comes from one and what comes from the other," Lima says.
Unemployment rate in the United States
in% (Obama administration in blue, Trump in red)
Source: Department of Labor
"In my opinion, this movement reflects much more what has been Obama's Trump inherits only a sustainable situation from the US economy, "says Otto Nogami, professor of economics at Insper.
But, while unemployment continues to decline, the cost of creating jobs for business has increased under Trump's leadership compared to the years when Obama held the presidency, according to data from the Department of Labor.
Cost of Employment in the United States
Quarterly Change in% (Obama Administration in Blue, Trump in Red)
Source: Department of Labor
Economists also point out that the attempt to Trump to heat the economy by reducing taxes can have a negative cost on the public debt.
Paulo Dutra, coordinator of the FAAP economics course, also indicates that a worsening of the debt can have an impact on inflation, as the government may issue more credit. Money to cover expenses, which leads to higher prices by devaluing the dollar.
"Economic growth due to tax cuts is temporary, but I can generate inflationary pressures." What he (Trump) did is a populist policy on public accounts, "says Dutra.
The International Monetary Fund (IMF) predicts that the ratio of public debt to gross domestic product (GDP) to United States will increase over the four years of Trump's tenure to reach 110% in 2020.
Public debt and US GDP
as% of GDP
Source: IMF
"There is no problem, say a high percentage of debt to GDP. What we are looking at is the pace of growth, which is simply not more important here because the economy is growing. Otherwise, the expenses would increase already, because the expenses increase more than the receipts ", explains Dutra.
- "The only problem of our economy is the Fed," says Trump
. "The Fed is curbing economic activity and Trump, in his fight to thwart the Fed's action, reduces the tax burden.This is the big upheaval that exists in the United States To the extent that fiscal policy does not talk about monetary policy, this can lead to an extremely recessive component. "
For him, this" struggle "between interest rates and interest rates as well as politics budget can undermine entrepreneurs' confidence and thus reduce investment. Another factor likely to be affected is consumer confidence, which also slows the pace of the economy
In recent weeks, a phenomenon related to the US interest rate curve heightened worries about the country's economy as badysts see it as a strong sign of recession risk.
Source: Fed
What happened is an approximation between the short and long-term interest rate curve. A situation like this means that someone who invests in the United States to redeem in 2 years may have similar or higher incomes than someone who chooses a 10-year term, for example.
The problem is that in recent times, the United States went into recession shortly thereafter. This reversal could indicate a renewed confidence in the US economy.
"It's a very intriguing thing, it started at the end of the third quarter and it's a very strong sign of a recession in the US economy," he said. Lima. "
The economist Paulo Dutra believes that the risk of recession in the United States comes from inflationary pressures.For him, rising prices is a matter of time. adjustment is a crisis, "he said." When Trump started a trade war and imposed restrictions on imports, the price of goods and services increased, "he said. in the United States, "explains Dutra. "On the labor side, companies, which sell the product a little more expensive, hire more people.I have two inflationary pressures, one of the price of the product. entry and the other on the labor side.And all this is validated by the increase of the purchasing power of the population. "
In Lima, the US economy will also lose the force in the coming months. "This is not a risk, it is already certain that a slowdown is already occurring.The risk is that of recession, in this concept of two quarters of negative change (of GDP)." [19659043] "The US economy is very clear when it comes to cycles, and when the economy reaches its peak, it is naturally calming down." The big advantage is that Trump does not admit it, "he says. Nogami says.
