Signs of recession worry Trump before 2020

President Donald Trump warns of an economic crash when he loses re-election, arguing that even voters who would not personally like him should base themselves on the nation's strong growth and low unemployment rate. .

But in private, Trump is more and more worried because the economy will not be as good on election day.

The financial markets have announced the possibility of a recession this week in the United States, causing great concern among investors, businesses and consumers. This adds to concerns about Trump's plans to impose stiff tariffs on products from China and rumors from the United Kingdom and Germany that their economies are in danger. to contract.

Even though a pre-election recession is far from certain, a downturn would be a devastating blow to the president, who has made the strong economy his main argument for a second term. Trump's advisers fear that a weakened economy will hurt him with moderate Republican and independent voters who have kindly let him pass some of his inflammatory policies and speeches. And the White House's economic advisers see few options to reverse the trend if the economy starts to slip.

Trump has begun to blame others for fears of recession, mainly the Federal Reserve, for which he insists on further cuts in interest rates. Much of the uncertainty prevailing in the markets stems from its own escalation of a trade war with China, as well as the weakening of economies in key countries of the world.

Some of Trump's closest advisers have urged him to lower the temperature of the trade dispute, fearing that new tariffs will only hurt US consumers and further shake the markets. The president blinked once this week, delaying a series of tariffs in an effort to save Christmas sales.

The aides recognize that the steps that the White House could take to end a slowdown are unclear. The Trump tax break in 2017 has turned out to be so politically unpopular that many Republicans fled to it in mid-year last year. And a new stimulus spending program could encourage intra-ministerial parties to fight big deficits.

Administration officials hope that a combination of wage gains and consumer spending will fuel growth until 2020. Yet, Trump knows that his survival depends on voters who believe that he or she is the only one to be able to extend the expansion of the economy even more than ten years.

"You have no choice but to vote for me because your 401 (k), everything is going to be put on the back burner," said the president at a rally Thursday in New York. Hampshire. "Whether you like me or you hate me, you have to vote for me."

Trump spent much of the week at his New Jersey golf club, several of his morning commutes, his cable TV afternoons and his evenings calling for confidants and business leaders to to get an idea of ​​the volatility of the market.

Although he has expressed his personal concerns about Wall Street, he is also skeptical about some of the weaker economic indicators, wondering if media and institutional figures are manipulating the data to give it a bad image, according to two Republicans close to the White House. allowed to discuss private conversations.

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

In the midst of the market turmoil this week, the president tweeted the defenses of his economic record.

He criticized the Fed for not lowering interest rates further, believing that sharper cuts would lead to an increase in credit activity and make the US dollar more competitive against foreign currencies. The president also highlighted the strength of consumer spending, as retail sales jumped 3.4% over last year.

Yet his interest in the Fed can be counterproductive.

Last month, the Federal Reserve voted to lower rates for the first time since 2008, a step taken to protect the economy from trade uncertainty. But consumers have interpreted this as a precautionary measure before slowing down rather than as an effort to maintain growth in the economy, according to the consumer survey conducted by the University of Michigan on Friday.

Consumer confidence has fallen by 6.4% since July. Pessimism could worsen if the Fed decided to cut rates in line with Trump's wishes.

"Further cuts in interest rates would help heighten consumer fears about a potential recession," said Richard Curtin, director of the investigation.

One sector that is already suffering this year is manufacturing, the very industry that Trump is committed to reviving and strengthening with its rates. Industrial production fell 0.5% in the last 12 months, the Fed said Thursday.

The government could take some steps to help the manufacturing sector and the economy, said Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers.

Congress could endorse the updated trade agreement between the United States, Canada and Mexico – which would protect the supply chain in North America. Second, the government could renew the charter that will expire soon for the Export-Import Bank. But reconciling the situation with China is delicate because it involves negotiations between two countries with divergent interests.

"This requires two parts – it's not something that the United States and our own political environment can handle," Dempsey said.

Most economists – including Fed officials – are still expecting economic growth this year, at a slower pace than 2.9% last year. .

A senior White House official said that growth in the second quarter of this year was artificially low due to unusual weather and Boeing problems that affected aircraft production. Thus, the basic economy could be stronger than many forecasters think.

On Wednesday, the financial markets discussed a possible slowdown, as the interest rate applied to a 10-year US Treasury bond fell below the rate of a 2-year note. This event has traditionally foreshadowed a recession. But the Trump official said he might have lost his power of prediction because of low rates and other central bank policies around the world.

But falling rates on US Treasury notes indicate that the countdown to the recession is now reckoned, said Scott Anderson, chief economist at Bank of the West.

The only challenge is to determine when this alarm may sound.

"I think we're heading down the road to recession – we're moving steadily toward this inevitable conclusion," said Anderson. "This is only the drip worry that reigned over the market sentiment."