As President of the Republic, Jair Bolsonaro, at a hearing with Mike Pompeo, US Secretary of State – Photo: Marcos Corrêa / Presidency of the Republic. Republic, Jair Bolsonaro during a meeting with Mike Pompeo, Secretary of State – Photo: Marcos Correa / Presidency "src =" data: image / jpeg; base64, / 9j / 4AAQSkZJRgABAQAAAQABAAD / 2wBDAAMCAgMCAgMDAwMEAwMEBQgFBQQEBQoHBwYIDAoMDAsKCwsNDhIQDQ4RDgsLEBYQERMUFRUVDA8XGBYUGBIUFRT / 2wBDAQMEBAUEBQkFBQkUDQsNFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBT / wgARCAARABkDASIAAhEBAxEB / 8QAGgAAAgMBAQAAAAAAAAAAAAAAAAcFBggECf / EABYBAQEBAAAAAAAAAAAAAAAAAAIDAf / aAAwDAQACEAMQAAABn3VgazHWS8fP PDsroCsc68wFf + / EACEQAAECBAcAAAAAAAAAAAAAAAQFBgABAzUCBxEUFSQy / 9oACAEBAAEFAnY5Z0l4gumOKnuwjmt2NC51F5bVyMLeKJmTU1hxXjMyxT9R / 8QAGREAAgMBAAAAAAAAAAAAAAAAAAEQEiFh / 9oACAEDAQE / AVpfgo // xAAaEQABBQEAAAAAAAAAAAAAAAABABAREiEx / 9oACAECAQE / ATirB6 // xAAsEAACAA QDAw0AAAAAAAAAAAABAgADBBEFEiEGEDEkMjNCUWFxc3SBkrHB / 9oACAEBAAY / AqOTRYmFEo2nSkawBzdY ETKgkGUq57g8YdcQreR1GqLN5qMHHDu4x08n5iK1c2bLPbX3jDsMqVbNIbOjWIuh1WLnQWsB2DdX + c + / + Jv 2Y2c9L // EACIQAQABBAEDBQAAAAAAAAAAAAERACExQRBRYbFxkaHB8P / aAAgBAQABPyEZEJGolxIaavTdXQUGJIcX161LoMOgi3ahDpX7P7okEBVbvmgVUOBGC4TBh70cCHoYYPPvyzfCUeDj / 9oADAMBAAIAAwAAABAa8J7 / xAAZEQACAwEAAAAAAAAAAAAA AAABMQAQEUH / 2gAIAQMBAT8QLKUA5xEr / 8QAGREBAAIDAAAAAAAAAAAAAAAAAQAREDFx / 9oACAECAQE / EFfsVYQ7cf / EAB8QAQACAgICAwAAAAAAAAAAAAERIQAxEEFhsVFxkf / aAAgBAQABPxByUpAl3MBa0kCzgh9zRUM0mpa0RvHaNbiYZXVWxEycdImlx6ivc4GJRNEAQolhA1FkUJL4Y / U / KnvI + 2Q OflPd9vXH // == "/> [19659052] The President of the Republic, Jair Bolsonaro, during & # 39; an audience with Mike Pompeo, Secretary of State of the United States – Photo: Marcos Corrêa / Presidency of the Republic of the United States – Photo: Marcos Corrêa / Presidency of the Republic "data-src =" https://s2.glbimg.com/ ZNnIb2YbPMHGQnv6F8iVxKk wmmg = / 0x0: 2000×1334 / 1008×0 / smart / filters: strip_icc () / i.s3. >
The President of the Republic, Jair Bolsonaro, at a hearing with the US Secretary of State Mike Pompeo – Photo: Marcos Corrêa / Presidency of the Republic
The United States is a important trading partner of Brazil – the second largest in the volume of exports and imports, behind only China. In 2018, Brazil exported 28.7 billion US dollars worth of goods to the United States and imported 28.9 billion US dollars, according to data from the Ministry of Industry, Trade and Industry. services.
When the United States entered a crisis in 2008, the Brazilian government took measures such as lower taxes to warm the domestic market to prevent its economy from being affected. However, economists warn that if a new collapse occurs in 2019, the situation of the public accounts of Brazil does not allow to repeat the strategy. In other words, the country would be more vulnerable to the global crisis than it was before. in 2008.
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"We do not have this fiscal policy instrument to use, because in 2008, the capacity of reaction of Brazil is much more reduced.The only instrument which we have today is the rate of "interest," Dutra said of the country's potential to stimulate consumption in the event of an international crisis.
Nogami makes another comparison and points out that the 2008 crisis has its origins in the financial market, whereas a crisis would now be "strictly economic" and would therefore affect Brazil more.
According to Lima, one of the main risks for emerging countries like Brazil would be the devaluation of the local currency, that is, inflation. "In this period of risk aversion and uncertainty, the market is seeking a safe haven, and the refuge is the US economy, despite the crisis." People are looking for the dollar, which strengthens the currency. American. "
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